Monday, June 08, 2009 6:39:31 AM
APH: Manufacturing and sales agreements and Patents
On November 13, 2003, ALDA Pharmaceuticals Corp., formerly Duft Biotech Capital Ltd., completed the acquisition
of the assets of 513947 BC Ltd., formerly ALDA Pharmaceuticals Inc., (“the Qualifying Transaction”) and a $1.2 Million
financing arranged by Canaccord Capital Corporation (“the Financing”).ALDA trades on the TSX Venture Exchange
in Vancouver, Canada under the symbol “APH” and on the OTC BB under the symbol “APCSF”.
ALDA has developed a patented infection control formulation, referred to as T36®, a mixture of ethanol,
o-phenylphenol, benzalkonium chloride and other ingredients (including lemon fragrance and water). All of these
component chemicals are bio-degradable.
Manufacturing and sales agreements
Canada
On October 4, 2005 the Company signed a manufacturing agreement with Norwood Packaging Ltd. (“Norwood”)of
Surrey British Columbia, Canada to manufacture its T36® Disinfectant antibacterial product. On June 18, 2008, both
the Company and Norwood agreed to waive the 90-day notice period required in the agreement and to terminate the
agreement. For future orders, ALDA will provide Norwood with purchase orders and pay Norwood according to the
standard payment terms that Norwood provides to its other customers. The Company has also started to use other
manufacturers and, on February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of
the business and undertakings of a pharmaceutical manufacturing firm.
An agreement between Group 270 Sales and Marketing Inc. (“Group 270”) and ALDA was established on November
17, 2006 in which Group 270 will assist ALDA in selling ALDA’s products in the retail market. To accomplish this,
Group 270 will undertake market research and a competitive analysis to estimate total annual volume in the area of
personal disinfectants, estimate annual sales volumes, establish the pricing structure for retail and establish a roll out
strategy to national retail chains, such as Shoppers DrugMart, Loblaws,Wal-Mart and Zellers, sourcing and engaging
a third party logistics company for order fulfillment, establish EDI and order processing development.
On August 22, 2008 Group 270 and the Company mutually agreed that Group 270 will be compensated at the rate of
$100 per hour rather than receiving a monthly retainer. In the event that both ALDA and Group 270 mutually agree
that there is sufficient reason to continue the payment, it will remain in effect on a month to month basis until the
payment of a commission rate of 8% of net sales exceeds the $1,500 per month. At that time the monthly payment will
cease and Group 270 will receive only the commission.
The agreement may be terminated if either party provides the other party with 60 days written notice, by either party if
there has been a breach of any provision of the agreement and thirty (30) days has elapsed from the date that written
notice has been sent to the party in breach by the other party or at the option of either party, if the other party becomes
insolvent; violates the laws, regulations, rules, or statutes of any government; ceases doing business; makes an
assignment for the benefit of creditors; or commits an act of bankruptcy. A failure by either party to exercise any right
hereunder shall not operate as a waiver of such right and all remedies contained within the agreement shall be
cumulative.
China
On October 6, 2004, ALDA entered into an agreement with Fuzhou Xinmei Biotech Co. Ltd. (“Fuzhou”) to
manufacture and distribute ALDA’s products Fujian province in China. On August 31, 2006, an agent actingon behalf
of Fuzhou (“the Agent”), received a Certificate of Approval from the Fujian Centre of Disease Control for T36®
Disinfectant after the product passed all of the required tests. The registration of T36® Disinfectant in China was
expanded beyond disinfection of inanimate objects, such as hospital equipment and instruments, to also allow external
use on humans, including use as a first-aid antiseptic and hand sanitizer. The Certificate of Approval allowed the
Agent to apply to the Chinese National Centre for Health Inspection and Supervision for approval to manufacture T36®
Disinfectant for sale in China and for export. On April 19, 2007, a manufacturing certificate (Certificate of Approval
(Health ID. No. 0109) was granted to the Agent in China for a period of four years from April 19, 2007 to April 18,
2011 and is renewable by filing an application for renewal 6 months before the expiry date.
In May 25, 2007, ALDA’s agent in China established a new company, He-Yi She Ye Limited (“He-Yi”)and the
agreement with Fuzhou was transferred to He-Yi and expanded to cover marketing in all of China. The agreement with
He-Yi provides that ALDA will provide He-Yi with all information that ALDA has at its disposal to assist with the
registration of ALDA’s products in China. In the agreement, it is stated that He-Yi would be responsible for procuring
all necessary government approvals for ALDA’s products within 6 months from the time all technical data to support
the application is provided by ALDA Pharmaceuticals Corp. Quarterly reports on the progress of the approvals were to
be provided to ALDA by He-Yi. Extensions could be requested by He-Yi to procure all necessary government
approvals and would not be unreasonably refused by ALDA for recurring periods of 3 months if He-Yi was employing
its best efforts in obtaining the registration of the ALDA products in China and was providing quarterly reports as
required or if more time was required by ALDA Pharmaceuticals Corp. to obtain information required by He-Yi. As
noted above, He-Yi has now fulfilled its obligations to register T36® Disinfectant for sale in China.
Under the terms of the agreement, ALDA Pharmaceuticals Corp. was to provide He-Yi with the specifications
required for He-Yi to provide a manufacturing facility suitable for the manufacturing of ALDA’s products.He-Yi was
to provide a fully equipped manufacturing facility according to the specifications provided by ALDA and to produce
the ALDA products subject to He-Yi employing its best efforts to obtain the space, materials and equipment specified
by ALDA. He-Yi has the right to distribute ALDA’s products in China subject to ALDA’s approval of each
distributorship. As announced in a news release distributed by the Company on May 29, 2008, He-Yi has fulfilled its
obligation to establish a manufacturing facility.
The Agreement is effective until April 18, 2011 (“the Initial Term”).Upon expiration of the Initial Term, the
Agreement may be renewed for additional periods, (“the Renewals”) provided that ALDA and He-Yi have each met
all of their obligations under the Agreement and provided that He-Yi is able to obtain renewals of the Certificate of
Approval (Health ID. No. 0109) that has been granted by the Ministry of Health of the People’s Republic of China and
expires on April 18, 2011. Any renewals will reflect current market conditions in the territory served by He-Yi at the
time the Renewals are granted and the time periods of any Renewals will be the same as the corresponding time
periods of the renewals of the Certificate.
For the first 3 years after production is started by He-Yi and within 6 months after production is started by He-Yi,
ALDA and He-Yi are to establish minimum sales levels and, thereafter, after each new distributorship is established.
He-Yi will pay ALDA a royalty, based on the gross revenues received by He-Yi for all of ALDA’s products sold in
China as follows:
5% during the first and second year after production is started by He-Yi,
8% during the third year,
6% after a doubling of sales over the sales achieved in the second year has occurred.
He-Yi will pay ALDA a 10% royalty based on the gross revenues received by He-Yi for all of ALDA’s products
sold by He-Yi outside of China.
All royalties will be paid monthly within 30 days after each month end.
ALDA, at ALDA’s discretion, will have the right to buy product from He-Yi. At the request of ALDA and with the
authorization of ALDA, He-Yi agrees to direct ship ALDA’s products for ALDA, at ALDA’s expense, to anywhere in
the world.
As of the date of this report, the agreement is in good standing. On April 8, 2008, the Company announced that He-Yi
had secured four contracts for the distribution of T36® Disinfectant in China. Evergreen Health Care committed to
minimum sales of 1 million RMB in Hong Kong and Macau for a period of one year, Jin Wei Kai Medical
Technology Limited and Jin Qin Scientific Development Ltd. to 4.8 Million RMB each over three years in northern
China (Beijing) and central China (Wu Hang), respectively, and Wondfo Biotech Co. Ltd. to 3 million RMB in
southern China (Guang Zhou) over three years. The total sales potential of all four contracts is 13.6 Million RMB or
nearly CDN $2 million at the current exchange rate. The Company will realize a royalty as described above on any
sales achieved by He-Yi. On May 29, 2008, the Company announced that the manufacturing facility set up in China
by He-Yi was operational and that the first production runs had started. In addition, a pilot batch of the T36®
formulation that was manufactured by He-Yi passed the quality control and efficacy tests. As of the date of this report,
the agreement is in good standing.
United States
On December 13, 2007, the Company announced that the services of Brand Institute, Inc. had been engaged to assist
with marketing efforts in the US and internationally, particularly with the development of the retail and therapeutic
applications of the T36® technology. The Company saw a need to align its marketing efforts with its anticipated
European and FDA product registrations and the proposed listing of its shares in the US. Due to its US and
international presence, Brand Institute, Inc. was selected to work with the Company in its targeted markets. Brand
Institute, Inc. offers pharmaceutical naming, packaging and labeling, trade marking and market research services, as
well as global regulatory insight provided by former key officials from the FDA and Health Canada. With offices in
the US, Europe and Asia, Brand Institute Inc. will provide strategic and regulatory assistance to the Company as it
establishes its presence in markets outside of Canada. Brand Institute is also assisting the Company with the re-design
of its website and with other aspects of its retail marketing program, such as label design and graphics.
No other active sales or manufacturing agreements are in place.
Patents
The Company is attempting to patent or secure proprietary protection for the specific combination and manufacturing
of the T36® formulation although the ingredients are all common chemical compounds.
The Patent Cooperation Treaty (PCT) is an international patent law treaty established in 1970. It provides a unified
procedure for filing patent applications to protect inventions in each of its Contracting States, which includes each
jurisdiction specified below. A patent application filed under the PCT is called an “international application” or “PCT
application”. A single filing of an international application is made with a Receiving Office (RO) in one language. It
then results in a search being performed by an International Searching Authority (ISA), accompanied with a written
opinion regarding the patentability of the invention which is the subject of the application. Optionally, this is followed
by a preliminary examination, performed by an International Preliminary Examining Authority (IPEA). The PCT does
not lead to the grant of an "international patent", which does not exist, but rather, national patent examinations that are
handled by each relevant national or regional authority. For example, in Canada, the US, China, Australia and
Singapore, there are national patent offices whereas, in Europe, the European Patent Office handles the national phase
for its member states.
API filed patent application #PCT/CA2002/001284, “A wide spectrum disinfectant”, on August 20, 2002. All rights to
the patent application were transferred from API to the Company on completion of the Qualifying Transaction on
November 13, 2003. A summary of subsequent events is presented below.
Canada
assigned it Patent Application Number 2,495,938. On August 17, 2007, the Company filed a Request for Examination
with CIPO. On September 24, 2007 the Company filed a Voluntary Amendment to the patent application filed with
CIPO. The proposed amendments expanded the claims to include a number of therapeutic applications of the T36®
formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually
transmitted infections (“STI’s”). On October 4, 2007, the Company was notified that CIPO had acknowledged a
request by the Company to examine the patent application. Since the process of examination can take two years, for a
fee of $500, the Company requested an Expedited Examination on November 7, 2007 to reduce the response time to
approximately three months. On April 8, 2008, CIPO provided an Office Action in which a number of questions were
posed to the Company. Many of the same questions had already been posed by the Examiner for the EPO and the
Company was advised that a response was required by October 8, 2009. On the advice of the Company’s patent
lawyers, the Company decided to temporarily abandon the Canadian patent application and the abandonment was
deemed effective by CIPO on October 8, 2008. However, the patent application can be reinstated by October 8, 2009
by paying a fee of CAN$200.00 and submitting a response to the Office Action to CIPO. This decision was made to
defer the costs of the Canadian patent application for a period of one year at little cost.
European Union
On March 30, 2005 the PCT application was accepted for national examination by the European Patent Office (“EPO”)
which assigned it Patent Application Number 02754054.1-2113. The countries covered by the European patent
application are Austria, Belgium, Bulgaria, Switzerland, Cyprus, the Czech Republic, Germany, Denmark, Estonia,
Spain, Finland, France, Great Britain (the UK), Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco,
Netherlands, Portugal, Sweden, the Slovak Republic and Turkey. On May 18, 2005, the bibliographic data of the
above-noted application was published in the European Patent Bulletin, under Publication No. 1530485. The resulting
effect of such publication is that any possible infringer is deemed to have knowledge of the patent application without
the Company having to formally inform them of this application’s existence. On October 18, 2006 the EPO provided
the Company with an Office Action requesting further information on the patent application. The Company responded
to the questions and received a second Office Action, dated September 5, 2007 from the EPO. This second Office
Action requested that the Company provide certain additional information and to conduct certain experiments to
support the claims that were made in the application. The Company completed both the literature research and the
laboratory studies and, on December 19, 2008, submitted the response to the second Office Action to the EPO. A
response from the EPO is still pending.
China
On June 25, 2005 the Company was notified that the PCT application was accepted for national examination by the
Patent Office of the People’s Republic of China (“Chinese Patent Office”) and assigned Patent Application Number
02829642.7. On August 11, 2005, the Chinese Patent Office accepted a Request for Substantive Examination from the
Company. The application was published in the Chinese Patent Gazette on October 19, 2005, under Publication No.
CN1684711A and entered into Substantive Examination. On February 5, 2006, the Company filed a Voluntary
Amendment to the original patent application to correct certain minor errors in the original application. On June 2,
2006, the Chinese Patent Office provided an Office Action which requested certain additional amendments to the
patent application. On December 18, 2006, the Company filed its response to the Office Action. The Company was
notified by the Chinese Patent Office that the Chinese patent had been allowed, effective June 8, 2007. Amendments to
the original patent application were then drafted by the Company. As in the case of the amendments prepared for CIPO,
the proposed amendments to the Chinese patent expand the original claims to include a number of therapeutic
applications of the T36® formulation, including its use in cosmetics and in a microbicidal gel to prevent the
transmission of sexually transmitted infections (“STI’s”).On October 10, 2007, the Company was advised that the
amended claims had been submitted to the Chinese Patent Office. On January 30, 2008 the Chinese Patent office
assigned Chinese Divisional Patent Application No. 200710142798.3 to the new application which was
published in the Chinese Patent Gazette, under Publication No. CN101112624A. At the time of this report, no
further developments have occurred with this Chinese patent application. On February 6, 2008, the Company
announced that Certificate of Invention Patent Number ZL02829642.7 had been issued by the State Intellectual
Property Office of the People’s Republic of China. The patent provides protection for the composition and production
methods for ALDA’s T36® formulation until August 20, 2022.
United States
US Patent #7,338,927
On February 18, 2005, the US Patent and Trademark Office (“USPTO”) received the PCT patent application and
assigned it Patent Application Number 10/525,110. The patent application was published by the USPTO on December
22, 2005, under Publication Number US 2005/0282727. On July 27, 2006, the Company received that first Office
Action from the USPTO which required clarification or modification of certain claims made in the patent application.
The Company was required to respond to the Office Action by October 27, 2006 and did so on October 26, 2006 with
amendments to the claims that required clarification or modification. On February 7, 2007 the USPTO provided the
Company with a Notice of Allowance for the US patent with all claims made by the Company accepted by the USPTO.
A Notice of Allowance is not a grant of a patent and is subject to withdrawal by the USPTO or on petition by the
Company. The Company then filed certain minor, voluntary amendments to the patent application and a second
Notice of Allowance, dated June 8, 2007 was provided by the USPTO. On February 15, 2008, the Company was
advised that a Notice of Allowance had been received from the USPTO projecting that the US patent would be issued
on March 4, 2008. As scheduled, U.S. Patent Number 7,338,927 was issued on that date and provides protection for
the composition and production methods for ALDA's T36® formulation until August 20, 2022. The patent can be
viewed on the website of the USPTO.
U.S. patent application (Serial No. 11/966,128)
Amendments to the original patent application were drafted by the Company and submitted to the USPTO as a U.S.
Continuation Patent Application in December, 2007. As in the case of the amendments prepared for the Chinese Patent
Office and CIPO, the proposed amendments to the US patent expand the original claims to include a number of
therapeutic applications of the T36® formulation, including its use in cosmetics and in a microbicidal gel to prevent the
transmission of sexually transmitted infections (“STI’s”). On January 23, 2008 the USPTO issued a Filing Receipt for
the U.S. Continuation Patent Application (“the US CPA”) and assigned Serial No. 11/966,128 to the application. On
May 2, 2008, the USPTO issued an Office Action in relation to the US CPA. The matters raised in the Office Action
were addressed by the company and a Response was submitted to the USPTO in November, 2008. On January 5, 2009,
references cited in connection with a related patent application were submitted to the USPTO in an Information
Disclosure Statement (“IDS”) relating to the new U.S. application.The purpose of an IDS is to bring to the attention of
the Examiner any information that may pertain to the patentability of the claims of a patent application in order to
comply with the Duty of Disclosure imposed on patent Applicants under U.S. patent law. The onus is on the patent
Applicant to provide such information to the USPTO and the consequences can be serious if such information is not
provided to the USPTO. On January 16, 2009, the USPTO provided the Company with a Notice of Allowance for the
new U.S. patent application. However, it was determined that the U.S. Examiner had not considered the IDS filed
January 5, 2009, prior to issuing the Notice of Allowance. This was brought to the Examiner’s attention, who then
reviewed the IDS and provided a Supplemental Notice of Allowability on March 25, 2009. The Issue Fee and
Publication Fee were subsequently paid by the Company. As of the date of this report, the Company is awaiting further
correspondence from the USPTO in this regard. The Company still has a number of pending patent applications that
relate to the new U.S. application and should any new references or art be raised by a patent Examiner for any of these
applications prior to issuance of the application to patent, the Company will have to submit such art to the USPTO in
order to comply with the Duty of Disclosure, which in turn could result in the allowance of the application being
withdrawn. The issuance of the new U.S. application, therefore, while likely, is not guaranteed at this stage. Therefore,
at the time of this report, the Company has no assurance that any patent based on the US CPA will be granted at all and,
if any patent is granted, the Company cannot estimate when the patent will be granted or what claims will be allowed
and protected, if any.
Singapore
On February 18, 2005, the Singapore Patent Office accepted the PCT patent application and assigned it Patent
Application Number 200500987-3. On July 31, 2007, the Company was notified that the application had been
examined by the Intellectual Property Office of Singapore and satisfied the formal requirements of the Patent Act and
Rules of Singapore. Accordingly, the application was assigned Divisional Singapore Patent Application No.
200703677-5. The Company can now file a request for a combined Search and Examination Report by September 18,
2009.
Australia
On March 15, 2005 the PCT application was accepted for national examination by the Australian patent office on
March 15, 2005 and assigned with Patent Application Number 2002322916. On October 24, 2006, the Australian
patent office provided the Company with a Direction to Request Examination. Under Australian Patent law, such
examination must be requested within five years of the filing date or within six months of receiving a direction from
the Australian Patent Office, whichever is sooner. On October 10, 2007 the Company announced that the Australian
Patent Office had accepted the patent application with no objections. On December 4, 2007, a divisional application
was filed at the Australian Patent Office. As in the case of the amendments prepared for the Chinese Patent Office,
CIPO and the USPTO, the divisional application provides amendments to the Australian patent that expand the
original claims to include a number of therapeutic applications of the T36® formulation, including its use in cosmetics
and in a microbicidal gel to prevent the transmission of sexually transmitted infections (“STI’s”). A response from the
Australian Patent Office, concerning this application is still pending. On February 22, 2008, the Company announced
that Australian Patent Number 2002322916 has been issued by the Australia Patent Office. The patent provides
protection for the composition and production methods for ALDA’s T36® formulation until August 20, 2022. On
March 3, 2008, the Company was notified that the divisional application had been assigned Serial No. 2007237333
with an official filing date of August 20, 2002. Examination of the application was requested by the Company on June
3, 2008.
PCT application for anti-inflammatory, antiseptic therapeutic formulation
On March 20, 2008 the Company filed a comprehensive new patent application, International Application No.
PCT/CA2008/000536, “Antiseptic Compositions for the Treatment of Infections”, with CIPO under the Patent
Cooperation Treaty (PCT). The new PCT application seeks protection for the composition and preparation of T36®
formulations that also contain steroids, anesthetics or analgesics for use on topical infections and, in particular,
inflamed infections. Typically, infections with associated inflammation are treated with separate antiseptic and
anti-inflammatory preparations. The new T36® formulations combine these properties into a single treatment, making
the prescription process easier for the physician and the application easier for the patient.
In preliminary studies, under the direction of a physician, T36® formulations containing anti-inflammatory steroids
quickly resolved a number of skin infections, some of which had resisted all other treatments. Examples include
chronic eczema with secondary Staphylococcus infections and fungal infections, such as athlete’s foot, Tinea
versicolor.
On January 13, 2009, the Company was notified by its patent lawyers that an International Search Report (ISR) and
Written Opinion was issued by the International Searching Authority (ISA) on December 18, 2008. As part of the PCT
patent process, the ISA performs a search of prior art to identify any relevant art that may impact the patentability of a
PCT application. Generally, “prior art”consists of everything which has been made available to the public anywhere
in the world, for example, by means of a written disclosure (including drawings and other illustrations). The prior art is
“relevant” if it is capable of being of assistance in determining whether an invention, as claimed, is new and involves
an inventive step and was made available to the public before the international filing date. The ISA then issues a
preliminary and non-binding Written Opinion. This Written Opinion is an assessment by an Examiner on whether or
not a patent application conforms with respect to certain requirements for patentability. As disclosed above, references
cited in the Search Report and Written Opinion were submitted to the USPTO on January 5, 2009 in an Information
Disclosure Statement (“IDS”) relating to the new US CPA.
The claims made in this particular PCT application were purposefully very broad. Accordingly, the examiner for ISA
found a number of patents and other literature that, in the opinion of the examiner, represented prior art. At this time,
the Company does not need to take any action if National Examination of the PCT application is requested by January
20, 2010. As the National Examiners provide their responses to the PCT application, the Company can respond by
arguing against the opinions of the Examiners, or amending the claims.
As the time of writing, the Company has no assurance that any patents that have not yet been granted will be granted at
all and, if any patents are granted, the Company cannot estimate when the patents will be granted or what claims will
be allowed and protected, if any.
Rage Against The Machine
On November 13, 2003, ALDA Pharmaceuticals Corp., formerly Duft Biotech Capital Ltd., completed the acquisition
of the assets of 513947 BC Ltd., formerly ALDA Pharmaceuticals Inc., (“the Qualifying Transaction”) and a $1.2 Million
financing arranged by Canaccord Capital Corporation (“the Financing”).ALDA trades on the TSX Venture Exchange
in Vancouver, Canada under the symbol “APH” and on the OTC BB under the symbol “APCSF”.
ALDA has developed a patented infection control formulation, referred to as T36®, a mixture of ethanol,
o-phenylphenol, benzalkonium chloride and other ingredients (including lemon fragrance and water). All of these
component chemicals are bio-degradable.
Manufacturing and sales agreements
Canada
On October 4, 2005 the Company signed a manufacturing agreement with Norwood Packaging Ltd. (“Norwood”)of
Surrey British Columbia, Canada to manufacture its T36® Disinfectant antibacterial product. On June 18, 2008, both
the Company and Norwood agreed to waive the 90-day notice period required in the agreement and to terminate the
agreement. For future orders, ALDA will provide Norwood with purchase orders and pay Norwood according to the
standard payment terms that Norwood provides to its other customers. The Company has also started to use other
manufacturers and, on February 23, 2009, the Company entered into a non-binding Letter of Intent to purchase all of
the business and undertakings of a pharmaceutical manufacturing firm.
An agreement between Group 270 Sales and Marketing Inc. (“Group 270”) and ALDA was established on November
17, 2006 in which Group 270 will assist ALDA in selling ALDA’s products in the retail market. To accomplish this,
Group 270 will undertake market research and a competitive analysis to estimate total annual volume in the area of
personal disinfectants, estimate annual sales volumes, establish the pricing structure for retail and establish a roll out
strategy to national retail chains, such as Shoppers DrugMart, Loblaws,Wal-Mart and Zellers, sourcing and engaging
a third party logistics company for order fulfillment, establish EDI and order processing development.
On August 22, 2008 Group 270 and the Company mutually agreed that Group 270 will be compensated at the rate of
$100 per hour rather than receiving a monthly retainer. In the event that both ALDA and Group 270 mutually agree
that there is sufficient reason to continue the payment, it will remain in effect on a month to month basis until the
payment of a commission rate of 8% of net sales exceeds the $1,500 per month. At that time the monthly payment will
cease and Group 270 will receive only the commission.
The agreement may be terminated if either party provides the other party with 60 days written notice, by either party if
there has been a breach of any provision of the agreement and thirty (30) days has elapsed from the date that written
notice has been sent to the party in breach by the other party or at the option of either party, if the other party becomes
insolvent; violates the laws, regulations, rules, or statutes of any government; ceases doing business; makes an
assignment for the benefit of creditors; or commits an act of bankruptcy. A failure by either party to exercise any right
hereunder shall not operate as a waiver of such right and all remedies contained within the agreement shall be
cumulative.
China
On October 6, 2004, ALDA entered into an agreement with Fuzhou Xinmei Biotech Co. Ltd. (“Fuzhou”) to
manufacture and distribute ALDA’s products Fujian province in China. On August 31, 2006, an agent actingon behalf
of Fuzhou (“the Agent”), received a Certificate of Approval from the Fujian Centre of Disease Control for T36®
Disinfectant after the product passed all of the required tests. The registration of T36® Disinfectant in China was
expanded beyond disinfection of inanimate objects, such as hospital equipment and instruments, to also allow external
use on humans, including use as a first-aid antiseptic and hand sanitizer. The Certificate of Approval allowed the
Agent to apply to the Chinese National Centre for Health Inspection and Supervision for approval to manufacture T36®
Disinfectant for sale in China and for export. On April 19, 2007, a manufacturing certificate (Certificate of Approval
(Health ID. No. 0109) was granted to the Agent in China for a period of four years from April 19, 2007 to April 18,
2011 and is renewable by filing an application for renewal 6 months before the expiry date.
In May 25, 2007, ALDA’s agent in China established a new company, He-Yi She Ye Limited (“He-Yi”)and the
agreement with Fuzhou was transferred to He-Yi and expanded to cover marketing in all of China. The agreement with
He-Yi provides that ALDA will provide He-Yi with all information that ALDA has at its disposal to assist with the
registration of ALDA’s products in China. In the agreement, it is stated that He-Yi would be responsible for procuring
all necessary government approvals for ALDA’s products within 6 months from the time all technical data to support
the application is provided by ALDA Pharmaceuticals Corp. Quarterly reports on the progress of the approvals were to
be provided to ALDA by He-Yi. Extensions could be requested by He-Yi to procure all necessary government
approvals and would not be unreasonably refused by ALDA for recurring periods of 3 months if He-Yi was employing
its best efforts in obtaining the registration of the ALDA products in China and was providing quarterly reports as
required or if more time was required by ALDA Pharmaceuticals Corp. to obtain information required by He-Yi. As
noted above, He-Yi has now fulfilled its obligations to register T36® Disinfectant for sale in China.
Under the terms of the agreement, ALDA Pharmaceuticals Corp. was to provide He-Yi with the specifications
required for He-Yi to provide a manufacturing facility suitable for the manufacturing of ALDA’s products.He-Yi was
to provide a fully equipped manufacturing facility according to the specifications provided by ALDA and to produce
the ALDA products subject to He-Yi employing its best efforts to obtain the space, materials and equipment specified
by ALDA. He-Yi has the right to distribute ALDA’s products in China subject to ALDA’s approval of each
distributorship. As announced in a news release distributed by the Company on May 29, 2008, He-Yi has fulfilled its
obligation to establish a manufacturing facility.
The Agreement is effective until April 18, 2011 (“the Initial Term”).Upon expiration of the Initial Term, the
Agreement may be renewed for additional periods, (“the Renewals”) provided that ALDA and He-Yi have each met
all of their obligations under the Agreement and provided that He-Yi is able to obtain renewals of the Certificate of
Approval (Health ID. No. 0109) that has been granted by the Ministry of Health of the People’s Republic of China and
expires on April 18, 2011. Any renewals will reflect current market conditions in the territory served by He-Yi at the
time the Renewals are granted and the time periods of any Renewals will be the same as the corresponding time
periods of the renewals of the Certificate.
For the first 3 years after production is started by He-Yi and within 6 months after production is started by He-Yi,
ALDA and He-Yi are to establish minimum sales levels and, thereafter, after each new distributorship is established.
He-Yi will pay ALDA a royalty, based on the gross revenues received by He-Yi for all of ALDA’s products sold in
China as follows:
5% during the first and second year after production is started by He-Yi,
8% during the third year,
6% after a doubling of sales over the sales achieved in the second year has occurred.
He-Yi will pay ALDA a 10% royalty based on the gross revenues received by He-Yi for all of ALDA’s products
sold by He-Yi outside of China.
All royalties will be paid monthly within 30 days after each month end.
ALDA, at ALDA’s discretion, will have the right to buy product from He-Yi. At the request of ALDA and with the
authorization of ALDA, He-Yi agrees to direct ship ALDA’s products for ALDA, at ALDA’s expense, to anywhere in
the world.
As of the date of this report, the agreement is in good standing. On April 8, 2008, the Company announced that He-Yi
had secured four contracts for the distribution of T36® Disinfectant in China. Evergreen Health Care committed to
minimum sales of 1 million RMB in Hong Kong and Macau for a period of one year, Jin Wei Kai Medical
Technology Limited and Jin Qin Scientific Development Ltd. to 4.8 Million RMB each over three years in northern
China (Beijing) and central China (Wu Hang), respectively, and Wondfo Biotech Co. Ltd. to 3 million RMB in
southern China (Guang Zhou) over three years. The total sales potential of all four contracts is 13.6 Million RMB or
nearly CDN $2 million at the current exchange rate. The Company will realize a royalty as described above on any
sales achieved by He-Yi. On May 29, 2008, the Company announced that the manufacturing facility set up in China
by He-Yi was operational and that the first production runs had started. In addition, a pilot batch of the T36®
formulation that was manufactured by He-Yi passed the quality control and efficacy tests. As of the date of this report,
the agreement is in good standing.
United States
On December 13, 2007, the Company announced that the services of Brand Institute, Inc. had been engaged to assist
with marketing efforts in the US and internationally, particularly with the development of the retail and therapeutic
applications of the T36® technology. The Company saw a need to align its marketing efforts with its anticipated
European and FDA product registrations and the proposed listing of its shares in the US. Due to its US and
international presence, Brand Institute, Inc. was selected to work with the Company in its targeted markets. Brand
Institute, Inc. offers pharmaceutical naming, packaging and labeling, trade marking and market research services, as
well as global regulatory insight provided by former key officials from the FDA and Health Canada. With offices in
the US, Europe and Asia, Brand Institute Inc. will provide strategic and regulatory assistance to the Company as it
establishes its presence in markets outside of Canada. Brand Institute is also assisting the Company with the re-design
of its website and with other aspects of its retail marketing program, such as label design and graphics.
No other active sales or manufacturing agreements are in place.
Patents
The Company is attempting to patent or secure proprietary protection for the specific combination and manufacturing
of the T36® formulation although the ingredients are all common chemical compounds.
The Patent Cooperation Treaty (PCT) is an international patent law treaty established in 1970. It provides a unified
procedure for filing patent applications to protect inventions in each of its Contracting States, which includes each
jurisdiction specified below. A patent application filed under the PCT is called an “international application” or “PCT
application”. A single filing of an international application is made with a Receiving Office (RO) in one language. It
then results in a search being performed by an International Searching Authority (ISA), accompanied with a written
opinion regarding the patentability of the invention which is the subject of the application. Optionally, this is followed
by a preliminary examination, performed by an International Preliminary Examining Authority (IPEA). The PCT does
not lead to the grant of an "international patent", which does not exist, but rather, national patent examinations that are
handled by each relevant national or regional authority. For example, in Canada, the US, China, Australia and
Singapore, there are national patent offices whereas, in Europe, the European Patent Office handles the national phase
for its member states.
API filed patent application #PCT/CA2002/001284, “A wide spectrum disinfectant”, on August 20, 2002. All rights to
the patent application were transferred from API to the Company on completion of the Qualifying Transaction on
November 13, 2003. A summary of subsequent events is presented below.
Canada
assigned it Patent Application Number 2,495,938. On August 17, 2007, the Company filed a Request for Examination
with CIPO. On September 24, 2007 the Company filed a Voluntary Amendment to the patent application filed with
CIPO. The proposed amendments expanded the claims to include a number of therapeutic applications of the T36®
formulation, including its use in cosmetics and in a microbicidal gel to prevent the transmission of sexually
transmitted infections (“STI’s”). On October 4, 2007, the Company was notified that CIPO had acknowledged a
request by the Company to examine the patent application. Since the process of examination can take two years, for a
fee of $500, the Company requested an Expedited Examination on November 7, 2007 to reduce the response time to
approximately three months. On April 8, 2008, CIPO provided an Office Action in which a number of questions were
posed to the Company. Many of the same questions had already been posed by the Examiner for the EPO and the
Company was advised that a response was required by October 8, 2009. On the advice of the Company’s patent
lawyers, the Company decided to temporarily abandon the Canadian patent application and the abandonment was
deemed effective by CIPO on October 8, 2008. However, the patent application can be reinstated by October 8, 2009
by paying a fee of CAN$200.00 and submitting a response to the Office Action to CIPO. This decision was made to
defer the costs of the Canadian patent application for a period of one year at little cost.
European Union
On March 30, 2005 the PCT application was accepted for national examination by the European Patent Office (“EPO”)
which assigned it Patent Application Number 02754054.1-2113. The countries covered by the European patent
application are Austria, Belgium, Bulgaria, Switzerland, Cyprus, the Czech Republic, Germany, Denmark, Estonia,
Spain, Finland, France, Great Britain (the UK), Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco,
Netherlands, Portugal, Sweden, the Slovak Republic and Turkey. On May 18, 2005, the bibliographic data of the
above-noted application was published in the European Patent Bulletin, under Publication No. 1530485. The resulting
effect of such publication is that any possible infringer is deemed to have knowledge of the patent application without
the Company having to formally inform them of this application’s existence. On October 18, 2006 the EPO provided
the Company with an Office Action requesting further information on the patent application. The Company responded
to the questions and received a second Office Action, dated September 5, 2007 from the EPO. This second Office
Action requested that the Company provide certain additional information and to conduct certain experiments to
support the claims that were made in the application. The Company completed both the literature research and the
laboratory studies and, on December 19, 2008, submitted the response to the second Office Action to the EPO. A
response from the EPO is still pending.
China
On June 25, 2005 the Company was notified that the PCT application was accepted for national examination by the
Patent Office of the People’s Republic of China (“Chinese Patent Office”) and assigned Patent Application Number
02829642.7. On August 11, 2005, the Chinese Patent Office accepted a Request for Substantive Examination from the
Company. The application was published in the Chinese Patent Gazette on October 19, 2005, under Publication No.
CN1684711A and entered into Substantive Examination. On February 5, 2006, the Company filed a Voluntary
Amendment to the original patent application to correct certain minor errors in the original application. On June 2,
2006, the Chinese Patent Office provided an Office Action which requested certain additional amendments to the
patent application. On December 18, 2006, the Company filed its response to the Office Action. The Company was
notified by the Chinese Patent Office that the Chinese patent had been allowed, effective June 8, 2007. Amendments to
the original patent application were then drafted by the Company. As in the case of the amendments prepared for CIPO,
the proposed amendments to the Chinese patent expand the original claims to include a number of therapeutic
applications of the T36® formulation, including its use in cosmetics and in a microbicidal gel to prevent the
transmission of sexually transmitted infections (“STI’s”).On October 10, 2007, the Company was advised that the
amended claims had been submitted to the Chinese Patent Office. On January 30, 2008 the Chinese Patent office
assigned Chinese Divisional Patent Application No. 200710142798.3 to the new application which was
published in the Chinese Patent Gazette, under Publication No. CN101112624A. At the time of this report, no
further developments have occurred with this Chinese patent application. On February 6, 2008, the Company
announced that Certificate of Invention Patent Number ZL02829642.7 had been issued by the State Intellectual
Property Office of the People’s Republic of China. The patent provides protection for the composition and production
methods for ALDA’s T36® formulation until August 20, 2022.
United States
US Patent #7,338,927
On February 18, 2005, the US Patent and Trademark Office (“USPTO”) received the PCT patent application and
assigned it Patent Application Number 10/525,110. The patent application was published by the USPTO on December
22, 2005, under Publication Number US 2005/0282727. On July 27, 2006, the Company received that first Office
Action from the USPTO which required clarification or modification of certain claims made in the patent application.
The Company was required to respond to the Office Action by October 27, 2006 and did so on October 26, 2006 with
amendments to the claims that required clarification or modification. On February 7, 2007 the USPTO provided the
Company with a Notice of Allowance for the US patent with all claims made by the Company accepted by the USPTO.
A Notice of Allowance is not a grant of a patent and is subject to withdrawal by the USPTO or on petition by the
Company. The Company then filed certain minor, voluntary amendments to the patent application and a second
Notice of Allowance, dated June 8, 2007 was provided by the USPTO. On February 15, 2008, the Company was
advised that a Notice of Allowance had been received from the USPTO projecting that the US patent would be issued
on March 4, 2008. As scheduled, U.S. Patent Number 7,338,927 was issued on that date and provides protection for
the composition and production methods for ALDA's T36® formulation until August 20, 2022. The patent can be
viewed on the website of the USPTO.
U.S. patent application (Serial No. 11/966,128)
Amendments to the original patent application were drafted by the Company and submitted to the USPTO as a U.S.
Continuation Patent Application in December, 2007. As in the case of the amendments prepared for the Chinese Patent
Office and CIPO, the proposed amendments to the US patent expand the original claims to include a number of
therapeutic applications of the T36® formulation, including its use in cosmetics and in a microbicidal gel to prevent the
transmission of sexually transmitted infections (“STI’s”). On January 23, 2008 the USPTO issued a Filing Receipt for
the U.S. Continuation Patent Application (“the US CPA”) and assigned Serial No. 11/966,128 to the application. On
May 2, 2008, the USPTO issued an Office Action in relation to the US CPA. The matters raised in the Office Action
were addressed by the company and a Response was submitted to the USPTO in November, 2008. On January 5, 2009,
references cited in connection with a related patent application were submitted to the USPTO in an Information
Disclosure Statement (“IDS”) relating to the new U.S. application.The purpose of an IDS is to bring to the attention of
the Examiner any information that may pertain to the patentability of the claims of a patent application in order to
comply with the Duty of Disclosure imposed on patent Applicants under U.S. patent law. The onus is on the patent
Applicant to provide such information to the USPTO and the consequences can be serious if such information is not
provided to the USPTO. On January 16, 2009, the USPTO provided the Company with a Notice of Allowance for the
new U.S. patent application. However, it was determined that the U.S. Examiner had not considered the IDS filed
January 5, 2009, prior to issuing the Notice of Allowance. This was brought to the Examiner’s attention, who then
reviewed the IDS and provided a Supplemental Notice of Allowability on March 25, 2009. The Issue Fee and
Publication Fee were subsequently paid by the Company. As of the date of this report, the Company is awaiting further
correspondence from the USPTO in this regard. The Company still has a number of pending patent applications that
relate to the new U.S. application and should any new references or art be raised by a patent Examiner for any of these
applications prior to issuance of the application to patent, the Company will have to submit such art to the USPTO in
order to comply with the Duty of Disclosure, which in turn could result in the allowance of the application being
withdrawn. The issuance of the new U.S. application, therefore, while likely, is not guaranteed at this stage. Therefore,
at the time of this report, the Company has no assurance that any patent based on the US CPA will be granted at all and,
if any patent is granted, the Company cannot estimate when the patent will be granted or what claims will be allowed
and protected, if any.
Singapore
On February 18, 2005, the Singapore Patent Office accepted the PCT patent application and assigned it Patent
Application Number 200500987-3. On July 31, 2007, the Company was notified that the application had been
examined by the Intellectual Property Office of Singapore and satisfied the formal requirements of the Patent Act and
Rules of Singapore. Accordingly, the application was assigned Divisional Singapore Patent Application No.
200703677-5. The Company can now file a request for a combined Search and Examination Report by September 18,
2009.
Australia
On March 15, 2005 the PCT application was accepted for national examination by the Australian patent office on
March 15, 2005 and assigned with Patent Application Number 2002322916. On October 24, 2006, the Australian
patent office provided the Company with a Direction to Request Examination. Under Australian Patent law, such
examination must be requested within five years of the filing date or within six months of receiving a direction from
the Australian Patent Office, whichever is sooner. On October 10, 2007 the Company announced that the Australian
Patent Office had accepted the patent application with no objections. On December 4, 2007, a divisional application
was filed at the Australian Patent Office. As in the case of the amendments prepared for the Chinese Patent Office,
CIPO and the USPTO, the divisional application provides amendments to the Australian patent that expand the
original claims to include a number of therapeutic applications of the T36® formulation, including its use in cosmetics
and in a microbicidal gel to prevent the transmission of sexually transmitted infections (“STI’s”). A response from the
Australian Patent Office, concerning this application is still pending. On February 22, 2008, the Company announced
that Australian Patent Number 2002322916 has been issued by the Australia Patent Office. The patent provides
protection for the composition and production methods for ALDA’s T36® formulation until August 20, 2022. On
March 3, 2008, the Company was notified that the divisional application had been assigned Serial No. 2007237333
with an official filing date of August 20, 2002. Examination of the application was requested by the Company on June
3, 2008.
PCT application for anti-inflammatory, antiseptic therapeutic formulation
On March 20, 2008 the Company filed a comprehensive new patent application, International Application No.
PCT/CA2008/000536, “Antiseptic Compositions for the Treatment of Infections”, with CIPO under the Patent
Cooperation Treaty (PCT). The new PCT application seeks protection for the composition and preparation of T36®
formulations that also contain steroids, anesthetics or analgesics for use on topical infections and, in particular,
inflamed infections. Typically, infections with associated inflammation are treated with separate antiseptic and
anti-inflammatory preparations. The new T36® formulations combine these properties into a single treatment, making
the prescription process easier for the physician and the application easier for the patient.
In preliminary studies, under the direction of a physician, T36® formulations containing anti-inflammatory steroids
quickly resolved a number of skin infections, some of which had resisted all other treatments. Examples include
chronic eczema with secondary Staphylococcus infections and fungal infections, such as athlete’s foot, Tinea
versicolor.
On January 13, 2009, the Company was notified by its patent lawyers that an International Search Report (ISR) and
Written Opinion was issued by the International Searching Authority (ISA) on December 18, 2008. As part of the PCT
patent process, the ISA performs a search of prior art to identify any relevant art that may impact the patentability of a
PCT application. Generally, “prior art”consists of everything which has been made available to the public anywhere
in the world, for example, by means of a written disclosure (including drawings and other illustrations). The prior art is
“relevant” if it is capable of being of assistance in determining whether an invention, as claimed, is new and involves
an inventive step and was made available to the public before the international filing date. The ISA then issues a
preliminary and non-binding Written Opinion. This Written Opinion is an assessment by an Examiner on whether or
not a patent application conforms with respect to certain requirements for patentability. As disclosed above, references
cited in the Search Report and Written Opinion were submitted to the USPTO on January 5, 2009 in an Information
Disclosure Statement (“IDS”) relating to the new US CPA.
The claims made in this particular PCT application were purposefully very broad. Accordingly, the examiner for ISA
found a number of patents and other literature that, in the opinion of the examiner, represented prior art. At this time,
the Company does not need to take any action if National Examination of the PCT application is requested by January
20, 2010. As the National Examiners provide their responses to the PCT application, the Company can respond by
arguing against the opinions of the Examiners, or amending the claims.
As the time of writing, the Company has no assurance that any patents that have not yet been granted will be granted at
all and, if any patents are granted, the Company cannot estimate when the patents will be granted or what claims will
be allowed and protected, if any.
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