to Seelos' licensing partners. Licensing of intellectual property is of critical importance to
Seelos' business and involves complex legal, business and scientific issues. Disputes may arise regarding intellectual property subject to a licensing agreement, including, but not limited
- the scope of rights granted under the license agreement and other interpretation-related issues;
- the extent to which Seelos' technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;
- the sublicensing of patent and other rights;
- Seelos' diligence obligations under the license agreement and what activities satisfy those diligence obligations;
- the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Seelos' licensors and Seelos and Seelos' collaborators;
- the priority of invention of patented technology.
If disputes over intellectual property and other rights that Seelos has in-licensed prevents or impairs Seelos' ability to maintain Seelos' current licensing arrangements on
acceptable terms, Seelos may be unable to successfully develop and commercialize the affected product candidates. If Seelos fails to comply with any such obligations to Seelos' licensor, such
licensor may terminate their licenses to Seelos, in which case Seelos would not be able to market products covered by these licenses. The loss of Seelos' licenses would have a material
adverse effect on Seelos' business.
Seelos may be required to pay milestones and royalties pursuant to the License Agreement, which could adversely affect the overall profitability for Seelos
of any products that Seelos may seek to commercialize.
Under the terms of the License Agreement, Seelos may be obligated to pay the licensors under the License Agreement up to an aggregate of approximately
$135 million in development, regulatory and sales milestones. Seelos will also be required to pay royalties on future worldwide net product sales. In addition, Seelos will be required to pay
royalties to Vyera on net sales of SLS-002 pursuant to the Vyera Asset Purchase Agreement. These royalty payments could adversely affect the overall profitability for Seelos of any products
that it may seek to commercialize.
Seelos may not be able to protect its proprietary or licensed technology in the marketplace.
Seelos depends on Seelos' ability to protect its proprietary or licensed technology. Seelos relies on trade secret, patent, copyright and trademark laws, and
confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection. Seelos' success depends in large part on Seelos' ability and any
licensor's or licensee's ability to obtain and maintain patent protection in the U.S. and other countries with respect to Seelos' proprietary or licensed technology and products. Seelos currently
in-license some of Seelos' intellectual property rights to develop Seelos' product candidates and may in-license additional intellectual property rights in the future. Seelos cannot be certain that
patent enforcement activities by its current or future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or
other intellectual property rights. Seelos also cannot be certain that its current or future licensors will allocate sufficient resources or prioritize their or Seelos' enforcement of such patents. Even
if Seelos is not a party to these legal actions, an adverse outcome could prevent Seelos from continuing to license intellectual property that Seelos may need to operate its business, which
would have a material adverse effect on its business, financial condition and results of operations.
Seelos believes it will be able to obtain, through prosecution of patent applications covering Seelos' owned technology and technology licensed from others, adequate
patent protection for Seelos' proprietary drug technology, including those related to Seelos' in-licensed intellectual property. If Seelos is compelled to spend significant time and money
protecting or enforcing its licensed patents and future patents Seelos may own, designing around patents held by others or licensing or acquiring, potentially for large fees, patents or other
proprietary rights held by others, Seelos' business, financial condition and results of operations may be materially and adversely affected. If Seelos is unable to effectively protect the intellectual
property that Seelos owns or in-licenses, other companies may be able to offer the same or similar products for sale, which could materially adversely affect Seelos' business, financial
condition and results of operations. The patents of others from whom Seelos may license technology, and any future patents Seelos may own, may be challenged, narrowed, invalidated or
circumvented, which could limit Seelos' ability to stop competitors from marketing the same or similar products or limit the length of term of patent protection that Seelos may have for its
Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements
imposed by governmental patent agencies, and Seelos' patent protection for licensed patents, pending patent applications and potential future patent applications and
patents could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid to the
U.S. Patent and Trademark Office ("USPTO") and various governmental patent agencies outside of the U.S. in several stages over the lifetime of the applicable patent and/or patent
application. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar