Business Context and Reporting Period
Company: Processa Pharmaceuticals, Inc. (PCSA)
Filing Type: Form 8-K (Current Report)
Date of Report: June 17, 2025
Principal Executive Offices: Vero Beach, FL
The Company entered into a Binding Term Sheet with Intact Therapeutics ("Intact") granting Intact an exclusive option to license PCS12852, a Phase 2B-ready 5HT4 agonist for diabetic gastroparesis.
Key Financial Metrics and Transaction Terms
This filing details a strategic agreement rather than periodic financial results. Key financial terms include:
- Immediate Payment: $20,000 non-refundable standstill payment received upon execution.
- License Agreement Consideration (Upon Closing):
- 3.5% equity interest in Intact.
- $2.5 million cash payment ($1.0 million within 30 days; $1.5 million within 12 months).
- Future Milestones: Development and regulatory milestone payments, commercial milestones based on net sales, and a 12% royalty on worldwide net sales (excluding South Korea).
- Extension Fee: $30,000 fee to extend the due diligence period by an additional 120 days.
Material Changes and Related Agreements
The execution of the Term Sheet is contingent on several conditions, including:
- Completion of additional diligence by Intact.
- Negotiation and execution of a definitive license agreement.
- Amendment of the Company's existing license agreement with Yuhan Corporation.
Yuhan Corporation Amendment: The Company plans to enter into Amendment No. 1 to its 2020 License Agreement with Yuhan Corporation. Key changes include:
- Extension of the timeframe to dose the first patient in a Phase 2B clinical trial.
- Increased sublicense payment percentages to Yuhan:
- 60% prior to Phase 2B clinical trial.
- 50% after Phase 2B clinical trial.
- 40% after Phase 3 clinical trial.
Outlook, Risks, and Contingencies
Timeline: Parties have 120 days to complete due diligence and execute the license agreement, extendable by 120 days for an additional fee.
Risks and Contingencies:
- There is no assurance that a definitive license agreement will be executed.
- There is no assurance that Yuhan Corporation will agree to the required amendment.
- The transaction is subject to the full terms and conditions of the attached Binding Term Sheet.
Investor Verification Checklist
- Verify the status of the amendment negotiations with Yuhan Corporation, as the Intact deal is contingent upon this.
- Confirm the timeline for the Phase 2B clinical trial dosing under the amended Yuhan agreement.
- Monitor the 120-day due diligence window for the execution of the definitive license agreement with Intact.
- Review the full text of the Binding Term Sheet (Exhibit 10.1) for specific milestone definitions and termination clauses.