RespireRx Signs LOI With Australian CRO For Dronabinol Development For Obstructive Sleep Apnea

RespireRx Pharmaceuticals Inc. RSPI entered into a letter of intent with an Australia headquartered bespoke clinical research organization focused on cannabinoid and psychedelic clinical research.

The LOI calls for a target execution date for a definitive contract that is 30 days from the date of the LOI, at which time RespireRx will be required to make a $50,000 deposit to be applied to the final studies budget and credited against the first invoice under the definitive contract. Under the definitive contract, the CRO is expected to provide full service CRO services, including regulatory, compliance, GMP manufacturing services in addition to human pharmacokinetic and pivotal human efficacy and safety studies of dronabinol for the treatment of obstructive sleep apnea.

The entry into this LOI is anticipated to be the first step in a series of transactions that are expected to include:

• Formation of an Australian subsidiary of RespireRx, and all that is required in the formation process, including, among other things, the establishment of a board of directors and the engagement of accountants. The subsidiary, anticipated to be named ResolutionRx (or a similar name), is being formed primarily to engage in the research and development activities that will be the subject of the definitive contract. In good faith, the company intends to commence the formation of the Australian subsidiary as soon as practical.

• Contribution of, or the making available of certain dronabinol assets and certain liabilities to the newly formed Australian subsidiary.

• Agreement on the final budget for the scope of the work in the definitive contract, currently anticipated to be approximately $17 million, but which is subject to change.

• Obtaining an independent valuation report of the assets contributed to the subsidiary by the Company.

• If consummated, of which no assurance can be provided, an equity or equity-linked financing of up to 25% of the research and development budget at either the subsidiary level or at the company level to be utilized exclusively to support the R&D budget.

• Participation in the 43.5% Australian research and development tax credit program, which the company believes may be financeable in advance of final receipt of the tax credit funds, over the course of the R&D timeline and at a reasonable discount to the ultimate amount of the expected credit.

• The equity or equity-linked financing plus the financing of the research and development tax credit, if consummated, of which no assurance can be provided, are anticipated to represent approximately 60% of the total R&D budget and approximately 49% of the total funding required by ResolutionRx inclusive of non-R&D budget overhead.

• The company will need to identify one or more additional sources of capital to fund the balance of the R&D and the non-R&D overhead of which no assurance can be provided.

• The company cannot assure that a definitive contract will be executed, or that any of the anticipated financings described above will consummate on terms acceptable to the company or ResolutionRx or at all.

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