Item 1.01 Entry into a Material Definitive Agreement.
On January 31, 2023, Karuna Therapeutics, Inc. (the "Company") entered into a
license agreement (the "Agreement") with GFB (ABC), LLC ("GFB"), assignee of the
assignment estate of Goldfinch Bio, Inc., pursuant to which GFB granted to the
Company an exclusive (even as to GFB and its affiliates), worldwide, and
sublicensable right and license to certain patent rights and related know-how
(the "Licensed Intellectual Property") to develop, manufacture, and
commercialize GFB's investigational transient receptor potential canonical 4 and
5 (TRPC4/5) channel candidates, including the lead clinical-stage candidate
known as GFB-887 (collectively, the "Licensed Compounds"). The Company agreed to
use commercially reasonable efforts to develop, obtain regulatory approval for,
and commercialize at least one product that contains or comprises a Licensed
Compound (a "Licensed Product") in at least two indications in the United
States.
Under the terms of the Agreement, the Company is obligated to pay to GFB a $15.0
million upfront payment, and a total of up to $520.0 million for each Licensed
Compound upon the achievement of certain development, regulatory and commercial
milestones with respect to such Licensed Compound, of which $410.0 million are
related to regulatory approval and commercial sales milestones. The Company is
also obligated to pay GFB a flat low-single-digit royalty on aggregate net sales
of each Licensed Product on a country-by-country basis until the later of: (i)
the expiration date of the last valid claim covering the Licensed Product in
such country; (ii) the expiration date of regulatory exclusivity with respect to
such Licensed Product in such country; and (iii) the date that is a specific
period after the first commercial sale of such Licensed Product in such country
(collectively, the "Royalty Term"). The royalty rate is subject to reduction on
a Licensed Product-by-Licensed Product and country-by-country basis under
certain circumstances. In the event that the Company sublicenses to a third
party any of the rights to the Licensed Intellectual Property granted under the
Agreement, the Company will be obligated to pay GFB royalties within the range
of 25% to 35% on any consideration the Company receives from the sublicensee,
excluding royalties and certain other payments.
Unless earlier terminated, the Agreement will expire on the expiration of the
last to expire Royalty Term. Unless the Agreement is earlier terminated, on
expiration of each applicable Royalty Term, the Company will have a fully
paid-up, irrevocable and perpetual license under the Licensed Intellectual
Property to develop, manufacture and commercialize each applicable Licensed
Product in the applicable country. Either party may terminate the Agreement for
the other party's material breach, following a customary notice and cure period,
or insolvency, other than an insolvency proceeding related to the administration
of the assignment estate of Goldfinch Bio, Inc. The Company may terminate the
Agreement for any reason upon 90 days written notice to GFB.
The foregoing description of the terms of the Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Agreement, a copy of which the Company intends to file with the Securities and
Exchange Commission, with confidential terms redacted, as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 2022.
Item 7.01 Regulation FD Disclosure.
On February 2, 2023, the Company and GFB issued a joint press release regarding
the Agreement. A copy of this press release is attached hereto as Exhibit 99.1
and is incorporated into this Item 7.01 by reference. The information contained
in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 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 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Joint press release issued by Karuna Therapeutics, Inc. and GFB (ABC),
LLC, dated February 2, 2023
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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