Item 1.01. Entry into a Material Definitive Agreement.
License and Commercialization Agreement and Commercial Supply Agreement
On October 10, 2013, VIVUS, Inc., or VIVUS or the Company, entered into a license and commercialization agreement, or the License Agreement, and a commercial supply agreement, or the Supply Agreement, with Auxilium Pharmaceuticals, Inc., or Auxilium.
Under the terms of the License Agreement, Auxilium received an exclusive license to commercialize and promote VIVUS’s drug STENDRA™ (avanafil) for the treatment of erectile dysfunction in the United States and Canada and their respective territories, or the Territory. Additionally, following the completion of certain events, VIVUS has agreed to transfer to Auxilium ownership of the product marketing authorization for STENDRA for the treatment of erectile dysfunction, which was granted by the U.S. Food and Drug Administration, or the FDA, in April 2012. Each party agreed not to develop, commercialize, or in-license any other product that operates as a PDE-5 inhibitor for the treatment of erectile dysfunction in the Territory for a limited time period, subject to certain exceptions. A PDE-5 inhibitor means any product that operates as a phosphodiesterase type-5 inhibitor.
VIVUS will receive an upfront license fee of $30 million, various milestone payments, plus royalty payments on STENDRA sales. VIVUS is eligible to receive a regulatory milestone payment of $15 million upon approval by the FDA of a specific time of onset claim for STENDRA in the Territory. In addition, VIVUS is eligible to receive up to an aggregate of $255 million in potential milestone payments based on certain net sales targets by Auxilium. Further, VIVUS will receive royalty payments based on tiered percentages of the aggregate annual net sales of STENDRA in the Territory on a quarterly basis. The percentage of Auxilium’s aggregate annual net sales to be paid to VIVUS increases in accordance with the achievement of specific thresholds of aggregate annual net sales of STENDRA in the Territory. If Auxilium’s net sales of STENDRA in a country are reduced by certain amounts following the entry of a generic product to the market, royalty payments will be reduced by certain percentages based on such reductions. Auxilium will also reimburse VIVUS for payments made to cover various obligations to Mitsubishi Tanabe Pharmaceutical Corporation during the term of the License Agreement.
Auxilium will receive an exclusive license, with a right to sublicense, subject to certain limitations, under certain of VIVUS’s trademarks, including STENDRA, to market, sell and distribute STENDRA for the treatment of erectile dysfunction in the Territory. In addition, Auxilium will receive an exclusive license, with a right to sublicense, subject to certain limitations, under certain of VIVUS’s patents and know-how (i) to use, distribute, import, promote, market, sell, offer for sale and otherwise commercialize STENDRA for the treatment of erectile dysfunction in the Territory, (ii) to make and have made STENDRA anywhere in the world, with certain exceptions, where STENDRA is solely for use or sale for the treatment of erectile dysfunction in the Territory, and (iii) to conduct certain development activities on STENDRA for the treatment of erectile dysfunction in support of obtaining regulatory approval in the Territory.
Auxilium will obtain STENDRA exclusively from VIVUS for a mutually agreed term pursuant to the Supply Agreement, as further described below. Auxilium may elect to transfer the control of the supply chain for STENDRA for the Territory to itself or its designee by assigning to Auxilium VIVUS’s agreements with the contract manufacturer, which is referred to below as the Supply Chain Transfer.
At VIVUS’s sole cost and expense, VIVUS shall be responsible for preparing and filing with the FDA the appropriate documents to obtain a label expansion for STENDRA referencing a specific time of onset claim. VIVUS shall use commercially reasonable efforts to obtain approval of such label expansion filing. Further, VIVUS shall be responsible for conducting any post-regulatory studies of STENDRA that are required by the FDA in the Territory. Such costs will be split equally between the parties up to a specified amount and then once the specified amount is reached VIVUS shall be solely responsible for the remainder of the costs.
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