| Item 1.01 | Entry into a Material Definitive Agreement. |
On January 4, 2019, Spero Therapeutics, Inc. (“Spero”), through its wholly owned subsidiary New Pharma License Holdings Limited (“NPLH”), entered into a license agreement (the “License Agreement”) with Everest Medicines II Limited (“Everest”), which License Agreement also includes an option granted by Spero’s wholly owned subsidiary Spero Potentiator, Inc., a Delaware corporation (“Potentiator” and, together with NPLH, the “Company”). Under the terms of the License Agreement, the Company granted Everest an exclusive license to develop, manufacture and commercialize Spero’s product candidate SPR206 (the “Compound”) or products that contain the Compound (a “Licensed Product”) in Greater China (which includes Mainland China, Hong Kong and Macau), South Korea and certain Southeast Asian countries (collectively, the “Territory”). The Company retains development, manufacturing and commercialization rights with respect to the Compound and Licensed Products in the rest of the world and also retains the right to develop or manufacture the Compound and Licensed Products in the Territory for use outside the Territory. In addition to the license grant to SPR206, the Company also granted Everest a12-month exclusive option to negotiate with the Company for an exclusive license to develop, manufacture and commercialize Spero’s product candidate SPR741 in the Territory.
Under the terms of the License Agreement, the Company is entitled to receive an upfront payment of $3 million. The Company may also receive up to an additional $59.5 million in milestone payments upon Everest’s achievement of certain developmental, regulatory and sales milestone events related to SPR206, which achievement cannot be guaranteed. The Company is also entitled to receive high single-digit to low double-digit royalties on net sales, if any, of Licensed Products in the Territory following regulatory approval of the Compound. Everest has the right to sublicense to affiliates and third parties in the Territory.
Everest is responsible for all costs related to developing, obtaining regulatory approval of and commercializing the Compound and Licensed Products in the Territory, and is obligated to use commercially reasonable efforts to develop, manufacture and commercialize Licensed Products, including to achieve certain specified diligence milestones within agreed-upon periods. A joint development committee will be established between the Company and Everest to coordinate and review the development, manufacturing and commercialization plans with respect to Licensed Products in the Territory.
Unless earlier terminated due to certain material breaches of the contract, or otherwise, the License Agreement will expire on ajurisdiction-by-jurisdiction and LicensedProduct-by-Licensed Product basis until the latest to occur of expiration of the last valid claim under a licensed patent in such jurisdiction, the expiration of regulatory exclusivity in such jurisdiction or ten years after the first commercial sale of such Licensed Product in such jurisdiction. The License Agreement may be terminated in its entirety by Everest upon 90 or 180 days’ prior written notice, depending on the stage of development of the initial Licensed Product.
The foregoing description of the terms of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the License Agreement, which Spero intends to file as an exhibit to its Quarterly Report onForm 10-Q for the quarterly period ending March 31, 2019. Spero intends to seek confidential treatment for certain portions of the License Agreement pursuant to a Confidential Treatment Request to be submitted to the Securities and Exchange Commission pursuant toRule 24b-2 under the Securities Exchange Act of 1934, as amended.
On January 7, 2019, Spero issued a press release announcing the entry into the License Agreement, a copy of which is filed herewith as Exhibit 99.1 and incorporated by reference herein.
On January 7, 2019, Spero issued a press release providing regulatory and clinical updates for its product candidate SPR994, a copy of which is filed herewith as Exhibit 99.2 and is incorporated herein by reference.
