Eterna Therapeutics Inc. (NASDAQ:ERNA), a pharmaceutical company, has entered into a new Exclusive License and Collaboration Agreement with Factor Bioscience Limited, as reported in a recent SEC filing. The agreement, effective September 9, 2024, provides Eterna with exclusive rights to develop certain technologies for cancer, autoimmune disorders, and rare diseases.
The collaboration, confirmed on Monday, September 24, 2024, also includes provisions for Factor to supply services and materials to aid Eterna in advancing the licensed technology and increasing production capabilities through third-party facilities.
This new agreement supersedes two prior arrangements: the Exclusive Amended and Restated License Agreement with Factor dated November 14, 2023, and another exclusive license obtained through Eterna's acquisition of assets from Exacis Biotherapeutics Inc. on April 26, 2023.
Eterna's financial commitments under the new agreement include a monthly payment of $208,333 for the first year, additional payments towards patent costs, milestone payments, royalties on net sales of products developed from the licensed technology, and sublicensing fees.
The initial term of the collaboration is set for one year following the effective date, with automatic annual renewals. Eterna retains the right to terminate the agreement with a 90-day notice, and standard termination rights apply for both parties in the event of material breaches or bankruptcy-related occurrences.
In other recent news, Eterna Therapeutics Inc. is at risk of being delisted from the Nasdaq Stock Market due to an equity shortfall, despite submitting a compliance plan earlier this year. The pharmaceutical company failed to meet the minimum stockholders' equity requirement of $2.5 million by the given deadline.
Eterna Therapeutics plans to appeal this decision, which will temporarily delay the suspension of trading and the filing of the Form 25-NSE. However, the outcome of this hearing is uncertain, and the company's future listing on the Nasdaq Capital Market remains in question.
In addition to the delisting issue, Eterna Therapeutics has announced a significant change in its annual meeting of stockholders, now scheduled for September 27, 2024. This date represents a major shift from the previous year's timeline. Stockholders intending to participate in the annual meeting or nominate board of director candidates must submit their notice by August 29, 2024.
InvestingPro Insights
The recent collaboration agreement between Eterna Therapeutics Inc. (NASDAQ:ERNA) and Factor Bioscience Limited comes at a critical time for the company, as reflected in the latest financial data and analyst projections from InvestingPro.
Eterna's revenue for the last twelve months as of Q2 2024 stands at a modest $0.16 million, with a concerning gross profit margin of -111.11%. This aligns with an InvestingPro Tip indicating that the company "suffers from weak gross profit margins." Additionally, the operating income margin of -13,572.84% suggests significant challenges in achieving profitability.
Another InvestingPro Tip warns that Eterna is "quickly burning through cash," which could explain the company's strategic move to secure this new collaboration. The agreement's financial terms, including the monthly payments and potential milestone payments, may provide Eterna with much-needed resources to advance its research and development efforts.
Investors should note that analysts anticipate a sales decline in the current year, according to another InvestingPro Tip. This forecast, coupled with the company's current financial position, underscores the importance of the new agreement in potentially reversing this trend and improving Eterna's market position.
For those seeking a more comprehensive analysis, InvestingPro offers 12 additional tips that could provide valuable insights into Eterna Therapeutics' financial health and future prospects.
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