UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 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): June 9, 2008
Manhattan
Pharmaceuticals, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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001-32639
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36-3898269
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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810
Seventh Avenue, 4th Floor
New
York, New York 10019
(Address
of principal executive offices) (Zip Code)
(212)
582-3950
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
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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o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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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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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
1.01 Entry
into a Material Definitive Agreement
On
June
9, 2008, Manhattan Pharmaceuticals, Inc. (the "Company"), Hedrin Pharmaceuticals
K/S
(“Hedrin
K/S”), Hedrin
Pharmaceuticals General Partner ApS (“Hedrin GP”)
and
Nordic
Biotech Venture Fund II K/S (“Nordic”)
entered
into an amendment to the Joint Venture Agreement dated January 31, 2008 for
the
development and commercialization of Hedrin for the North American market.
The
amendment provides, among other things, for the separation of the final tranche
of cash and equity, which was originally due upon a specific milestone related
to the designation of HedrinTM
as a
medical device, into two separate installments. The first installment is payable
by June 30, 2008 and the second installment is payable upon device
classification by the U.S. Food & Drug Administration (“FDA”).
Under
the
terms of the amended agreement, the joint venture entity, Hedrin K/S, is
scheduled to receive the first installment of $1.25 million in cash from Nordic
by June 30, 3008. Hedrin K/S will then distribute $1.0 million in cash to
Manhattan Pharmaceuticals and equity to each of Manhattan Pharmaceuticals and
Nordic sufficient to maintain their respective ownership interests at 50%.
In
the second installment, due upon classification of Hedrin by the FDA as a Class
II or Class III medical device, Hedrin K/S will receive $1.25 million in cash
from Nordic, and will then distribute $0.5 million cash to Manhattan
Pharmaceuticals and equity to each of Manhattan Pharmaceuticals and Nordic
sufficient to maintain their respective ownership interests at 50%. The total
of
both installments results in the payment and distribution of the same aggregate
amounts agreed to under the original joint venture agreement.
Upon
fulfillment of the final tranche, Hedrin K/S will have received a total of
$1.5
million cash to be applied toward the development and commercialization of
Hedrin in North America. All costs associated with the Hedrin project including
any necessary U.S. clinical trials, patent costs, and future milestones owed
to
the original licensor, Thornton & Ross Limited, are the responsibility of
Hedrin K/S.
If
classification of Hedrin by the FDA as a Class II or Class III medical device
is
not received by June 30, 2009, then Nordic will not be obligated to make the
second installment payment and Nordic will receive an additional 20% ownership
of the joint venture and enhanced control over the joint venture's operations
and other important decision-making.
The
foregoing description of the amendment is intended to be a summary and is
qualified in its entirety by reference to such agreement, which is attached
as
Exhibit 10.1 and incorporated by reference as if fully set forth herein.
Item
8.01 Other
Events.
On
June
12, 2008, the Company issued a press release regarding the status of the
regulatory approvals for its non-insecticide treatment for pediculosis (head
lice), Hedrin™
and
the
amendment to the joint venture agreement between the Company, Hedrin K/S, Hedrin
GP and Nordic.
A copy
of the press release is furnished herewith as Exhibit 99.1.
2
Item
9.01
Financial Statements and Exhibits
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(d)
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Exhibits.
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Exhibit No.
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Description
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10.1
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OMNIBUS
AMENDMENT TO JOINT VENTURE AGREEMENT dated June 9, 2008
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99.1
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Press
Release Issued June 12, 2008
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3
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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MANHATTAN
PHARMACEUTICALS, INC.
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Date:
June 12, 2008
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By:
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/s/ Michael
G. McGuinness
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Michael
G. McGuinness
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Chief
Financial Officer
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4
Exhibit
10.1
OMNIBUS
AMENDMENT TO JOINT VENTURE AGREEMENT AND ADDITIONAL
AGREEMENTS
THIS
OMNIBUS AMENDMENT TO JOINT VENTURE AGREEMENT AND ADDITIONAL AGREEMENTS (this
“Amendment”)
is
entered into as of June 9, 2008
by and
among Manhattan Pharmaceuticals, Inc., a Delaware corporation (“MHA”),
Hedrin Pharmaceuticals K/S,
a
Danish limited liability partnership (“Newco”),
Hedrin
Pharmaceuticals General Partner ApS, a Danish private limited company
(“Hedrin
GP”)
and
Nordic
Biotech Venture Fund II K/S, a Danish limited liability partnership
(“Nordic”).
WITNESSETH:
WHEREAS,
MHA and Nordic previously entered into that certain Joint Venture Agreement
dated as of January 31, 2008 (as previously amended, the “Joint
Venture Agreement”).
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Joint Venture Agreement;
WHEREAS,
pursuant
to the Joint Venture Agreement, (i) MHA agreed to assign certain assets to
Newco
in accordance with the terms of that certain Assignment and Contribution
Agreement dated as of February 21, 2008 (as amended from time to time, the
“Contribution
Agreement”),
(ii)
MHA, Nordic and Hedrin GP entered into a Limited Partnership Agreement dated
as
of February 21, 2008 (as amended from time to time, the “Partnership
Agreement”),
and
(iii) MHA and Nordic entered into a Shareholders Agreement dated as of February
21, 2008 (as amended from time to time, the “Shareholders
Agreement”)
with
respect to Hedrin GP; and
MHA,
Newco, Hedrin GP and Nordic wish to recognize that substantial progress has
been
made toward achieving the Payment Milestone so as to justify a current partial
Milestone Payment and that more specificity is appropriate in the definition
of
the Payment Milestone that will result in the payment of the remaining Milestone
Payment, all in accordance with the terms hereof, and that the Joint Venture
Agreement, Contribution Agreement, Partnership Agreement and Shareholders
Agreement should be appropriately modified, in each case on the terms and
conditions set forth in this Amendment.
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. Amendments
to Joint Venture Agreement.
(a) Section
1
of the Joint Venture Agreement is hereby amended by deleting the defined
term
“Milestone Payment” in its entirety and adding the following two new defined
terms in alphabetical sequence in Section 1:
“Initial
Milestone Payment” means the payment by Nordic of an additional $1,250,000 to
Newco after the satisfaction of the Initial Payment Milestone (as defined
in the
Contribution Agreement).
“Second
Milestone Payment” means the payment by Nordic of an additional $1,250,000 to
Newco after the satisfaction of the Second Payment Milestone (as defined
in the
Contribution Agreement).
(b) Section
1
of the Joint Venture Agreement is hereby amended by deleting the defined
term
“Investment Amount” in its entirety and replacing it with the following:
“Investment
Amount”
means
(i) $2,500,000 if neither the Initial Milestone Payment nor the Second Milestone
Payment has occurred, (ii) $3,750,000 if, prior to June 30, 2009, the Initial
Milestone Payment has occurred but the Second Milestone Payment has not
occurred, (iii) $3,500,000 if (A) on or after June 30, 2009, the Initial
Milestone Payment has occurred but the Second Milestone Payment has not
occurred, or (B) if
prior
to June 30, 2009, the U.S.
Food
and Drug Administration (“FDA”)
formally designates the Licensed Products (as defined in the Contribution
Agreement) as a drug and refers regulation thereof to the FDA Center for
Drug
Evaluation and Research, and (iv) $5,000,000 if both the Initial Milestone
Payment and the Second Milestone Payment have occurred.
2. Amendments
to Contribution Agreement.
(a) Section
5.3 of the Contribution Agreement is hereby deleted in its entirety and replaced
with the following:
“5.3 Definition
of Initial Payment Milestone and Second Payment Milestone
For
purposes of this Agreement, (i) the term “Initial
Payment Milestone”
shall
mean a preliminary determination from the U.S. Food and Drug Administration
received prior to September 30, 2008 that the Licensed Products will be
regulated as a medical device, and (ii) the term “Second
Payment Milestone”
shall
mean (A) a determination by the U.S. Food and Drug Administration (“FDA”)
that a
Licensed Product is substantially equivalent to a predicate device in accordance
with Section 513(f)(1) or 510(k) of the Federal Food, Drug, and Cosmetic
Act (as
amended, the “FDC
Act”)
or any
other marketing authorization of a Licensed Product by the FDA as a medical
device, (B) the issuance of a “Classification Decision” as such term is used in
Attachment 1 of the FDA Guidance for Industry and CDRH Staff titled “New Section
513(f)(2) - Evaluation of Automatic Class III Designation” issued by the FDA on
February 19, 1998, with respect to a Licensed Product, or (C) the receipt
of a
formal response to a “Request for Designation” from the Office of Combination
Products that designates a Licensed Product as a device, in each of cases
(A)
through (C) prior to June 30, 2009.”
2
(b) Section
5.1(a)(ii) of the Contribution Agreement is hereby deleted in its entirety
and
replaced with two new subsections as follows:
“(ii) within
21
days after the achievement of the Initial Payment Milestone (as defined below):
(A) pay to MHA an additional US$1,000,000.00 in cash (the “Second
Cash Payment”)
and
(B) if necessary to maintain MHA’s 50% ownership of outstanding Partnership
Shares, issue to MHA, and deliver a certificate representing, a number of
additional Partnership Shares of Newco that will constitute, together with
the
Initial Equity Issuance, 50% of all outstanding Partnership Shares (the
“Second
Equity Issuance”).
(iii) within
30
days after the achievement of the Second Payment Milestone (as defined below):
(A) pay to MHA an additional US$500,000.00 in cash (the “Third
Cash Payment”
and
together with the First Cash Payment and the Second Cash Payment, the
“Cash
Payments”)
and
(B) if necessary to maintain MHA’s 50% ownership of outstanding Partnership
Shares, issue to MHA, and deliver a certificate representing, a number of
additional Partnership Shares of Newco that will constitute, together with
the
Initial Equity Issuance and Second Equity Issuance, 50% of all outstanding
Partnership Shares (the “Third
Equity Issuance”)
and,
together with the Initial Equity Issuance and Second Equity Issuance, the
“Equity
Issuances”).”
(c) Section
5.1(c) of the Contribution Agreement is hereby deleted in its entirety and
replaced with the following:
“Upon
the
Initial Equity Issuance, MHA shall own 50% of the outstanding Partnership
Shares
of Newco. Upon the Second Equity Issuance, MHA shall own 50% of the outstanding
Partnership Shares of Newco (after giving effect to the issuance of additional
Partnership Shares, if any, to Nordic pursuant to the Partnership Agreement).
Upon the Third Equity Issuance, if any, MHA shall own 50% of the outstanding
Partnership Shares of Newco (after giving effect to the issuance of additional
Partnership Shares, if any, to Nordic pursuant to the Partnership
Agreement).”
(d) Section
5.2(b) of the Contribution Agreement is hereby deleted in its entirety and
replaced with the following:
“(b) (i)
The
authorized capital of Newco, immediately after the Second Equity Issuance,
if
any, consists of 2,000 Partnership Shares, 700 of which are owned, beneficially
and of record, by Nordic, and 700 of which are owned, beneficially and of
record
by MHA, and (ii) the authorized capital of Newco, immediately after the Third
Equity Issuance, if any, consists of 2,000 Partnership Shares, 1,000 of which
are owned, beneficially and of record, by Nordic, and 1,000 of which are
owned,
beneficially and of record by MHA.
3
3. Amendments
to Partnership Agreement.
(a) Section
1.1 of the Partnership Agreement is hereby amended by deleting the defined
term
“Payment Milestone” in its entirety and adding the following two new defined
terms in alphabetical sequence in Section 1.1:
“Initial
Payment Milestone” means such term as defined in the Contribution Agreement.
“Second
Payment Milestone” means such term as defined in the Contribution Agreement.
(b) Section
3.6 of the Partnership Agreement is hereby deleted in its entirety and replaced
with the following:
“(a)
Not
later than 21 days after satisfaction, if any, of the Initial Payment Milestone,
Nordic shall pay to the Partnership an additional $1,250,000 by wire transfer
to
a bank account designated by the Partnership as payment for an additional
200
Partnership Shares. The satisfaction of the Initial Payment Milestone shall
constitute payment by MHA for an additional 200 Partnership Shares, subject
to
subsection (c) below. Accordingly, after satisfaction of the Initial Payment
Milestone, the Partnership Shares shall be distributed among the Parties
as
follows (all amounts in DKK):
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Number of Partnership Shares
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Nordic
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700
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MHA
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700
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General Partner
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0
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Total
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1,400
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(b)
Not
later than 30 days after satisfaction, if any, of the Second Payment Milestone,
Nordic shall pay to the Partnership an additional $1,250,000 by wire transfer
to
a bank account designated by the Partnership as payment for an additional
300
Partnership Shares. The satisfaction of the Second Payment Milestone shall
constitute payment by MHA for an additional 300 Partnership Shares. Accordingly,
after satisfaction of the Second Payment Milestone, the Partnership Shares
shall
be distributed among the Parties as follows (all amounts in DKK):
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Number of Partnership Shares
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Nordic
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1,000
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MHA
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1,000
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General
Partner
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0
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Total
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2,000
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(c)
If
the Second Payment Milestone is not achieved by June 30, 2009, or if prior
to
June 30, 2009, the U.S.
Food
and Drug Administration (“FDA”)
formally designates the Licensed Products (as defined in the Contribution
Agreement) as a drug and refers regulation thereof to the FDA Center for
Drug
Evaluation and Research,
(i)
Nordic shall not be obliged to make any payment to the Partnership pursuant
to
clause
3.6(b), (ii) MHA shall forfeit to the Partnership 400 Partnership Shares,
and
(iii) Nordic shall be entitled to, and the Partnership shall make, a return
of
capital of $250,000, with no corresponding reduction in Nordic’s Partnership
Shares. Accordingly,
after June 30, 2009, if the Second Payment Milestone has not been achieved,
or
if
prior to June 30, 2009, the FDA
formally designates the Licensed Products as a drug and refers regulation
thereof to the FDA Center for Drug Evaluation and Research, the Partnership
Shares shall be distributed among the Parties as follows (all amounts in
DKK):
4
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Number of Partnership Shares
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||||
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Nordic
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700
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MHA
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300
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General
Partner
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0
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Total
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1,000
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(c) Section
11.1(ii) of the Partnership Agreement is hereby deleted in its entirety and
replaced with the following:
From
any
amount available for distribution in excess of the amount referred to under
sub-clause 11.1(i) the holder(s) of the MHA Partnership Shares shall before
any
distribution is made to other Limited Partners be entitled to receive an
amount
equal to the proceeds distributed to the holders of the Nordic Partnership
Shares under sub-clause 11.1(i) multiplied by a fraction the numerator of
which
is MHA’s number of Partnership Shares at the time of such distribution, and the
denominator of which is the total number of outstanding Partnership Shares
at
the time of such distribution.
4. Amendments
to Shareholders Agreement.
(a) Section
1.1 of the Shareholders Agreement is hereby amended by deleting the defined
term
“Payment Milestone” in its entirety and adding the following two new defined
terms in alphabetical sequence in Section 1.1:
“Initial
Payment Milestone” means such term as defined in the Contribution Agreement.
“Second
Payment Milestone” means such term as defined in the Contribution Agreement.
(b) Section
4.3 of the Shareholders Agreement is hereby deleted in its entirety and replaced
with the following:
“Irrespective
of clause 4.2, if the Second Payment Milestone has not been achieved by 30
March
2009, Nordic shall – in addition to any board members appointed by Nordic
pursuant to clause 4.2 and as long as Nordic is the owner of the Nordic
Partnership Shares – immediately be entitled to appoint one additional
board member, in which case the board of directors may consist of up to five
members elected at the general meeting.”
5
5. Satisfaction
of Initial Payment Milestone.
The
parties hereto acknowledge and agree that the Initial Payment Milestone is
deemed to be achieved as of the date of this Amendment and that payment of
the
Nordic capital contribution to Newco pursuant to Section 3.6(a) of the
Partnership Agreement, as amended hereby, and payment by Newco of the Second
Cash Payment pursuant to Section 5.1(a)(ii) of the Contribution Agreement,
as
amended hereby, will each occur on or before the twenty-first day after the
date
of this Amendment.
6. Representations
and Warranties; Ratification.
(a) Each
of
MHA, Nordic, Newco and Hedrin GP represents and warrants to the other parties
hereto that this Amendment has been duly executed and delivered by such party
and constitutes a legal, valid and binding obligation of such party enforceable
against it in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of
law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy.
(b) Each
of
Nordic, MHA, Newco and Hedrin GP represents and warrants to the others that
each
of the representations and warranties of such party in each of the Joint
Venture
Agreement and the Additional Agreements to which such company is a party
is true
and correct in all material respects on the effective date of this Amendment
(except as set forth on Schedule
A
hereto
and except for representations and warranties limited as to time or with
respect
to a specific event, which representations and warranties shall continue
to be
limited to such time or event).
(c) Except
as
hereby amended, the Joint Venture Agreement and each provision thereof, and
each
Additional Agreement (as the same may be amended in connection with this
Amendment) and each provision thereof, are hereby ratified and confirmed
in
every respect and shall continue in full force and effect.
7. Conditions
Precedent.
The
agreements set forth in this Amendment are conditional and this Amendment
shall
not be effective until receipt by each party of a fully-executed counterpart
of
this Amendment (which may be a facsimile or .pdf copy thereof).
6
8. Miscellaneous.
(a) Entire
Agreement.
This
Amendment, the Joint Venture Agreement and the Additional Agreements, as
amended
hereby, contain the entire understanding of the parties hereto and supercedes
all prior or contemporaneous negotiations, promises, covenants, agreements
and
representations of every nature whatsoever with respect to the matters referred
to in this Amendment, the Joint Venture Agreement and the Additional Agreements.
(b) Headings.
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
(c) Successors
and Assigns.
This
Amendment shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns.
(d) Expenses.
Notwithstanding any provision to the contrary in the Agreement or the Additional
Agreements, MHA will reimburse Nordic for all legal, due diligence and advisory
fees and expenses incurred by Nordic or its advisors in connection with this
Amendment and the transactions contemplated by this Amendment, the Agreement
and
the Additional Agreements. MHA has made on or before the date of this Amendment,
or shall make within five (5) days of the date of this Amendment, a payment
to
Nordic of $30,000, and thereafter shall make additional advances and payments
to
Nordic necessary to reimburse Nordic for its fees and expenses in excess
of
amounts previously advanced under this Section 8(d).
(e) Governing
Law.
(i) All
questions concerning the construction, validity, enforcement and interpretation
of this Amendment, as it relates to the amendments to the Joint Venture
Agreement and Contribution Agreement, shall be governed by and construed
and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof, except to the extent
that
the application of the General Corporation Law of the State of Delaware is
mandatorily applicable.
(ii) All
questions concerning the construction, validity, enforcement and interpretation
of this Amendment, as it relates to the amendments to the Partnership Agreement
and Shareholders Agreement, shall be governed by and construed and enforced
in
accordance with Danish law.
(iii) Each
Party hereby irrevocably submits to the exclusive jurisdiction of the federal
and state courts sitting in the state of New York in any action or proceeding
arising out of or relating to this Amendment. Each Party hereby irrevocably
agrees, on behalf of itself and on behalf of such Party’s successors and
permitted assigns, that all claims in respect of such action or proceeding
shall
be heard and determined in any such court and irrevocably waives any objection
such person may now or hereafter have as to the venue of any such suit, action
or proceeding brought in such a court or that such court is an inconvenient
forum. If either party shall commence an action or proceeding to enforce
any
provision of this Amendment, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding.
(f) Counterparts.
This
Amendment may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation
of the
party executing (or on whose behalf such signature is executed) with the
same
force and effect as if such facsimile signature page were an original
thereof.
7
(g) Severability.
If any
provision of this Amendment is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Amendment shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that
is a
reasonable substitute therefore, and upon so agreeing, shall incorporate
such
substitute provision in this Amendment.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment under seal
as
of the day and year first above written.
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MANHATTAN
PHARMACEUTICALS, INC.
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By:
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/s/
Douglas Abel
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Name:
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Douglas
Abel
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Title:
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President
and Chief Executive Officer
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NORDIC:
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NORDIC
BIOTECH VENTURE FUND II K/S
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By:
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/s/
Florian Schonharting
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Florian
Schonharting, Partner
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/s/
Christian Hansen
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Christian
Hansen, Partner
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HEDRIN
PHARMACEUTICALS K/S:
BY: HEDRIN
PHARMACEUTICALS GENERAL PARTNER APS
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By:
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/s/
Florian Schonharting
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By:
|
/s/
Douglas Abel
|
|
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Florian
Schonharting, Director
|
Douglas
Abel, Director
|
HEDRIN
PHARMACEUTICALS GENERAL PARTNER APS:
|
By:
|
/s/
Florian Schonharting
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By:
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/s/
Douglas Abel
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|
Florian
Schonharting, Director
|
Douglas
Abel, Director
|
8
Exhibit
99.1
Manhattan
Pharmaceuticals Announces Amendment of Joint Venture Deal with Nordic
Biotech
Company
to Receive $1.0 Million in Cash and $1.25 Million in Equity
NEW
YORK, NY JUN 12, 2008
-
Manhattan Pharmaceuticals, Inc. (OTCBB: MHAN) today announced that the FDA
has
directed Hedrin™,
a
novel, non-insecticide treatment for pediculosis (head lice), to the Center
for
Devices and Radiological Health (CDRH) division of the U.S. Food and Drug
Administration (FDA) for review as a device. As a result of this regulatory
progress, the company and Nordic Biotech Venture Fund II K/S (Nordic) have
amended their joint venture agreement for the development and commercialization
of Hedrin for the North American market. This amendment separates the final
tranche of cash and equity, originally due upon medical device designation,
into
two separate installments. The first installment is payable by June 30, 2008
and
the second installment is payable upon device classification by the
FDA.
Under
the
terms of the amended agreement, the joint venture entity, Hedrin Pharmaceuticals
K/S, is scheduled to receive the first installment of $1.25M in cash from Nordic
by June 30, 3008. Hedrin Pharmaceuticals K/S will then distribute $1.0M in
cash
to Manhattan Pharmaceuticals and equity to each of Manhattan Pharmaceuticals
and
Nordic sufficient to maintain their respective ownership interests at 50%.
In
the second installment, due upon classification of Hedrin by the FDA as a Class
II or Class III medical device, Hedrin Pharmaceuticals K/S will receive $1.25M
in cash from Nordic, and will then distribute $0.5M cash to Manhattan
Pharmaceuticals and equity to each of Manhattan Pharmaceuticals and Nordic
sufficient to maintain their respective ownership interests at 50%. The total
of
both installments results in payment and distribution of the same aggregate
amounts agreed to under the original joint venture agreement.
Upon
fulfillment of the final tranche, Hedrin Pharmaceuticals K/S will have received
a total of $1.5M cash to be applied toward the development and commercialization
of Hedrin in North America. All costs associated with the Hedrin project
including any necessary U.S. clinical trials, patent costs, and future
milestones owed to the original licensor, Thornton & Ross Limited, are the
responsibility of Hedrin Pharmaceuticals K/S.
About
Hedrin
To
date,
Hedrin has been clinically studied in 326 subjects and has demonstrated clinical
equivalence to widely used insecticide head lice treatments. It is currently
marketed as a device in Western Europe and as a pharmaceutical in the United
Kingdom (U.K.). In Europe, Hedrin has been launched in 21 countries and has
achieved annual sales through its licensees of approximately $45 million at
in-market public prices (which equates to a projected 21% market share), and
is
the market leader in the U.K. with $11 million in sales (23% market share)
and
France with a 21% market share.
Hedrin
is
a unique, proprietary combination of silicones (dimethicone and cyclomethicone)
that acts as a pediculicidal (lice killing) agent by disrupting the insect's
mechanism for managing fluid and breathing. Hedrin contains no traditional
chemical insecticides in contrast with most currently available lice treatments.
Recent studies have indicated that resistance to traditional chemical
insecticides may be increasing and therefore contributing to insecticide
treatment failure. Because Hedrin kills lice by preventing the louse from
excreting waste fluid and by asphyxiation (smothering), rather than by acting
on
the central nervous system, the insects cannot build up resistance to the
treatment.
About
Pediculosis
According
to the American Academy of Pediatrics, an estimated 6 to 12 million Americans
have pediculosis each year, with pre-school and elementary age children and
their families affected most often.
About
Manhattan Pharmaceuticals, Inc.
Manhattan
Pharmaceuticals, Inc. is a specialty pharmaceutical company that acquires and
develops novel, high-value drug candidates primarily for the treatment of
dermatologic disorders. With a pipeline consisting of four clinical stage
product candidates, the company is currently developing Hedrin™, a novel,
non-insecticide treatment for pediculosis (head lice); Topical PTH (1-34) for
the treatment of psoriasis; Altoderm™ (topical cromolyn sodium) for the
treatment of pruritus associated with dermatologic conditions including atopic
dermatitis; and Altolyn™ (oral tablet cromolyn sodium) for the treatment of
mastocytosis. (http://www.manhattanpharma.com)
About
Nordic Biotech
Nordic
Biotech Advisors ApS is the investment advisor to Nordic Biotech K/S and Nordic
Biotech Venture Fund II K/S, and was founded in 2001 by Christian Hansen and
Florian Schonharting. Key investors in the Nordic Biotech fund family are major
institutions and family foundations. Nordic Biotech focuses on global special
situations opportunities and currently has a portfolio in excess of 10
companies. (http://www.nordicbiotech.com/)
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Note
Regarding Forward-Looking Statements
This
press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements involve risks
and uncertainties that could cause Manhattan Pharmaceuticals, Inc.'s actual
results to differ materially from the anticipated results and expectations
expressed in these forward-looking statements. These statements are often,
but
not always, made through the use of words or phrases such as "anticipates,"
"expects," "plans," "believes," "intends," "will," and similar words or phrases.
These statements are based on Manhattan Pharmaceuticals, Inc.'s current
expectations, forecasts and assumptions, which are subject to risks and
uncertainties, which could cause actual outcomes and results to differ
materially from these statements. Among
other things, there can be no assurances that our joint venture with Nordic
will
be able to meet the milestone which will obligate Nordic to make the next
payment referred to in this press release (the failure to meet that milestone
by
June 30, 2009 will give Nordic an additional 20% ownership of the joint venture,
and enhanced control over the joint venture's operations and other important
decision-making),
that
liquidated damages will accrue if we are unable to register the shares of common
stock underlying the warrants and the put/call rights referred to in this press
release in a timely manner, that Manhattan Pharmaceuticals, Inc.'s development
efforts relating to Hedrin or any other current or future product candidates
will be successful, that any clinical study will be completed or will return
positive results, or that we will be able to out-license its discontinued
programs to other companies on terms acceptable to Manhattan Pharmaceuticals,
Inc. or at all. Other risks that may affect forward-looking information
contained in this press release include the company's extremely limited capital
resources, the possibility of being unable to obtain regulatory approval of
Manhattan Pharmaceuticals, Inc.'s product candidates, or obtain the treatment
we
are seeking for Hedrin, the risk that the results of clinical trials may not
support the company's claims, the risk that the company's product candidates
may
not achieve market acceptance in North America or elsewhere, the company's
reliance on third-party researchers to develop its product candidates,
availability of patent protection, the risk that sufficient capital may not
be
available to develop and commercialize the company's product candidates, the
company's lack of experience in developing and commercializing pharmaceutical
products, and that trading in the company's stock may be adversely impacted
by
the company's voluntary delisting of its common stock from the American Stock
Exchange. Additional risks are described in the company's filings with the
Securities and Exchange Commission, including its Annual Report on Form 10-K
for
the year ended December 31, 2007. Manhattan Pharmaceuticals, Inc. assumes no
obligation to update these statements, whether as a result of new information,
future events, or otherwise, except as required by law.
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Contact
Manhattan
Pharmaceuticals, Inc.
Michael
G. McGuinness, Chief Financial Officer
(212)
582-3950
4