Annual report pursuant to Section 13 and 15(d)

COMMITMENTS

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COMMITMENTS
12 Months Ended
Nov. 30, 2018
COMMITMENTS [Text Block]

NOTE 10 - COMMITMENTS

a. Maryland Technology Development Corporation

     On June 30, 2014, the Company’s U.S. Subsidiary entered into a grant agreement with Maryland Technology Development Corporation (“TEDCO”). TEDCO was created by the Maryland State Legislature in 1998 to facilitate the transfer and commercialization of technology from Maryland’s research universities and federal labs into the marketplace and to assist in the creation and growth of technology-based businesses in all regions of the State. Under the agreement, TEDCO paid to the U.S Subsidiary an amount of $406 thousand (the “Grant”). On June 21, 2016 TEDCO has approved an extension until June 30, 2017. Through November 30, 2018, the Company utilized $356 thousand from the grant and recorded it as a deduction of research and development expenses in the statement of comprehensive loss.

b.  Department De La Gestion Financiere Direction De L’analyse Financiere (“DGO6”)

(1) On March 20, 2012, MaSTherCell was awarded an investment grant from the DGO6 of Euro 1.2 million. This grant is related to the investment in the production facility with a coverage of 32% of the investment planned. As of November 30, 2018, the DGO6 transferred the entire amount to MaSTherCell.

(2) On November 17, 2014, the Belgian Subsidiary, received the formal approval from the DGO6 for a Euro 2 million ($2.4 million) support program for the research and development of a potential cure for Type 1 Diabetes. The financial support was composed of Euro 1,085 thousand ( 70% of budgeted costs) grant for the industrial research part of the research program and a further recoverable advance of Euro 930 thousand ( 60% of budgeted costs) of the experimental development part of the research program. In December 2014, the Belgian Subsidiary received advance payment of Euro 1,209 thousand under the grant. The grants are subject to certain conditions with respect to the Belgian Subsidiary’s work in the Walloon Region. In addition, the DGO6 is also entitled to a royalty upon revenue being generated from any commercial application of the technology. In 2017 the Company received by the DGO6 final approval for Euro 1.8 million costs invested in the project out of which Euro 1.2 million founded by the DGO6. As of November 30, 2018, the Company repaid to the DGO6 a total amount of $34 thousand (Euro 30 thousand) and amount of $152 thousand was recorded in other payables.

(3) ln April 2016, the Company's Belgian Subsidiary received the formal approval from DGO6 for a Euro 1.3 million ($1.5 million) support program for the development of a potential cure for Type 1 Diabetes. The financial support was awarded to the Belgium Subsidiary as a recoverable advance payment at 55% of budgeted costs, or for a total of Euro 717 thousand ($800 thousand). The grant will be paid over the project period. On December 19, 2016, the Belgian Subsidiary received advance payment of Euro 359 thousand ($374 thousand). Up through November 30, 2018, an amount of Euro 303 thousand was recorded as deduction of research and development expenses and an amount of $64 thousand was recorded as advance payments on account of grant.

(4)  On October 8, 2016, the Belgian Subsidiary received the formal approval from the DGO6 for a Euro 12.3 million ($12.8 million) support program for the GMP production of AIP cells for two clinical trials that will be performed in Germany and Belgium. The project will be held during a period of three years commencing January 1, 2017. The financial support is awarded to the Belgium subsidiary at 55% of budgeted costs, a total of Euro 6.8 million ($7 million). The grant will be paid over the project period. On December 19, 2016, the Belgian Subsidiary received a first payment of Euro 1.7 million ($1.8 million). Up through November 30, 2018, an amount of $1.1 million was recorded as deduction of research and development expenses and an amount of $847 thousand was recorded as advance payments on account of grant.

c. Israel-U.S. Binational Industrial Research and Development Foundation (“BIRD”)

     On September 9, 2015, the Israeli Subsidiary entered into a pharma Cooperation and Project Funding Agreement (CPFA) with BIRD and Pall Corporation, a U.S. company. BIRD will give a conditional grant of $400 thousand each (according to terms defined in the agreement), for a joint research and development project for the use Autologous Insulin Producing (AIP) Cells for the Treatment of Diabetes (the “Project”). The Project started on March 1, 2015. Upon the conclusion of product development, the grant shall be repaid at the rate of 5% of gross sales. The grant will be used solely to finance the costs to conduct the research of the project during a period of 18 months starting on March 1, 2015. To date the Israeli Subsidiary received $200 thousand under the grant. On July 28, 2016 BIRD approved an extension till May 31, 2017 and final report was submitted to BIRD.

     Up through November 30, 2018, an amount of $359 thousand was recorded as deduction of research and development expenses and $159 thousand as a receivable on account of grant.

d. Korea-Israel Industrial Research and Development Foundation (“KORIL”)

     On March 14, 2016, the Israel subsidiary, entered into a collaboration agreement with CureCell, initially for the purpose of applying a grant from KORIL for pre-clinical and clinical activities related to the commercialization of the Israel subsidiary AIP cell therapy product in Korea. The Parties agreed to carry out at their own expenses and their respective commitments under the work plan approved by KORIL and any additional work plan to be agreed between the Israeli Subsidiary and CureCell. The Israeli Subsidiary will own sole rights to any intellectual property developed from the collaboration which is derived under the Israeli Subsidiary’s AIP cell therapy product, information licensed from THM. Subject to obtaining the requisite approval needed to commence commercialization in Korea, the Israel subsidiary has agreed to grant to CureCell, or a fully owned subsidiary thereof, under a separate sub-license agreement an exclusive sub-license to the intellectual property underlying the Company’s API product solely for commercialization of the Israel subsidiary products in Korea. As part of any such license, CureCell has agreed to pay annual license fees, ongoing royalties based on net sales generated by CureCell and its sublicensees, milestone payments and sublicense fees. Under the agreement, CureCell is entitled to share in the net profits derived by the Israeli Subsidiary from world - wide sales (except for sales in Korea) of any product developed as a result of the collaboration with CureCell. Additionally, CureCell was given the first right to obtain exclusive commercialization rights in Japan of the AIP product, subject to CureCell procuring all the regulatory approvals required for commercialization in Japan. As of November 30, 2018, none of the requisite regulatory approvals for conducting clinical trials had been obtained.

On May 26, 2016, the Israeli Subsidiary and CureCell entered into a pharma Cooperation and Project Funding Agreement (CPFA) with KORIL. KORIL will give a conditional grant of up to $400 thousand each (according to terms defined in the agreement), for a joint research and development project for the use of AIP Cells for the Treatment of Diabetes (the “Project”). The Project started on June 1, 2016. Upon the conclusion of product development, the grant shall be repaid at the yearly rate of 2.5% of gross sales. The grant will be used solely to finance the costs to conduct the research of the project during a period of 18 months starting. On July 26, 2018 KORIL approved extension for the project period till May 31, 2019. As of November 30, 2018, The Israeli Subsidiary and CureCell received total amount of $440 thousand under the grant. Up through November 30, 2018, The Isreali Subsidiary recorded an amount of $279 thousand as a deduction of research and development expenses and $119 thousand as a receivable on account of grant, and CureCell recorded $134 thousand as advance payments on account of grant.

e. BIRD Secant

     On July 30, 2018, Orgenesis Inc and Atvio Biotech, entered into a collaboration agreement with Secant Group LLC ("Secant"). Under the agreement, Secant will engineer and prototype 3D scaffolds based on novel biomaterials and technologies involving bioresorbable polymer microparticles, while Atvio will provide expertise in cell coatings, cell production, process development and support services. Under the agreement, Orgenesis is authorized to utilize the jointly developed technology for its autologous cell therapy platform, including its Autologous Insulin Producing (“AIP”) cell technology for patients with Type 1 Diabetes, acute pancreatitis and other insulin deficient diseases.  In the beginning of 2018, Atvio entered into a Cooperation and Project Funding Agreement (CPFA) with BIRD and Secant.  BIRD will give a conditional grant up to $450 thousand each to support the join project (according to terms defined in the agreement).

     As of November 30, 2018, Atvio received a total amount of $125 thousand under the grant. Up through November 30, 2018, an amount of $275 thousand was recorded as deduction of research and development expenses and $163 thousand as a receivable on account of grant.

f. Lease Agreement

The Company leases office space for its CDMO facilities and research and development facilities in Belgium, Korea, Israel and the United States of America under several lease agreements. The expiration dates of the lease agreements for the facilities in each country are as follow:

Country Expire Date
Belgium February 29, 2020 and March 31, 2030
Israel July 31, 2023
Korea July 14, 2020
United States *

*The company signed a new lease agreement during January 2019, see Note 21(f)

Future minimum lease commitments under non-cancelable operating lease agreements are as follows:

2019 $ 783  
2020   626  
2021 and thereafter   3,504  
Total $ 4,913