Item 1.01 Entry Into a Material Definitive Agreement.
On
During the term of the Agreement, SFJ will have primary responsibility for the
clinical trial management of the HNC Clinical Trial and serves as a contract
research organization as defined by 21 C.F.R. 312.52. The Company will be the
sponsor of the HNC Clinical Trial and will also have sole responsibility for
regulatory interactions and approval activities for BEMPEG in all indications.
The Company and Bristol-Myers Squibb, pursuant to their Strategic Collaboration
Agreement dated
The Company and SFJ have agreed to use commercially reasonable efforts to
conduct and complete the HNC Clinical Trial activities for which each is
responsible in accordance with the timeline agreed to by the Parties. The
Company and SFJ will form a joint steering committee to oversee and manage the
collaboration. Further, the Company has agreed that if the HNC Clinical Trial
meets specified trial success criteria, it will use commercially reasonable
efforts to file a biologics license application (a "BLA") with the
The Company will pay SFJ, subject to the buy-out provision described below, a
series of success-based annual payments following FDA approval of BEMPEG for the
Melanoma Indication, the HNC Indication, or both, and FDA approval of one
additional BEMPEG indication. Payments will not start until the completion of
the HNC Clinical Trial activities as defined below. The total success-based
annual payments for the first indication approved by FDA, whether for the
Melanoma Indication or the HNC Indication, is an aggregate of
The Company has the right, at its option, to make a one-time cash payment to SFJ to buy out all of the First Indication Amount at a prespecified annual discount rate. This buy-out option is exercisable by the Company within 180 days of the First Payment Date. The Company also has the right, at its option, to make a one-time cash payment to SFJ to buy out all of the Second Indication Amount, at a prespecified annual discount rate. This buy-out option is exercisable by the Company within 180 days of the approval date for the second indication approved by FDA. Within 45 days following a change of control of the Company, the Company shall make a one-time cash payment to SFJ equal to 150% of development costs paid or incurred by SFJ prior to such change of control, to be credited toward future Success Payments in the order in which they become due.
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The Company has agreed to certain affirmative and negative covenants, including restrictions on the Company's ability to incur liens on its intellectual property that is necessary or useful for the development, manufacture, use, sale or import of BEMPEG (the "BEMPEG IP"), or assign or convey any right to receive income with respect to the BEMPEG IP (other than royalty and other license fee obligations to licensors thereof in accordance with the applicable license agreement), except for the issuance of senior secured debt secured by all or substantially all of the Company's assets, including the BEMPEG IP.
The Agreement expires upon the payment of all Success Payments to SFJ, unless earlier terminated. The Agreement may be terminated by either party (a) for material breach by the other party, following a specified cure period, (b) upon the other party's bankruptcy, (c) if the independent data monitoring committee for the HNC Clinical Trial recommends termination of the trial for safety or health reasons or for futility and the Company reasonably believes there is a basis for such termination, (d) if the parties mutually agree a material health or safety concern with respect to the subjects of the HNC Clinical Trial exists or (e) upon a breach by the other party involving improper payments or a violation of anti-corruption policies. The Agreement may be terminated by SFJ (a) for failure by the Company to make a Success Payment when due, following the lapse of a specified cure period, (b) in the event that any HNC Clinical Trial does not meet its overall survival primary endpoint, (c) if the Company is prevented from further developing or commercializing BEMPEG for any of the Indications and the future value of BEMPEG would likely be materially adversely affected due to certain third party patents that would be infringed by the manufacture, use, sale, offer for sale or import of BEMPEG or (d) in the event of certain disagreements among the JSC. In certain instances, upon the termination of the agreement, the Company will be obligated to pay SFJ a multiple of the amounts paid by SFJ for development cost funding under the agreement, including specifically: (i) 300% in the event the agreement is terminated due to a safety concern of which the Company had knowledge prior to the date of the Agreement and did not disclose to SFJ; (ii) 150% upon a breach by the Company involving improper payments or a violation of anti-corruption policies that impact the likelihood of obtaining regulatory approval; (iii) 100% upon a breach by SFJ involving improper payments or a violation of anti-corruption policies that impact the likelihood of obtaining regulatory approval, less the amount of all documented out-of-pocket expenses incurred by or on behalf of the Company as a result or arising out of such violation by SFJ; (v) 100% in the event of a termination due to third party patents; (iv) 100% in the event of a termination due to the Company's bankruptcy, subject to adjustments; and (v) 100% plus an amount reflecting interest on the amount paid by SFJ at an annual rate of 25% in the event of termination due to certain disagreements among the JSC.
The foregoing description of the Agreement is a summary only and is qualified in
its entirety by reference to the terms of the Agreement, a copy of which will be
filed with the Company's Annual Report on Form 10-K for the year ended
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