Questions
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What is the purpose of the Bond?
To fund the construction of the Research Laboratory of the Chemotherapy Research Institute critical to continuing its research program. This will complete Phase 1 of the Laboratory development.
Why is this funding support so important?
Because CRI is likely the only institute conducting serious world class research into Chemotherapy, perhaps the most destructive part of cancer treatment. And Chemotherapy affects the largest group of all cancer patients. Further, it represents the only real hope for late stage cancer patients. So our single core program, if successful, could change the face of cancer treatments in a relatively short period of time.
What is the total amount of the private Bond offering?
What are the amounts of the Bond Units that can be purchased?
You can purchase Bond units in three sizes. $5,000, $20,000, and $100,000. You can purchase any number of units.
Why are we using Bonds to fund the program?
Rather than simply giving money to the Institute, it allows donors to help us, at no cost to them, by buying Refundable Chemotherapy Endowment Bonds.. How? The bond is 100% secured and the bond funds will be returned at the end of the bond term with a small return. In effect, rather than give us money, donors are simply lending it to us for a period of time.
What is the estimated Bond return?
The return is estimated annually at 3 times the 5 year government bond rate with a 3.5% cap.
How is the Bond return paid?
Since the Institute is a tax exempt entity (a 501 (c) 3), the income from the endowment is classified as a donation and passed through to donors as a tax deductible donation.
Are there any additional returns if the research succeeds?
Yes. If the research succeeds, bond holders will receive an additional payment determined by the unit size. They are: For the $5,000 unit: Payment of the first $2 million of net research proceeds of successfully completed research. For the $20,000 unit: Payment of the first $3 million of net research proceeds of successfully completed research. For the $100,000 unit: An equity kicker of 5% of the net sales proceeds of successfully completed research or the first $15 million, whichever is less.
Are there any other returns for Bond holders?
Yes. Bond holders for the $20,000 and $100,000 unit will be entitled to a preference in treatment in the event the program is successful. The preferences are as follows:
For the $20,000 unit: A 30% discount on an approved treatment program for the Bond holders immediate family for 5 years. For the $100,000 unit: A 90% discount on an approved treatment program for the Bond holders immediate family for 10 years.
Is there any medical protection for my family as a Bond holder?
Yes. In essence, you can view this as the only potential "insurance" program for your family against the risk of being treated with Chemotherapy. If we succeed, donors will have a preference for treatment. See above. It is probably the only such program focused exclusively on Chemotherapy.
What is the construction cost of the laboratory?
We estimate it will be about $2.5 million.
How will the Bond funds pay for the construction?
The Bond funds will be placed into an endowment and the income from the endowment, managed by professional managers who can return about 7% per year, is estimated at $1.25 million over the five year term . That together with about $1.25 million of endowment principle will pay for the estimated construction cost of $2.5 million.
Will there be a mortgage on the property?
Who will own the property?
Chemotherapy Research Institute.
How is the Bondholder 100% secured?
Bond holders will have the first lien on the net endowment amount of about $3.75 million plus the property at the construction cost of $2.5 million for a total of $6.25 million. This ensures the Bond Holders are 100% secured for the full $5 million bond amount. It also provides a substantial reserve of 25% against any unexpected valuation decrease in book value at the end of the five year term to protect still further all Bond holders.
What is the likely market value of the property?
We are assuming it will be worth at least its construction cost or more. Without a mortgage, in the event the Institute's program fails, we believe the Laboratory will be sold for at least its construction cost or more. We do not know the future, and the value will be determined by the market and not by us.
How will the operating cost of the laboratory be covered?
The operating costs, in the order of $500,000 per year at the moment, will be paid for by continuing donations, which is the only source of income allowed for the institute to maintain its tax exempt status. The Institute is not a commercial enterprise. It is a not-for-profit entity supported by wonderful donors who wish to help us.
What is the likelyhood the Institute's research program will succeed?
We wish we could score medical research, but we can't. Medical research is undertaken to find cures and help save lives. Some programs succeed, others do not. But if we do not do this, there is no possibility of ever making medical progress and saving the lives of late stage cancer patients.
How can I assess the strength of the research program?
Click here for an expanded answer
What happens if the research fails and the Institute is closed?
For the Bond holders, in this event, the property will be sold and the endowment will be liquidated, and the total net proceeds will be paid to the Bond holders up to a total of $5 million.
Is this a Venture Capital or Private Equity investment?
No. There is no investible proposition. One may arise in the future in the event the completed research is successful. But that is the future. We will keep you informed of our progress.
How can I sell or trade my Bond?
The Institute will sponsor a Private Offering of bonds for sale on the third and fifth anniversary of the offering for those who wish to sell, if the bond has not previously been converted or if the bond has not previously been redeemed by the Institute.
Can I sell my Bond myself?
Yes. You will need approval from the Institute, and legal clearance.
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