| Item 1.01. | Entry into a Material Definitive Agreement. |
Asset Purchase Agreement
On January 17, 2019 (the “Signing Date”), Spectrum Pharmaceuticals, Inc. (the “Company”) entered into that certain Asset Purchase Agreement, by and among Acrotech Biopharma LLC, a Delaware limited liability company (the “Buyer”), Aurobindo Pharma USA, Inc., a Delaware corporation (the “Parent Guarantor”), and the Company (the “Purchase Agreement”), pursuant to which the Buyer will acquire certain assets and liabilities related to various hematology/oncology products of the Company, including BELEODAQ®, EVOMELA®, FOLOTYN®, MARQIBO®, FUSILEV®, KHAPZORY™ and ZEVALIN® (the “Product Portfolio”), set forth in Article II of the Purchase Agreement (collectively, the “Purchased Assets and Assumed Liabilities” and such acquisition, the “Transaction”). A copy of the Purchase Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.
In connection with the Transaction, the Company is entitled to receive an upfront purchase price of $160 million in cash, with $4 million to be held in escrow for six (6) months, payable upon the consummation of the Transaction (the “Closing Date”) and subject to adjustment in connection with the terms of the Purchase Agreement. The Company is also entitled to receive additional contingent milestone payments of up to $140 million. The contingent payments, if any, are triggered upon the achievement of certain milestones, including the receipt of certain U.S. Food and Drug Administration regulatory approvals related to MARQIBO® and the achievement of certain net sales targets related to MARQIBO® and KHAPZORY™. The milestones must be achieved within the five (5) year period following the Closing Date.
Pursuant to the Purchase Agreement, the Company has made customary representations and warranties and has agreed to customary covenants relating to the Transaction, including: (i) during the period between the Signing Date and the Closing Date, the Company will operate its business related to the Product Portfolio in the ordinary course; (ii) for a period of five (5) years following the Closing Date, the Company will not compete with the business related to the Product Portfolio; (iii) for a period of three (3) years following the Closing Date, the Company will not solicit any former employees of the Company that are hired by the Buyer; and (iv) the parties to the Purchase Agreement are obligated to seek certain regulatory approvals, including expiration (or early termination) of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Purchase Agreement also contains customary indemnification provisions, where the Company has agreed to indemnify the Buyer for losses arising from certain breaches of the Purchase Agreement, with a cap on indemnification set at twelve percent (12%) of the upfront purchase price of $160 million.
The Purchase Agreement also requires the Buyer to make offers of employment to certain employees of the Company that provide services relating to the Product Portfolio.
The Company entered into certain customary ancillary agreements in connection with the Transaction.
The above description of the Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Purchase Agreement filed as Exhibit 10.1 hereto and incorporated by reference.
