Item 1.01 Entry into a Material Definitive Agreement.
Asset Purchase Agreement
On October 18, 2021, Calithera Biosciences, Inc., or Calithera, entered into an
Asset Purchase Agreement, or the APA, with Millennium Pharmaceuticals, Inc., or
Millennium, a wholly owned subsidiary of Takeda Pharmaceutical Company Limited,
or Takeda, pursuant to which Calithera acquired or licensed from Millennium
certain technology, intellectual property and other assets related to Takeda's
small molecule programs TAK-228 and TAK-659, or the Programs.
Under the APA, Millennium will assign or cause to be assigned to Calithera
certain patents and know-how solely related to the Programs and necessary for
the exploitation of products containing the TAK-228 and TAK-659 compounds, as
well as specified regulatory materials, agreements, materials and inventory
related to the Programs. Millennium also will grant to us a license under
certain other intellectual property necessary for the exploitation of such
products. We will grant to Millennium a license under the intellectual property
assigned by Takeda to Calithera (including intellectual property controlled by
Calithera via the assigned contracts) in order for Millennium to perform its
obligations under the APA, ancillary agreements executed in connection with the
APA and other retained agreements and for Millennium's internal research use.
We must use commercially reasonable efforts to develop and commercialize at
least one TAK-228 product and one TAK-659 product in each of the United States,
Japan and certain European countries.
Pursuant to the APA, we will pay to Millennium an upfront payment of
$10.0 million in cash and will issue to Millennium shares of our Series A
Convertible Preferred Stock valued at $35.0 million. Calithera will make tiered
earn-out payments of high single-digits to low teens on net sales of TAK-228
products and TAK-659 products, subject to certain customary reductions.
Millennium will be eligible to receive up to an aggregate of $470.0 million in
clinical development, regulatory and sales milestone payments across both
Programs.
The APA contains customary representations, warranties, covenants, and closing
conditions. The term of the APA will continue until the expiration of our
obligations to make earn-out payments, unless earlier terminated. Either party
may terminate the APA in the event of an uncured material breach of the other
party or in the case of insolvency of the other party.
The foregoing description of the terms of the APA is qualified in its entirety
by reference to the APA, which we intend to file as an exhibit to our Annual
Report on Form 10-K for the year ending December 31, 2021.
Preferred Stock Purchase Agreement
October 18, 2021, in accordance with the APA, we entered into a Preferred Stock
Purchase Agreement, or the Purchase Agreement, with Millennium, pursuant to
which we agreed to issue to Millennium 1,000,000 shares of our Series A
Convertible Preferred Stock, or the Series A Preferred Stock, at a valuation of
$2.04 per equivalent one share of Common Stock, or the Common Stock, for an
aggregate deemed issue price of $35.0 million. The Series A Preferred Stock is
initially convertible at the option of the holder into 17,156,863 shares of
Common Stock, subject to price-based anti-dilution adjustments that if triggered
would result in the issuance of additional shares of Common Stock. Calithera
intends to seek stockholder approval at the next regular stockholder meeting for
the issuance of the shares of Common Stock above 20% in accordance with the
rules of The Nasdaq Stock Market LLC, including additional shares that may
. . .
Item 2.02 Results of Operations and Financial Condition.
As of September 30, 2021, Calithera expects to report cash and investments of
$84.5 million, or $74.5 million after the upfront cash payment to Millennium.
Calithera believes its cash and investments balance is sufficient to meet its
current operating plan for at least the next twelve months.
We have not yet completed our financial close process for the quarter ended
September 30, 2021 and the preliminary financial information is based on a
preliminary estimate of such information. This estimate is subject to change
upon completion of our financial closing procedures. Calithera's independent
registered public accounting firm, Ernst & Young LLP, has not audited, reviewed
or compiled this estimate and, accordingly, does not express an opinion on, or
provide any other form of assurance with respect to, the preliminary estimate.
This estimate is not a comprehensive statement of our financial results for the
quarter ended September 30, 2021 and its actual results may differ materially
from this estimate as a result of the completion of our financial closing
procedures, final adjustments and other developments arising between now and the
time that our financial results for this period are finalized.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K in the
section titled "Preferred Stock Purchase Agreement" is incorporated by reference
to this Item 3.02.
We issued and sold the Series A Preferred Stock in reliance on the exemption
from the registration requirements of the Securities Act of 1933, as amended, or
the Securities Act, by virtue of Section 4(a)(2) thereof. In connection with
Millennium's execution of the Purchase Agreement, Millennium represented to us
that they are an "accredited investor" as defined in Regulation D of the
Securities Act and that the Series A Preferred Stock to be purchased by them
will be acquired solely for their own account and for investment purposes and
not with a view to the future sale or distribution. The issuance and sale of the
Series A Preferred Stock have not been registered under the Securities Act or
the securities laws of any other jurisdiction, and such securities may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements. This Current Report on Form 8-K does
not constitute an offer to sell, or a solicitation of an offer to buy, any
security and shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offering would be unlawful.
Item 3.03 Material Modifications to Rights of Security Holders
Certificate of Designations
On October 18, 2021, in connection with the APA and the Purchase Agreement,
Calithera filed a Certificate of Designations of Preferences, Rights and
Limitations of the Series A Convertible Preferred Stock with the Secretary of
State of the State of Delaware, or the Certificate of Designations, designating
1,000,000 shares of Series A Preferred Stock with an original issue price of
$35.00 per share, which became effective with the Secretary of State of the
State of Delaware upon filing. The Series A Preferred Stock will be entitled to
customary dividends and distributions when and if paid on shares of the Common
Stock and will be entitled to vote on an as-converted basis on any matter
presented to the stockholders of Calithera or at any meeting of stockholders,
subject to certain beneficial ownership limitations. The Series A Preferred
Stock will have preference over the Common Stock with respect to distribution of
assets or available proceeds, as applicable, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of Calithera or any other
deemed liquidation event.
The Series A Preferred Stock will automatically convert, subject to certain
beneficial ownership limitations, on the earlier of (i) the 18-month anniversary
of the date of issuance and (ii) a qualified financing, in each case, into
17,156,863 shares of Common Stock, subject to certain price-based anti-dilution
adjustments. The Series A Preferred Stock is also convertible, subject to
certain beneficial ownership limitations, at the option of the holder thereof,
at any time prior to automatic conversion
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into 17,156,863 shares of Common Stock, subject to certain price-based
anti-dilution adjustments. If Calithera is unable to obtain stockholder approval
in accordance with the rules of The Nasdaq Stock Market LLC for the conversion
of all of the shares of Series A Preferred Stock to Common Stock, and as a
result Millennium is unable to convert any portion of the Series A Preferred
Stock to Common Stock, then Calithera and Millennium will negotiate in good
faith the timing and amount per share to be paid to compensate Millennium for
such inability to convert, provided that Calithera will not be required to pay
Millennium any cash for three years after the date of issuance unless Calithera
has closed an equity financing of at least $80.0 million with a volume weighted
average price of at least $2.04 per share then Calithera shall instead pay
Millennium $2.04 per share of Series A Preferred Stock that Millennium is unable
to convert. If Calithera is able to obtain stockholder approval in accordance
with the rules of The Nasdaq Stock Market LLC for the conversion of all of the
shares of Series A Preferred Stock to Common Stock but Millennium is unable to
convert as a result of the Accounting Cap (as defined in the Certificate of
Designations filed as Exhibit 3.1 to this Current Report) any portion of the
Series A Preferred Stock to Common Stock by the Outside Date (as defined in the
Certificate of Designations filed as Exhibit 3.1 to this Current Report), then
on each yearly anniversary thereafter, any shares of Series A Preferred Stock
that remain outstanding shall automatically be converted into Common Stock at
the applicable conversion ratio, in each case subject to the Accounting Cap,
until such point in time as all shares of Series A Preferred Stock have been
converted.
Additionally, certain matters require the approval of the Series A Preferred
Stock, voting as a separate class, including to (i) amend Calithera's
organizational documents in a way that has an adverse effect on the Series A
Preferred Stock, (ii) create or authorize the creation of any new security, or
reclassify or amend any existing security, of Calithera that are senior to, or
equal in priority with, the Series A Preferred Stock, including any shares of
Series A Preferred Stock, with respect to the distribution of assets on the
liquidation, dissolution or winding up of the Corporation, the payment of
dividends and rights of redemption or (iii) purchase or redeem, or pay or
declare, any dividend or make any distribution on, any shares of capital stock
of Calithera, subject to certain exceptions.
The foregoing description of the terms pertaining to the Series A Preferred
Stock is not complete and is qualified in its entirety by reference to the full
. . .
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal
Year
The description of the Certificate of Designations and the rights, preferences
and privileges of the newly designated Series A Preferred Stock in Item 3.03
above is incorporated by reference into this Item 5.03.
Item 7.01 Regulation FD Disclosure.
Calithera held a conference call on Monday, October 18, 2021, at 5:30 pm Eastern
Time to discuss the Programs and the related APA and Purchase Agreement. A copy
of the press release is furnished herewith as Exhibit 99.1. Attached as Exhibit
99.2 and incorporated by reference herein is a presentation, or the Investor
Presentation, that will be used by Calithera in presentations to investment
professionals and other persons to describe the Programs.
The information in this Item 7.01, including Exhibit 99.1 and Exhibit 99.2, is
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise
subject to liabilities under that section, and shall not be deemed to be
incorporated by reference into the filings of Calithera under the Securities Act
or the Exchange Act, regardless of any general incorporation language in such
filings. This Current Report on Form 8-K will not be deemed an admission as to
the materiality of any information of the information contained in this Item
7.01, including Exhibit 99.1 and Exhibit 99.2.
Item 8.01 Other Events.
We are supplementing and updating certain risk factors relating to our business
from that described under the heading, "Item 1A. Risk Factors" in our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2021, filed with the U.S.
Securities and Exchange Commission on August 5, 2021. The updated disclosure is
filed herewith as Exhibit 99.3 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. Description of Document
3.1 Calithera Biosciences, Inc. Certificate of Designations of
Preferences, Rights and Limitations of Series A Convertible
Preferred Stock.
10.1 Preferred Stock Purchase Agreement, dated as of October 18,
2021, by and between Calithera Biosciences, Inc. and Millennium
Pharmaceuticals, Inc.
99.1 Press Release, dated October 18, 2021.
99.2 Investor Presentation, dated October 18, 2021.
99.3 Risk Factors
104 Cover Page Interactive Data File (the cover page XBRL tags are
embedded within the Inline XBRL document)
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements based upon
Calithera's current expectations. Forward-looking statements involve risks and
uncertainties, and include, but are not limited to, all statements relating to
the clinical development, regulatory and sales milestone payments in connection
with the APA, how the shares of Series A Preferred Stock will convert into
shares of Common Stock and cash and investments Calithera expects to report for
the quarter ended September 30, 2021. These forward-looking statements are based
upon Calithera's current expectations. Actual results could differ materially
from these forward-looking statements as a result of certain factors, including,
without limitation, risks related to changes in estimated cash position based on
the completion of financial closing procedures and the review of Calithera's
financial statements, and other risks detailed in Calithera's filings with the
U.S. Securities and Exchange Commission. Calithera will continue to need
additional funding and may be unable to raise capital when needed, which would
force Calithera to delay, reduce or eliminate its product candidate development
programs, including the Programs. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Current
Report on Form 8-K. Calithera's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on August 5, 2021 contains under the heading,
"Risk Factors", a more comprehensive description of these and other risks to
which Calithera is subject in addition to updates described in Item 8.01 and the
updated disclosure filed as Exhibit 99.3 of this Current Report on Form 8-K.
Calithera expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward-looking statements contained herein to
reflect any change in its expectations with regard thereto or any change in
events, conditions or circumstances on which any such statements are based.
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