Manhattan Pharmaceuticals, Inc. (OTCBB:MHAN) announced that on January 4, 2011, the company entered into a settlement and release agreement with Nordic Biotech Fund II K/S and H Pharmaceuticals K/S. Manhattan Pharmaceuticals and Nordic are partners in the H Pharmaceuticals joint venture for the development and commercialization of Hedrin®, a non-pesticide treatment for head lice. The joint venture currently owns the rights to Hedrin in North America and is developing it as a medical device in the United States. The settlement and release agreement resolves all previously announced disagreements and disputes between Manhattan Pharmaceuticals and Nordic relating to the joint venture.
The principal terms of the settlement and release agreement are:
- Nordic's put right representing a disputed number of shares of Manhattan Pharmaceuticals common stock has been terminated.
- Nordic's warrant to purchase a disputed number of shares of Manhattan Pharmaceuticals common stock has been terminated.
- Nordic has made an additional, non-dilutive capital contribution of $1.5M to the joint venture to ensure continued development of Hedrin.
- The joint venture will pay to Manhattan Pharmaceuticals $575,000, $175,000 currently and the remainder subject to certain terms and conditions.
- Manhattan will retain an equity interest in the joint venture, which is currently 15%, but is subject to adjustment related to future capital contributions.
- Manhattan Pharmaceuticals will no longer have operational responsibilities in the joint venture or a seat on its governing board.
A more detailed overview of the settlement and release agreement is included in the company's Form 8-K as filed with the Securities and Exchange Commission on January 10, 2011.
"We are pleased to have resolved our disagreements with Nordic," said Michael G. McGuinness, Chief Operating and Financial Officer for Manhattan Pharmaceuticals, Inc. "The transaction benefits Manhattan through the cash payments, reduction of the overhang of the disputed warrant and put right amounts, and allows us to retain a meaningful equity interest the Hedrin asset."
SOURCE Manhattan Pharmaceuticals, Inc.