Item 1.01. Entry into a Material Definitive Agreement
Clover CpG 1018 Adjuvant Supply Agreement
On
Under the Clover Supply Agreement, Clover has committed to purchase, and the
Company has agreed to manufacture and supply, specified quantities of its CpG
1018 adjuvant for use in Clover's commercialization of vaccines containing
SCB-2019 and CpG 1018 adjuvant ("Clover Product") with specified delivery dates
in 2021 and the first quarter of 2022. However, the specified quantities of CpG
1018 adjuvant for delivery, and the timing for delivery, in 2021 are subject to
modification by the
Purchase orders submitted by Clover and accepted by Company are non-cancellable by Clover, except to the extent that the Company can cancel its corresponding order placed with its contract manufacturer of CpG 1018 adjuvant without incurring any cost as a result of such cancellation.
Pricing for CpG 1018 adjuvant delivered in 2021 and 2022 is variable depending
on (i) the ultimate destination country of Clover Product incorporating such CpG
1018 adjuvant and (ii) whether Clover Product incorporating such CpG 1018
adjuvant is sold in private markets in the ultimate destination country or is
sold to the
For CpG 1018 adjuvant to be delivered under the Clover Supply Agreement in 2021, subject to certain exceptions, Clover is obligated to pay the purchase price of the quantity of CpG 1018 adjuvant set forth in a purchase order submitted by Clover and accepted by the Company upon the earliest of (i) the first trueing-up exercise (as described above) for Clover Product incorporating such CpG 1018 adjuvant, (ii) within a specified period after Clover delivers Clover Product incorporating such CpG 1018 adjuvant to a customer, or (iii) Clover's receipt of payment for Clover Product incorporating such CpG 1018 adjuvant from a customer.
For CpG 1018 adjuvant to be delivered under the Clover Supply Agreement in 2022, subject to certain exceptions, Clover is obligated to pay a specified percentage of the purchase price of the quantity of CpG 1018 adjuvant set forth in a purchase order submitted by Clover and accepted by the Company upon the Company's acceptance of such purchase order, and the remainder of the purchase price upon the Company's release of such CpG 1018 adjuvant.
Unless earlier terminated, the Clover Supply Agreement will expire on
CpG 1018 Collaborations
The Company continues to actively pursue opportunities to collaborate with other organizations on the development of COVID-19 vaccines and other vaccines that utilize the Company's CpG 1018 adjuvant, including its existing collaborations.
There are risks and uncertainties inherent in vaccine research and development, including the timing of completing development, the timing of and results of clinical trials, whether a vaccine will be approved for use, the extent of competition, and whether a vaccine can be successfully commercialized. As a result, the Company's collaborative efforts with respect to the development of a potential COVID-19 vaccine or other vaccines utilizing CpG 1018 may not be successful. In addition, the Company's collaborators have primary responsibility for the development, conduct of clinical trials, and for seeking and obtaining regulatory approval, of a potential vaccine for COVID-19 or other indications containing CpG 1018. Some of the Company's collaborators are also evaluating one or more third party adjuvants as part of their development efforts. The Company has limited or
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no control over its collaborators' decisions, including their choice of adjuvants and/or the amount and timing of resources that any of these collaborators will dedicate to such activities. If a collaborator fails to conduct collaborative activities successfully or determines to proceed with one or more adjuvants other than CpG 1018, the development of a vaccine utilizing CpG 1018 will be delayed and may not occur at all.
The Company and its contract manufacturer have taken measures to support pandemic-level production of CpG 1018, as necessary to support existing and any future collaborations. However, if the Company is unable to maintain its existing supplier for CpG 1018, it would have to establish an alternate qualified manufacturing capability, which could result in significant additional
operating costs and delays in developing and commercializing any potential adjuvanted vaccines by the Company's third-party collaborators. There can be no assurance that the Company or other third parties will be able to produce CpG 1018 at a cost, quantity and quality sufficient to support the Company's existing or any future collaborations.
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