| Item 1.01. | Entry Into a Material Definitive Agreement. |
On November 9, 2020, Homology Medicines, Inc. (the “Company”) entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Pfizer Inc. (“Pfizer”), pursuant to which the Company, in a private placement transaction (the “Private Placement”), agreed to issue and sell to Pfizer 5,000,000 shares (the “Shares”) of common stock, par value $0.0001 per share, at a purchase price of $12.00 per share, for an aggregate purchase price of $60.0 million.
Pursuant to the terms of the Stock Purchase Agreement, the Company also granted to Pfizer a right of first refusal for a 30-month period (the “ROFR Period”) beginning on the date of the closing of the Private Placement (collectively, the “ROFR Provision”). Under the ROFR Provision, if, during the ROFR Period, the Company determines to enter into an agreement with any third party pursuant to which such third party obtains development or commercialization rights to one or both of HMI-102 and HMI-103 other than a third party providing services to, or performing services on behalf of, the Company (whether through license, co-promotion/co-commercialization agreement, profit share, joint venture, asset sale or otherwise, but excluding a change of control of the Company) (such agreement, a “Third Party Agreement”), then the Company shall provide prior written notice to Pfizer (the “Company Notice”), which Company Notice shall include a form of the Third Party Agreement regarding the grant of such rights that has been negotiated with such third party. If Pfizer shall notify the Company within a certain period from the date of the Company Notice (the “Notification Period”) that it would like to enter into an agreement with the Company (a “Pfizer Alternative Agreement”) on substantially the same economic terms as the Third Party Agreement, the Company and Pfizer shall negotiate exclusively in good faith, for a certain period (the “Negotiation Period”), which Negotiation Period may be extended by mutual agreement of the Company and Pfizer, to reach agreement on any other terms of such Pfizer Alternative Agreement. If the parties do not enter into a Pfizer Alternative Agreement within the Negotiation Period, then the right of first refusal will be deemed to have expired with respect to the applicable product candidate or candidates that are the subject of the Third Party Agreement. If Pfizer shall not so notify the Company within the Notification Period, then the Company shall be free to enter into such Third Party Agreement on the economic terms set forth in the form of Third Party Agreement provided to Pfizer with the Company Notice. However, if in such case the Company does not enter into such Third Party Agreement, then Pfizer’s right of first refusal will be deemed reinstated with respect to the applicable product candidate or candidates that are the subject of the Third Party Agreement. Pfizer may exercise its right of first refusal under the ROFR Provision one time for each of HMI-102 and HMI-103 during the ROFR Period. Pfizer and the Company also agreed to establish a committee for sharing information regarding the development of each of HMI-102 and HMI-103. The Company also agreed (i) to certain reporting obligations to Pfizer with respect to any non-public data regarding HMI-102 or HMI-103 resulting from the Company’s pre-clinical and/or clinical trials, (ii) to grant Pfizer the right to designate a representative reasonably acceptable to the Company to serve on the Company’s scientific advisory board, provided that such representative’s participation is limited to discussions and information regarding HMI-102 and HMI-103, and (iii) to provide Pfizer with notice if, at any time during the ROFR period, the Company determines to engage in discussions with a third party regarding, or to initiate a process for a potential transaction that would reasonably be expected to result in, a change of control (as defined in the Stock Purchase Agreement) of the Company. The ROFR Provision and other provisions of the Stock Purchase Agreement described in the foregoing paragraph (other than in clause (iii) of the immediately preceding sentence) will terminate upon a change of control of the Company.
Pursuant to the Stock Purchase Agreement, the Company also granted Pfizer certain rights with respect to the registration of the Shares under the Securities Act of 1933, as amended (the “Securities Act”) (collectively, the “Registration Rights Provision”). Under the Registration Rights Provision, if, after the first anniversary of the date of the closing of the Private Placement, Pfizer proposes to publicly resell any or all of the Shares pursuant to Rule 144 of the Securities Act, and Pfizer in good faith believes it will be unable to sell all of the Shares proposed to be sold by it pursuant to Rule 144 without volume or manner-of-sale restrictions, then Pfizer shall notify the Company and the Company shall file as promptly as practicable a registration statement for the resale of the Shares. The Registration Rights Provision also includes customary information, cooperation and other rights and obligations related to such registration rights.
Pursuant to the terms of the Stock Purchase Agreement, Pfizer agreed that the Shares will be subject to a lock-up restriction, such that Pfizer will not, without the prior approval of the Company, sell, or otherwise enter into a similar transaction with the same economic effect as a sale with respect to, the Shares, subject to certain customary exceptions, until the first anniversary of the date of the closing of the Private Placement. Pfizer also agreed to be subject to a standstill agreement, such that until the earlier of (i) the first anniversary of the closing date of the Private Placement or (ii) the occurrence of a change of control of the Company or certain other fundamental events, Pfizer will be subject to certain customary standstill restrictions.
The closing of the Private Placement is expected to occur on or about November 10, 2020, subject to the satisfaction of customary closing conditions.
