Here's a conspiracy theory for you. Follow the timeline and try to calculate how much money and equity (which we don't know what has happened to) has flowed to Toucan and Cognate. As I have stated numerous times dating back to the uplisting, everyone was focused on the offerings rather than the debt swaps that were done fairly quietly but at much greater values. If Linda is the beneficiary of Toucan and Cognate success, then maybe her own shares are just a disguise while the real money is taken out the back door.....
On July 30, 2004, we entered into a service agreement with Cognate, a contract manufacturing and services organization in which Toucan Capital has a majority interest. In addition, two of the principals of Toucan Capital are members of Cognate’s board of directors and, on May 17, 2007, the managing director of Toucan Capital, Linda F. Powers, was appointed to serve as our director and to serve as the non-executive Chairperson of our Board of Directors. Under the service agreement, we agreed to utilize Cognate’s services for an initial two-year period, related primarily to manufacturing DCVax® product candidates, regulatory advice, research and development preclinical activities and managing clinical trials. The agreement expired on July 30, 2006; however, we continued to utilize Cognate’s services under the same terms as set forth in the expired agreement. On May 17, 2007, we entered into a new services agreement with Cognate pursuant to which Cognate will provide certain consulting and, when needed, manufacturing services to us for our DCVax®-Brain Phase II clinical trial. Under the terms of the new contract, we paid a non-refundable contract initiation fee of $250,000 and committed to pay budgeted monthly service fees of $400,000, subject to quarterly true-ups, and monthly facility fees of $150,000. We may terminate this agreement with 180 days notice and payment of all reasonable wind-up costs and Cognate may terminate the contract in the event that the brain cancer clinical trial fails to complete enrollment by July 1, 2009. However, if such termination by us occurs at any time prior to the earlier of the submission of an FDA biological license application/new drug application on our brain cancer clinical trial or July 1, 2010 or, such termination by Cognate results from failure of the brain cancer clinical trial to complete patient enrollment by July 1, 2009, we are obligated to make an additional termination fee payment to Cognate equal to $2 million.
During the years ending December 31, 2005, 2006 and 2007, respectively, we recognized approximately $3.5 million, $2.4 million and $5.8 million of research and development costs related to this service agreement. As of December 31, 2006 and 2007, we owed Cognate approximately $2.2 million and $0, respectively.
