Low float stock REXN exploded higher in after-hours trading on February 10, 2020.
What caused the stock to exploded higher in after-hours trading was an 8-K filing submitted today to the SEC.
The 8-K filing reads as follows:
“On February 8, 2020, Rexahn Pharmaceuticals, Inc. (the “Company”) entered into an Exclusive License Agreement (the “License Agreement”) with Zhejiang HaiChang Biotechnology Co., Ltd., a Chinese company (“HaiChang”).
Under the terms of the License Agreement, the Company granted HaiChang an exclusive (even as to the Company), royalty-bearing, sublicensable worldwide license to research, develop and commercialize pharmaceutical products comprising RX-0201 (subject to and limited by the exclusive rights of NEXT BT Co. Ltd. with respect to RX-0201 in Asia), the nano-liposomal formulation of RX-0201 known as RX-0301, and RX-0047, a proprietary compound currently in preclinical development. HaiChang has agreed to use commercially reasonable efforts to develop, seek regulatory approval for, and commercialize one product comprising RX-0301 and one product comprising RX-0047.
HaiChang will pay to the Company a one-time upfront payment in the amount of $250,000 for certain materials to be transferred by the Company to HaiChang. HaiChang will pay the Company development milestone payments in an aggregate of up to $63 million with respect to RX-0201 and RX-0301 and up to $33 million with respect to RX-0047, and royalties based on percentages of net sales in the low tens with respect to RX-0201 and RX-0301 and the mid-single digits with respect to RX-0047. However, if HaiChang exclusively sublicenses its rights to a third party with respect to RX-0201 and RX-0301 or RX-0047 in a particular jurisdiction, instead of the foregoing milestones and royalties to the extent relating to such compound(s) and jurisdiction, HaiChang will pay the Company a percentage of any sublicensing revenue received by HaiChang, provided that in any event HaiChang will pay a milestone payment on initiation of a Phase 3 clinical trial that is subject to reduction by the amount of any sublicensing revenue paid with respect to the applicable compound(s) as of the time of initiation of the trial.
In connection with entering into the License Agreement, the parties terminated the Research Collaboration and License Agreement, dated as of February 8, 2018, under which HaiChang had previously agreed to develop RX-0301 through completion of a Phase IIa proof-of-concept clinical trial for the treatment of hepatic cell carcinoma in China.”
It looks like REXN just sold “certain materials” for $250,000 to the Chinese who are looking to further develop the nano-liposomal formulation of RX-0201 known as RX-0301, and RX-0047. If the Chinese company succeeds, Rexahn Pharmaceuticals will get further sublicensing revenue.