| Item 1.01 | Entry into a Material Definitive Agreement |
Effective November 6, 2018, Cue Biopharma, Inc. (the “Company”) entered into a Collaboration, License and Option Agreement (the “Agreement”) with LG Chem, Ltd. (“LG Chem”), related to the development of the Company’s Immuno-STAT BiologicsTM focused in the field of oncology.
Pursuant to the Agreement, the Company granted LG Chem an exclusive license to develop, manufacture and commercialize the Company’s lead product,CUE-101, as well as Immuno-STAT Biologics that targetT-cells against two additional cancer antigens (“Product Candidates”), in Australia, Japan, Republic of Korea, Singapore, Malaysia, Vietnam, Thailand, Philippines, Indonesia, China (including Macau and Hong Kong) and Taiwan (collectively, the “LG Chem Territory”). The Company retains rights to develop and commercialize all assets included in the Agreement in the United States and in global markets outside of the LG Chem Territory. Under the Agreement, the Company will engineer the selected Immuno-STAT Biologics™ for up to three alleles, which are expected to include the predominant alleles in the LG Chem Territory, thereby enhancing Cue’s market reach by providing for greater patient coverage of populations in global markets, while LG Chem will establish a chemistry, manufacturing and controls (“CMC”) process for the development and commercialization of Product Candidates. In addition, LG Chem has the option to select one additional Immuno-STAT Biologic for an oncology target (an “Additional Immuno-STAT Biologic”) within two years of the effective date of the Agreement for an exclusive worldwide development and commercialization license. If LG Chem exercises this option, then the parties will execute a license and collaboration agreement (“Global License and Collaboration Agreement”) setting forth the terms and conditions relating to such arrangement. The Company will retain an option toco-develop andco-commercialize the additional program worldwide.
Under the terms of the Agreement, LG Chem will pay the Company a $5.0 millionnon-refundable,non-creditable upfront payment and purchase approximately $5.0 million of shares of the Company’s common stock at a price per share equal to a twenty percent (20%) premium to the volume weighted-average closing price per share over the thirty (30) trading day period immediately prior to the effective date of the Agreement. The Company is also eligible to receive additional aggregate payments of approximately $400 million if certain research, development, regulatory and commercial milestones are successfully achieved. In addition, the Agreement also provides that LG Chem will pay the Company tiered single-digit royalties on net sales of commercialized Product Candidates (“Collaboration Products”) in the LG Chem Territory on aproduct-by-product andcountry-by-country basis, until the later of expiration of patent rights in a country, the expiration of regulatory exclusivity in such country, or ten years after the first commercial sale of a Collaboration Product in such country, subject to certain royalty step-down provisions set forth in the Agreement.
Pursuant to the Agreement, the parties will share research costs related to Collaboration Products, and LG Chem will provide CMC process development for selected Product Candidates and potentially additional downstream manufacturing capabilities, including clinical and commercial supply for Collaboration Products. In return for performing CMC process development, LG Chem is eligible to receivelow-single digit royalty payments on the sales of Collaboration Products sold in all countries outside the LG Chem Territory. Furthermore, should the parties enter into a Global License and Collaboration Agreement for an Additional Immuno-STAT Biologic, LG Chem will pay the Company aone-time,non-refundable,non-creditable upfront payment and the Company will be eligible to receive up to approximately $470 to $675 million in fees and milestone payments as well as tiered royalty payments on future global sales that range from high-single digits tomid-double digit teens in the United States andmid-single tolow-double digits outside of the United States. The amount of fees and milestone payments, as well as whether the Company receives royalty payments, will depend on when LG Chem nominates the Additional Immuno-STAT Biologic, the number of alleles selected by LG Chem and whether the Company exercises its option toco-develop andco-commercialize the additional program worldwide, in which case the Company would share costs and profits instead of receiving royalties and post-option-exercise milestones.
The Agreement includes various representations, warranties, covenants, indemnities and other customary provisions. LG Chem may terminate the Agreement for convenience or change of control of the Company on aprogram-by-program,product-by-product orcountry-by-country basis, or in its entirety, at any time following the notice period set forth in the Agreement. Either party may terminate the Agreement, in its entirety or on aprogram-by-program,product-by-product orcountry-by-country basis, in the event of an uncured material breach. The Agreement is also terminable by either party (i) upon the bankruptcy, insolvency or liquidation of the other party or (ii) for certain activities involving the challenge of certain patents controlled by the other party. Unless earlier terminated, the Agreement will expire on aproduct-by-product andcountry-by-country basis upon
