| Item 1.01 | Entry into a Material Definitive Agreement. |
Exclusive License Agreement with Mabwell Therapeutics, Inc.
On January 19, 2023, Disc Medicine, Inc. (“Disc”) entered into an exclusive license agreement with Mabwell Therapeutics, Inc. (“Mabwell”) (a wholly-owned subsidiary of Mabwell (Shanghai) Bioscience Co., Ltd), pursuant to which Mabwell granted Disc an exclusive and sublicensable license under certain patent rights, know-how, and materials to develop and commercialize antibody products containing Mabwell’s MWTX-001, MWTX-002, and MWTX-003 antibodies, along with limited variants thereof, in all fields of use, in all territories other than Greater China (Mainland China, Hong Kong, Macau and Taiwan) and Southeast Asia (Brunei, Myanmar, Cambodia, Timor-Leste, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand and Vietnam). Disc also granted Mabwell an exclusive, sublicensable, royalty-free license under Disc’s patents and know-how arising under the agreement to develop and commercialize licensed antibody products in Greater China and Southeast Asia.
The license agreement requires Disc to pay Mabwell an upfront payment of $10 million dollars, and certain development and regulatory milestone payments for the licensed antibody products, for up to three indications, up to a maximum aggregate amount of $127.5 million dollars, as well as certain commercial milestone payments for certain licensed antibody product net sales achievements, up to a maximum aggregate amount of $275 million dollars. Disc is further obligated to pay a tiered percentage of revenue that Disc receives from its sublicensees (excluding revenue that is attributable to net sales on which royalty payments are due), ranging from a low third decile percentage if the sublicense is granted prior to the initiation of a phase 1 clinical trial of the licensed antibody product, to a low first decile percentage if the sublicense is granted after regulatory approval of the licensed antibody product. No sublicense revenue is due if the sublicense is granted after the first commercial sale of the licensed antibody product.
In addition, Disc is obligated to pay Mabwell a royalty on annual net sales of all licensed antibody products at a tiered rate ranging from low single-digits to high single-digits, subject to customary royalty reductions for (i) lack of a valid patent claim covering the licensed antibody product generating such sales, (ii) entry of a biosimilar product that equals or exceeds 20% of the total market share of the licensed antibody product, and (iii) a portion of any royalties paid to a third party for patents that claim the composition of matter or method of use of the licensed antibodies. Further, royalties are subject to customary apportionment calculations where the licensed antibodies are commercialized in combination products. The obligation to pay royalties under the Mabwell license expires on a licensed antibody product-by-licensed antibody product and country-by-country basis upon the later of (a) expiration of the last valid patent claim of the licensed patents that cover such licensed antibody product in such country, (b) expiration of regulatory exclusivity for such licensed antibody product in such country, and (c) ten years from the first commercial sale of such licensed antibody product in such country.
Disc’s license grant expires upon expiration of the last remaining royalty obligation for the last licensed antibody product in the last country. Either party may terminate the agreement prior to its expiration upon the other party’s uncured material breach, insolvency, or a challenge of the validity or enforceability of the patents licensed to such other party under the agreement. Disc may also terminate the agreement for convenience on 60 days’ written notice to Mabwell. In the event the agreement is terminated other than by Disc for cause, Disc has agreed to grant Mabwell an exclusive, sublicensable, worldwide license under Disc’s patent rights and know-how arising under the license agreement to develop and commercialize products containing the licensed antibodies. In such circumstances, Disc and Mabwell will negotiate a royalty to be paid by Mabwell on the net sales of such products in the licensed territory.
