Katie Karloff, Chief Executive Officer of INVO Bioscience stated, “We are extremely pleased to have finalized our agreement with Ferring to commercialize INVOcell in the U.S., With Ferring applying its extensive resources and expertise in the field of assisted reproductive technologies (ART) to market and supply the INVOcell across the U.S., INVO Bioscience will now focus our efforts on the international markets and the expansion of INVO clinics throughout the U.S. while at the same time ensuring we meet the goals to obtain label enhancement.”
According to an 8k filed by INVO Bioscience on 01-17-2019, an initial $5,000,000 license fee was paid to INVO Bioscience along with the balance of terms (See 8k agreement language below):
“At the closing, the Company (INVO Bioscience) received its initial $5,000,000 license fee. Pursuant to the Distribution Agreement, among other things, the Company granted to Ferring an exclusive license in the United States (the “Territory”) with rights to sublicense under patents related to the Company’s proprietary intravaginal culture device known as INVOcell™, together with the retention device and any other applicable accessories (collectively, the “Licensed Product”) to market, promote, distribute and sell the Licensed Product with respect to all therapeutic, prophylactic and diagnostic uses of medical devices or pharmaceutical products involving reproductive technology (including infertility treatment) in humans (the “Field”). Ferring is responsible, at its own cost, for all commercialization activities for the Licensed Product in the Field in the Territory. The Company does retain a limited exception to the exclusive license granted to Ferring allowing the Company, subject to certain restrictions, to establish up to five clinics that will commercialize INVO cycles in the Territory. The Company retains all commercialization rights for the Licensed Product outside of the United States.
Under the terms of the Distribution Agreement, Ferring completed its obligation to make an initial payment to the Company of $5,000,000 upon completion of the required closing conditions, including executed agreements from all current manufacturers of the Licensed Product that upon a material supply default by the Company, Ferring can assume a direct purchase relationship with such manufacturers. Ferring is obligated to make a second payment to the Company of $3,000,000 provided that the Company is successful in obtaining a five (5) day label enhancement from the FDA for the current incubation period for the Licensed Product at least three (3) years prior to the expiration of the term of the license for the Licensed Product and provided further that Ferring has not previously exercised its right to terminate the Distribution Agreement for convenience. In addition, under the terms of a separate Supply Agreement, attached as an exhibit to the Distribution Agreement, Ferring is obligated to pay the Company a specified supply price for each Licensed Product purchased by Ferring for distribution.
The Distribution Agreement has an initial term expiring on December 31, 2025, and at the end of the initial term, it may be terminated by the Company if Ferring fails to generate specified minimum revenues to the Company from the sale of the Licensed Product during the final two years of the initial term. Provided that no such termination occurs at the end of the initial term, thereafter the term of the Distribution Agreement shall automatically be renewed for successive three (3) years terms unless terminated by mutual consent. The Distribution Agreement is subject to termination upon a material breach by either party or by Ferring for convenience. In addition, if the closing under the Distribution Agreement does not occur within seventy-five (75) days, a non-breaching party may elect to terminate the Distribution Agreement.
The foregoing summary of the terms of the Distribution Agreement does not purport to be complete and is qualified in its entirety by reference to the Distribution Agreement, copies of which will be filed with the Securities and Exchange Commission by the Company with its Annual Report on Form 10-K for the fiscal year ending December 31, 2018, requesting confidential treatment for certain portions.”