Item 1.01 Entry into a Material Definitive Agreement.
Amended and Restated Research Collaboration, Product Development and License Agreement
On
Under the terms of the Amended Agreement, the Continuing Collaboration will focus on the identification, research and development of product candidates directed to targets in the fields of ophthalmology and cardiovascular or metabolic ("CVM") disease, and will also include laboratory testing and other activities on molecules that are directed to one of up to two undisclosed targets outside of the fields of ophthalmology and CVM disease (each, a "Lab program"). As it did under the Original Agreement, Merck has an option to take an exclusive, worldwide license for each Continuing Product Candidate that is identified, researched and developed under the Amended Agreement and reaches the specified option exercise point, as well as to all other related compounds that are directed to the same target and that result in the same effect on such target (each such option, a "Merck Option" and each such Continuing Product Candidate and its related compounds, a "program"). In addition, under the terms of the Amended Agreement, new CVM-related programs to which Merck would have such an option may be added to the Continuing Collaboration if recommended by the Company and selected by Merck. Merck has a one-time right to exercise its option, during the research phase or a tail period following such research phase, as applicable, for any Continuing Product Candidate on a program-by-program basis when the Company or Merck achieves the specified option exercise point. The option exercise point for candidates under the Original Agreement was the completion of a human proof-of-concept trial. This generally continues to be the option exercise point under the Amended Agreement for Continuing Product Candidates that are directed to ophthalmology targets, including NGM621 and its related compounds and all of the compounds from two other ophthalmology programs directed against undisclosed ophthalmology targets and their related compounds (collectively, including NGM621 and its related compounds, the "Continuing Ophthalmology Product Candidates"). Upon the completion of the CATALINA clinical trial, a human proof-of-concept trial that the Company is currently conducting on NGM621, Merck will have an additional one-time option to obtain an exclusive, worldwide license to all of the Continuing Ophthalmology Product Candidates. If Merck does not exercise this one-time option for all Continuing Ophthalmology Product Candidates (the "Bundle Option"), it may nevertheless exercise its regular option with respect to NGM621 and its related compounds at such time, and it may also exercise its regular options for the Continuing Ophthalmology Product Candidates from each of the other two programs if a Continuing Ophthalmology Product Candidate from such program completes a human proof-of-concept trial. Unlike the Original Agreement, the option exercise point for a product candidate from the CVM-related programs or the Lab program will be the designation by Merck of such candidate as a research program development candidate that Merck intends to progress into preclinical development.
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The Company is primarily responsible under the Amended Agreement for all
research and development for the ophthalmology programs prior to the relevant
option exercise point and for the CVM-related programs prior to the expiration
of the research phase for the CVM-related programs as described below. For the
Lab program, the Company will be solely responsible for conducting or overseeing
certain pre-specified research that is expected to be completed in early 2022,
at which time Merck will decide whether to take sole responsibility for all
subsequent research on compounds resulting from the Lab program prior to the
option exercise point or to grant the Company the sole right, in its sole
discretion, to independently research, develop and commercialize such Lab
program compounds. As was the case under the Original Agreement, if Merck
exercises a Merck Option and obtains the relevant exclusive, worldwide license
for a Continuing Product Candidate and its related compounds, Merck will pay an
option exercise fee to the Company and will be responsible, at its own cost, for
any further development and commercialization activities for compounds within
that licensed program. In such case, the Company will have the option to receive
milestones and royalty payments or participate in the adjusted net sales in
exchange for co-funding a share of the development costs and allowable expenses
for any compound within that licensed program and an option to co-detail any
such compound in
Merck remains committed under the Amended Agreement to provide up to
The research phase for the ophthalmology-related programs will end no later than
As it did under the Original Agreement, Merck has the right under the Amended Agreement to review the then-ongoing research programs in the three-month period before the end of applicable research phase and to elect to designate one or more programs for which research and development would continue to be conducted, until the applicable option exercise point is reached, for up to three years after the end of such research phase, with the possibility of extension if ophthalmology clinical studies are then ongoing or if Merck determines to continue progressing a CVM-related program or Lab program toward the nomination of a research program development candidate (the "Tail Period"). The principal Tail Period-related changes in the Amended Agreement are that the Tail
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Period, if any, for the ophthalmology-related programs would be separate from the Tail Period, if any, for the CVM-related programs and the Lab program and that Merck would be primarily responsible for performing all research and development activities, itself or through third party contractors, during the Tail Period, if any, for the CVM-related programs and the Lab program.
Similar to the Original Agreement, during the research phase and any applicable Tail Period of the Continuing Collaboration, the Company may not directly or indirectly research, develop, manufacture or commercialize, outside of the Continuing Collaboration, any product with specified activity against any target that is being researched or developed under the Continuing Collaboration and, if Merck exercises its option for a program, the Company may not directly or indirectly research, develop, manufacture or commercialize any product with specified activity against the target that is the subject of that program for so long as Merck's license to it remains in effect. In addition, under the Amended Agreement, the Company is prohibited from, direct or indirectly, researching, developing or commercializing any product for the treatment of heart failure with preserved ejection fraction (HFpEF) during the research phase for the CVM-related programs.
Upon the signing of the Amended Agreement, Merck's options to the NGM Product Candidates were extinguished and the Company gained the right to research, develop and commercialize all NGM Product Candidates, in its sole discretion and at its expense, without any obligations to Merck other than to pay royalties to Merck at low single digit rates on the sales of any NGM Product Candidates that receive regulatory approval and, if the Company decides during a certain time period to engage in a formal partnering process for an NGM Product Candidate or negotiations regarding a license or asset acquisition for an NGM Product Candidate, to notify Merck, provide Merck with certain information and engage in good faith, non-exclusive negotiations with respect to such NGM Product Candidate with Merck at Merck's request.
The foregoing description of the Amended Agreement does not purport to be
complete and is subject to, and qualified in its entirety by, the full text of
the Amended Agreement, a redacted copy of which will be filed as an exhibit to
the Company's quarterly report on Form 10-Q for the quarter ended
Forward-Looking Statements
Statements contained in this current report on Form 8-K regarding matters that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expected," "will," "may," "continue" and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These statements include those related to anticipated activities by Merck and the Company under the Amended Agreement; the amount of development funding under, and potential option exercise fee payments to the Company under, the Amended Agreement; possible extensions and option exercises under the Amended Agreement; the potential receipt of milestone and royalty payments by the Company under the Amended Agreement; the Company funding the research, development and commercialization of NGM Product Candidates; the completion of the CATALINA clinical trial; and other statements that are not historical fact. Because such statements deal with future events and are based on the Company's current expectations, they are subject to various risks and uncertainties, and actual results, performance or achievements of the Company could differ materially from those described in or implied by the statements in this current report on Form 8-K. These forward-looking statements are subject to risks and uncertainties, including, without limitation, risks and uncertainties associated with the costly and time-consuming biopharmaceutical product development process and the uncertainty of clinical success, including risks related to failure or delays in successfully initiating, enrolling or completing clinical studies, as well as the risk that results obtained in clinical trials to date may not be indicative of results obtained in ongoing or future trials; the Company's ability to maintain the Continuing Collaboration with Merck, including the risk that if Merck were to breach or terminate the Amended Agreement or Merck's development funding obligations thereunder, the Company would not obtain all of the anticipated financial and other benefits of the Amended Agreement, and the development and/or commercialization of the Company's product candidates within the scope of the Continuing Collaboration could be delayed, perhaps substantially; the time-consuming and uncertain regulatory approval process; the Company's reliance on third-party manufacturers for its product candidates; the sufficiency of the Company's cash resources, including to fund programs that fall outside of the narrower scope of the Continuing Collaboration, and the Company's need for additional capital; the ongoing COVID-19 pandemic, which has adversely affected, and could materially and adversely affect in the future, the
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Company's business and operations, including the Company's clinical trials; and
other risks and uncertainties affecting the Company and its development
programs, including those discussed in the section titled "Risk Factors" in the
Company's quarterly report on Form 10-Q for the quarter ended
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