The agreement terminates upon the payment of all approval payments owing to SFJ, unless earlier terminated. The agreement will automatically terminate upon the termination of one of the Company’s PNH Phase 3 clinical trials due to a safety concern and may be terminated by either party (i) upon a material breach of the agreement by the other party, (ii) if the primary endpoint in the PEGASUS trial is not achieved, the parties agree that the results of the Phase 3 program do not warrant submission for regulatory approval orAPL-2 fails to receive regulatory approval from both the FDA and the EMA, (iii) upon the bankruptcy of the other party and (iv) upon a change of control of the Company. In addition, SFJ may terminate the agreement in the event of a material adverse effect on the Company’s business, the Company is permanently enjoined from developingAPL-2 for PNH due to certain third party patents or SFJ disagrees with certain decisions made by the Company with respect to the Phase 3 program.
In certain instances, upon the termination of the agreement, the Company will be obligated to pay SFJ a multiple of the amounts paid to the Company under the agreement, including specifically
(i) 300% of such amounts (or $308 million if less) in the event that SFJ terminates the agreement due to specified fundamental breaches of the agreement by the Company or the bankruptcy of the Company,
(ii) 150% in the event the agreement is terminated due to a safety concern resulting from the gross negligence of the Company, upon a change of control of the Company or upon a breach involving improper payments or a violation of anti-corruption policies that impact the likelihood of obtaining regulatory approval,
(iii) 100% in the event of a termination due to third party patents, and
(iv) 100% plus an amount reflecting interest on the amount paid by SFJ at an annual rate of 22% in the event of termination due to disagreements with respect to the Phase 3 program.
In addition, if following termination, the Company continues to developAPL-2 for PNH and obtains a regulatory approval, it will make the approval payments to SFJ as if the agreement had not been terminated less any payments made upon termination, other than in the event of a termination due to material adverse effect in which case the Company’s obligation would be reduced by 50%, a termination by the Company due to SFJ’s failure to make a payment in which case the Company’s obligation would be reduced by 15% and a termination due to permanent patent injunction in which case the Company would have no further obligation.
Concurrently with entering into the agreement, the Company and SFJ have entered into a letter of intent to negotiate and enter into a joint development agreement to support the Company’s clinical development ofAPL-2 for the treatment of patients with cold agglutinin disease and warm antibody hemolytic anemia. Under the terms of the letter of intent, following execution of the agreement and agreement as to the development program for both indications, SFJ would fund $30 million of the development costs for these indications. In addition, upon the mutual agreement of the Company and SFJ, at any time after the earlier of the date that the Company has reviewed the primary endpoint data from its PEGASUS Phase 3 trial ofAPL-2 in patients with PNH and March 31, 2020, SFJ may fund an additional $50 million of the Company’s development costs for these indications.
The foregoing description of the development funding agreement is a summary only and is qualified in its entirety by reference to the terms of the development funding agreement, a copy of which will be filed with the Company’s Quarterly Report on Form10-Q for the quarter ended March 31, 2019.
Forward-Looking Statements
Statements in this Form 8-K about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to the Company’s collaboration with SFJ and the timing of the payments thereunder. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: whether the collaboration with SFJ will be successful, the agreement for CAD/wAIHA will be executed and the Company will receive all of the contemplated funding under the collaboration; whether the Company’s clinical trials will be fully enrolled and completed when anticipated; whether preliminary or interim results from a clinical trial will be predictive of the final results of the trial; whether results obtained in preclinical studies and clinical trials will be indicative of results that will be generated in future clinical trials; whether APL-2 will successfully advance through the clinical trial process on a timely basis, or at all; whether the results of such clinical trials will warrant regulatory submissions and whether APL-2 will receive approval from the United States Food and Drug Administration or equivalent foreign regulatory agencies for any indication; and other factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2019 and the risks described in other filings that the Company may make with the Securities and Exchange Commission. Any forward-looking statements contained in this Form 8-K speak only as of the date hereof, and the Company specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
