| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 7, 2022, Athenex, Inc. (the “Company”) entered into a definitive agreement (the “Agreement”) with ImmunityBio, Inc. (the “Buyer”) whereby the Company agreed to sell to the Buyer its leasehold interest in a manufacturing facility in Dunkirk, New York (the “Dunkirk Facility”) and certain other related assets, as described below, in exchange for reimbursement of certain expenditures that the Company made in the Dunkirk Facility totaling approximately $38 million, subject to adjustment at closing, provided that the purchase price of the interest in the Dunkirk Facility will not exceed $40 million. The transaction is subject to customary closing conditions, including obtaining the consents of the Empire State Development Corporation (“ESD”), Fort Schuyler Management Corporation (“FSMC”), County of Chautauqua Industrial Development Agency (“CCIDA”) and a lender of the Company. The closing is not subject to a financing contingency. The transaction is expected to close in the first quarter of 2022.
In addition to the leasehold interest in the Dunkirk Facility, the Buyer will purchase the Company’s interests in certain leased manufacturing equipment and personal property, and owned personal property and inventory at the Dunkirk Facility, along with the Company’s rights in and obligations under its agreements relating to the Dunkirk Facility with ESD, FSMC and CCIDA and other parties. The Buyer will assume all capital expenditure and hiring obligations of the Company pursuant to the Company’s existing agreements with ESD and FSMC. The Company will continue to operate its existing Athenex Pharmaceutical Division (“APD”) and Athenex Pharmaceutical Solutions (“APS”) divisions. The Buyer and the Company also entered into a preliminary agreement, pursuant to which APS will have the ability to manufacture its 503B products at the Dunkirk Facility at prices to be determined on a product-by-product basis, provided that the pricing will not exceed Buyer’s costs plus a 15% margin, and the parties expect to enter into a definitive preferred contract manufacturing agreement. The Company has not assigned any of its rights to its corporate headquarters in Buffalo, New York, under this Agreement and will retain all of its rights and obligations with respect to its corporate headquarters.
The Agreement contains customary representations and warranties, covenants, agreements and indemnification obligations of the Company and the Buyer. The foregoing summary 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 is filed as an exhibit to this Current Report on Form 8-K.
The Company issued a press release announcing this transaction on January 12, 2022. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
The above description of the Agreement has been included to provide information regarding the terms of the Agreement. It is not intended to provide any other information about the Company or the Buyer. The Agreement contains representations and warranties of the parties thereto that were made solely for the benefit of the other parties. The assertions embodied in those representations and warranties are qualified by information in confidential disclosure schedules that the parties have exchanged in connection with signing the Agreement. The disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Agreement. In addition, such representations and warranties may apply a contractual standard of materiality that is different from that generally applicable to stockholders. The representations and warranties were made for the purposes of allocating contractual risk between the parties to the Agreement and should not be relied upon as a disclosure of factual information relating to the parties thereto or the Company.
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all of the statements, expectations, and assumptions contained in this Current Report on Form 8-K are forward-looking statements. These forward-looking statements are typically identified by terms such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “foresee,” “goal,” “guidance,” “intend,” “likely,” “may,” “plan,” “potential,” “predict,” “preliminary,” “probable,” “project,” “promising,” “seek,” “should,” “will,” “would,” and similar expressions. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: whether the Company closes on the sale of its interest in the Dunkirk Facility and enters into a preferred contract manufacturing agreement with the Buyer, the development stage of its primary clinical candidates, including NKT Cell Therapy and related risks involved in drug development, clinical trials, regulation, uncertainties around regulatory reviews and approvals; the Company’s ability to scale its manufacturing and commercial supply operations
