Item 1.01. Entry Into a Material Definitive Agreement.
On November 9, 2020, Homology Medicines, Inc. (the "Company") entered into a
stock purchase agreement (the "Stock Purchase Agreement") with Pfizer Inc.
("Pfizer"), pursuant to which the Company, in a private placement transaction
(the "Private Placement"), agreed to issue and sell to Pfizer 5,000,000 shares
(the "Shares") of common stock, par value $0.0001 per share, at a purchase price
of $12.00 per share, for an aggregate purchase price of $60.0 million.
Pursuant to the terms of the Stock Purchase Agreement, the Company also granted
to Pfizer a right of first refusal for a 30-month period (the "ROFR Period")
beginning on the date of the closing of the Private Placement (collectively, the
"ROFR Provision"). Under the ROFR Provision, if, during the ROFR Period, the
Company determines to enter into an agreement with any third party pursuant to
which such third party obtains development or commercialization rights to one or
both of HMI-102 and HMI-103 other than a third party providing services to, or
performing services on behalf of, the Company (whether through license,
co-promotion/co-commercialization agreement, profit share, joint venture, asset
sale or otherwise, but excluding a change of control of the Company) (such
agreement, a "Third Party Agreement"), then the Company shall provide prior
written notice to Pfizer (the "Company Notice"), which Company Notice shall
include a form of the Third Party Agreement regarding the grant of such rights
that has been negotiated with such third party. If Pfizer shall notify the
Company within a certain period from the date of the Company Notice (the
"Notification Period") that it would like to enter into an agreement with the
Company (a "Pfizer Alternative Agreement") on substantially the same economic
terms as the Third Party Agreement, the Company and Pfizer shall negotiate
exclusively in good faith, for a certain period (the "Negotiation Period"),
which Negotiation Period may be extended by mutual agreement of the Company and
Pfizer, to reach agreement on any other terms of such Pfizer Alternative
Agreement. If the parties do not enter into a Pfizer Alternative Agreement
within the Negotiation Period, then the right of first refusal will be deemed to
have expired with respect to the applicable product candidate or candidates that
are the subject of the Third Party Agreement. If Pfizer shall not so notify the
Company within the Notification Period, then the Company shall be free to enter
into such Third Party Agreement on the economic terms set forth in the form of
Third Party Agreement provided to Pfizer with the Company Notice. However, if in
such case the Company does not enter into such Third Party Agreement, then
Pfizer's right of first refusal will be deemed reinstated with respect to the
applicable product candidate or candidates that are the subject of the Third
Party Agreement. Pfizer may exercise its right of first refusal under the ROFR
Provision one time for each of HMI-102 and HMI-103 during the ROFR Period.
Pfizer and the Company also agreed to establish a committee for sharing
information regarding the development of each of HMI-102 and HMI-103. The
Company also agreed (i) to certain reporting obligations to Pfizer with respect
to any non-public data regarding HMI-102 or HMI-103 resulting from the Company's
pre-clinical and/or clinical trials, (ii) to grant Pfizer the right to designate
a representative reasonably acceptable to the Company to serve on the Company's
scientific advisory board, provided that such representative's participation is
limited to discussions and information regarding HMI-102 and HMI-103, and
(iii) to provide Pfizer with notice if, at any time during the ROFR period, the
Company determines to engage in discussions with a third party regarding, or to
initiate a process for a potential transaction that would reasonably be expected
to result in, a change of control (as defined in the Stock Purchase Agreement)
of the Company. The ROFR Provision and other provisions of the Stock Purchase
Agreement described in the foregoing paragraph (other than in clause (iii) of
the immediately preceding sentence) will terminate upon a change of control of
the Company.
Pursuant to the Stock Purchase Agreement, the Company also granted Pfizer
certain rights with respect to the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act") (collectively, the
"Registration Rights Provision"). Under the Registration Rights Provision, if,
after the first anniversary of the date of the closing of the Private Placement,
Pfizer proposes to publicly resell any or all of the Shares pursuant to Rule 144
of the Securities Act, and Pfizer in good faith believes it will be unable to
sell all of the Shares proposed to be sold by it pursuant to Rule 144 without
volume or manner-of-sale restrictions, then Pfizer shall notify the Company and
the Company shall file as promptly as practicable a registration statement for
the resale of the Shares. The Registration Rights Provision also includes
customary information, cooperation and other rights and obligations related to
such registration rights.
Pursuant to the terms of the Stock Purchase Agreement, Pfizer agreed that the
Shares will be subject to a lock-up restriction, such that Pfizer will not,
without the prior approval of the Company, sell, or otherwise enter into a
similar transaction with the same economic effect as a sale with respect to, the
Shares, subject to certain customary exceptions, until the first anniversary of
the date of the closing of the Private Placement. Pfizer also agreed to be
subject to a standstill agreement, such that until the earlier of (i) the first
anniversary of the closing date of the Private Placement or (ii) the occurrence
of a change of control of the Company or certain other fundamental events,
Pfizer will be subject to certain customary standstill restrictions.
The closing of the Private Placement is expected to occur on or about
November 10, 2020, subject to the satisfaction of customary closing conditions.
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The Private Placement was exempt from registration pursuant to Section 4(a)(2)
of the Securities Act, and corresponding provisions of state securities or "blue
sky" laws, as a transaction by an issuer not involving a public offering. Pfizer
represented that it was acquiring the Shares for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution
thereof. Accordingly, the Shares have not been registered under the Securities
Act and such securities may not be offered or sold in the United States absent
registration or an exemption from registration under the Securities Act and any
applicable state securities laws. Appropriate legends have been affixed to the
securities issued in this transaction.
The representations, warranties and covenants contained in the Stock Purchase
Agreement were made solely for the benefit of the parties thereto and may be
subject to limitations agreed upon by the contracting parties. Accordingly, the
Stock Purchase Agreement is incorporated herein by reference only to provide
investors with information regarding the terms of the Stock Purchase Agreement
. . .
Item 2.02. Results of Operation and Financial Condition.
On November 9, 2020, the Company issued a press release announcing the entry
into the Stock Purchase Agreement, a copy of which is attached hereto as Exhibit
99.1. In the press release, the Company announced that, based on current
projections, the Company believes that existing cash and cash equivalents,
together with the anticipated proceeds of $60.0 million from the Private
Placement, will enable the Company to continue its operations into the third
quarter of 2022.
The information in this Current Report attached hereto is intended to be
furnished and shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise
subject to the liabilities of that section, nor shall it be deemed incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except as expressly set forth by specific reference in such
filing.
Item 3.02. Unregistered Sales of Equity Securities.
The information contained in Item 1.01 of this Current Report is incorporated by
reference into this Item 3.02.
On November 9, 2020, the Company issued a press release announcing the entry
into the Stock Purchase Agreement, a copy of which is attached hereto as Exhibit
99.1.
Forward-Looking Statements Disclaimer
This Current Report contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. All statements contained
in this Current Report that do not relate to matters of historical fact should
be considered forward-looking statements, including without limitation
statements regarding: the completion of the Private Placement and the
sufficiency of our cash and cash equivalents, together with the anticipated
proceeds of $60.0 million from the Private Placement, to fund our operations.
These statements are neither promises nor guarantees, but involve known and
unknown risks, uncertainties and other important factors that may cause our
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to, the following: the
impact of the COVID-19 pandemic on our business and operations, including our
preclinical studies and clinical trials, and on general economic conditions; we
have and expect to continue to incur significant losses; our need for additional
funding, which may not be available; failure to identify additional product
candidates and develop or commercialize marketable products; the early stage of
our development efforts; potential unforeseen events during clinical trials
could cause delays or other adverse consequences; risks relating to the
capabilities of our manufacturing facility; risks relating to the regulatory
approval process; interim, topline and preliminary data may change as more
patient data become available, and are subject to audit and verification
procedures that could result in material changes in the final data; our product
candidates may cause serious adverse side effects; inability to maintain our
collaborations, or the failure of these collaborations; our reliance on third
parties; failure to obtain U.S. or international marketing approval; ongoing
regulatory obligations; effects of significant competition; unfavorable pricing
regulations, third-party reimbursement practices or healthcare reform
initiatives; product liability lawsuits; failure to attract, retain and motivate
qualified personnel; the possibility of system failures or security breaches;
risks relating to intellectual property and significant costs as a result of
operating as a public company. These and other important factors discussed under
the caption "Risk Factors" in our Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2020 and our other filings with the SEC could
cause actual results to differ materially from those indicated by the
forward-looking statements made in this Current Report. Any such forward-looking
statements represent management's estimates as of the date of this Current
Report. While we may elect to update such forward-looking statements at some
point in the future, we disclaim any obligation to do so, even if subsequent
events cause our views to change.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1† Stock Purchase Agreement, dated November 9, 2020, by and between
Homology Medicines, Inc. and Pfizer Inc.
99.1 Press Release issued by Homology Medicines, Inc. on November 9, 2020
104 Cover Page Interactive Data File (embedded within the inline XBRL
document)
† Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of
Regulation S-K.
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