Item 1.01 Entry into a Material Definitive Agreement.
On
March 31, 2022, Oncotelic Therapeutics, Inc. (the “Company”) entered into (i) a joint venture (the “JV”)
agreement with Dragon Overseas Capital Limited (“Dragon”) and GMP Biotechnology Limited (“GMP Bio”,
and the Company, Dragon and GMP Bio are collectively called the “Parties”) (the “JVA”),
(ii) a license agreement for rights to OT-101 (the “US License Agreement”) for the territory within the United
States of America (the “US”) with Sapu Holdings, LLC, a subsidiary of GMP Bio and (iii) a license agreement
for rights to OT-101 for the rest of the world with GMP Bio (the “Ex-US Rights Agreement”, and the US
License Agreement and the Ex-US License Agreement are collectively called the “Agreements”).
Dragon and the Company have
entered into the JVA to regulate their relationship and the operation and management of the JV. The JVA contains provisions
for the licensed products and licensed technologies related to OT-101 (the “Licensed products and technologies”).
Pursuant to the JVA the Company is required to transfer to GMP Bio all of the Company’s rights and obligations under the research
and development agreement dated 3 February 2020 between the Company and Golden Mountain Partners, LLC (“GMP”), an
affiliate of Dragon, as amended, varied and/or supplemented by a supplement to research and Services Agreement dated 23 March 2020 between
the Company, Mateon Therapeutics, Inc. (subsequently renamed the Company) and GMP (the “R&D Agreement”). The
JVA permits GMP to seek conversion of certain convertible promissory notes entered into between the Company and GMP (see
reference to Purchase Agreements and Notes below) into shares of common stock of the Company, par value $0.01 (the “Common
Stock”) within 15 business days of the execution of the JVA at a price of $0.2242 per Common Share, the closing price of the
Common Share as traded on the OTCQB the day prior to the execution of the JVA. Upon the execution of the JVA, Dragon will pay for and
hold 55 shares of GMP Bio and the Company will pay for and hold 45 shares of GMP Bio, both to be acquired at $1.00 per
share of GMP Bio. The JVA required the entering into of the Agreements on or before the execution of the JVA. The JVA defines
the valuation of the Agreements (taking into account the transfer of the Company’s rights and obligations under the R&D
Agreement) each at $11,320,237.25, for an aggregate of $22,640,474.50. The Parties also agreed that if a Rare Pediatric Disease (“RPD”)
Priority Review Voucher, upon clinical approval of OT-101 Technologies for treatment of diffuse intrinsic pontine glioma (the “DIPG
Voucher”), is issued to GMP Bio and GMP Bio, or a subsidiary thereof, sells the DIPG Voucher to a non-GMP subsidiary, then
the Company shall be eligible to receive up to 50% of the net sales proceeds or $50 million, whichever is less. Dragon shall fund
the JVA, for a total of $27,671,691, based on the conditions contained in the JVA, and the Company will input the licenses under
the Agreements into the JV. The Company is obligated to (i) (A) rectify the chain of legal title such that the Company
is the sole legal owner of such rights, (B) complete registration as the sole owner of all the Company’s Patent Rights and (C)
provide evidence of such registration that is satisfactory to Dragon; (ii) provide Dragon with copies of official documents issued by
the relevant patent offices in the relevant countries evidencing the Company’s legal ownership of all the Company’s Patents
Rights; and (iii) reflect the Company’s legal ownership of all the Company’s Patent Rights in the relevant online
registers of the relevant patent offices in the relevant countries. The JVA intends to raise funding for the JVA through a Series A round
of financing of not less than $20 million. Dragon can suspend funding the JVA if the Series A round of financing is not successfully
completed by August 31, 2022, in which case Dragon’s funding obligation would be restricted to $250,000 per month to GMP
Bio. If Dragon decides to terminate the JVA, the licenses granted under the Agreements shall be terminated and the OT-101 assets
licensed by the Company will revert back to the Company. The rest of the JVA deals with the conduct of the JV, the board
of directors of GMP Bio and other administrative matters. Dragon shall nominate up to three directors of their choosing to
the board of directors of GMP Bio, two of whom are already nominated as “A” Directors and the Company shall nominate
up to two directors of their choosing to the board of directors of GMP Bio, one of whom is already nominated as a
“B” Director. The JVA defines how the board of directors will operate as well as the general management and operations of
the JV. Other standard terms on shareholder rights, indemnification etc. are also defined in the JVA. Also included are the other terms
with relation to insurance, indemnification, jurisdiction and other customary terms and conditions.
The Agreements include terms
of an exclusive, irrevocable, perpetual, royalty-free, sublicensable license under the Licensed Technology to manufacture, have manufactured,
use, import, sell, offer for sale or otherwise exploit the Licensed Products, which is OT-101, in the Field, which is all therapeutic
uses in humans, and in the Territories, which is the US and the rest of the world. In addition, the Company grants a non-exclusive, irrevocable,
perpetual, royalty-free, non-sublicensable license for its sole use of the Company’s Vision Grid system for monitoring process,
man flow, equipment flow, and material flow in contract development and manufacturing organization operations. These have been
granted to GMP Bio and Sapu Holdings, LLC as the capital contribution by the Company to GMP Bio. The Agreements include
the contributions by the key employees, as defined and included in the Agreements, standard representations and warranties, intellectual
property protection, insurance, indemnification, jurisdiction and other customary terms and conditions.
The
foregoing descriptions of the Purchase Agreements and the Notes are qualified in their entirety by reference to the full text of the
of such agreements, copies of which were attached as Exhibit 10.1, 10.2 and 10.3, respectively, with our Current Report on form 8-K filed
with the SEC on December 1, 2021 and each of which is incorporated herein in its entirety by reference.