| | Item 1.01. | Entry into a Material Definitive Agreement. |
Asset Purchase Agreement
As previously disclosed, on December 11, 2022, Clovis Oncology, Inc. (the “Company”) and certain of its subsidiaries, Clovis Oncology Ireland Limited and Clovis Oncology UK Limited (together with the Company, the “Debtors”), filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (such court, the “Court” and such cases, the “Cases”). On January 24, 2023, the Court approved bidding procedures to conduct the sale of the Company’s assets in accordance with Section 363 of the Bankruptcy Code (the “Bidding Procedures”).
On March 30, 2023, the Company conducted an auction (the “Auction”) to sell certain of its assets and rights associated with Rubraca® (rucaparib) and the business and operations related to the development and exploitation thereof (the “Product Business”) pursuant to the Bidding Procedures. The Company determined that pharma& Schweiz GmbH (“Pharma&”) submitted the highest and otherwise best bid at the Auction.
Accordingly, on April 5, 2023, the Company entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Pharma& to sell the Product Business for an upfront payment of $70,000,000 (the “Upfront Payment”) and up to an additional $50,000,000 upon the successful achievement of specified regulatory milestones and $15,000,000 in later sales related milestones. Pursuant to the Asset Purchase Agreement, Pharma& will be responsible for the payment of up to $41,000,000 (the “Cure Cost Cap”) of Cure Costs (as defined in the Asset Purchase Agreement) in respect of the assigned contracts that are part of the Product Business, with the Company being responsible for the payment of Cure Costs above the Cure Cost Cap, if any. The transaction is part of a sale process under Section 363 of the Bankruptcy Code that will be subject to approval by the Court. Pursuant to the Bidding Procedures, Dr. Reddy’s Laboratories, Inc. was selected as the Back-Up Bidder (as defined in the Bidding Procedures) in the event the transactions with Pharma& under the Asset Purchase Agreement are not consummated.
Pursuant to the terms of the Asset Purchase Agreement, Pharma& and the Company entered into an escrow agreement with Citibank (the “Escrow Agent”), pursuant to which Pharma& deposited into escrow with the Escrow Agent $6,000,000 against the Upfront Payment.
The Asset Purchase Agreement contains customary representations and warranties of the parties and is subject to a number of closing conditions, including, among others, (i) the accuracy of representations and warranties of the parties; (ii) the entry of an order approving the Asset Purchase Agreement by the Court; (iii) material compliance with the obligations of the parties set forth in the Asset Purchase Agreement, including the assignment of certain essential contracts; and (iv) no Material Adverse Effect (as defined in the Asset Purchase Agreement) having occurred to the Product Business.
The Asset Purchase Agreement may be terminated, subject to certain exceptions: (i) by the mutual written consent of the parties; (ii) by either party, if (a) any court of competent jurisdiction or other competent governmental authority issues a final, non-appealable order prohibiting the transactions; or (b) if the closing has not occurred on or prior to June 30, 2023; (iii) by either party, (a) for certain material breaches by the other party of its representations and warranties or covenants that remain uncured or (b) if the Company enters into a definitive agreement with respect to an alternative transaction for the Product Business with one or more persons other than Pharma& and (iv) by Pharma& if (a) the Court has not entered a sale order approving the transaction prior to 11:59 p.m. Eastern Time on April 12, 2023; (b) the Court enters an order of, or the Company seeks to have the Court enter an order of, dismissal of the Cases, conversion of the Cases into cases under Chapter 7 of the Bankruptcy Code, or appointment of an appointee is entered for any reason; or (c) the Company files any stand-alone plan of reorganization or liquidation (or announces support of any such plan filed by any other party).
The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated by reference herein. The representations and warranties contained in the Asset Purchase Agreement were made only for the purposes of the Asset Purchase Agreement and solely for the benefit of the parties thereto. Those representations and warranties may be subject to important limitations and qualifications agreed to by the
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