Entry into a Material Definitive Agreement

On April 29, 2020, PTC Therapeutics, Inc. (the "Company"), reported that certain of the former equityholders of Agilis Biotherapeutics, Inc. ("Agilis"), and, for the limited purposes set forth in the agreement, Shareholder Representative Services LLC, entered into a Rights Exchange Agreement (the "Rights Exchange Agreement"), pursuant to which the Company agreed to issue 2,821,176 shares of its common stock (the "Common Stock Consideration") and paid $36,881,009 (the "Cash Consideration"), in the aggregate, to such former equityholders of Agilis (the "Participating Rightholders") in exchange for the cancellation and forfeiture by the Participating Rightholders of their rights to receive certain milestone-based contingent payments under the Agreement and Plan of Merger (the "Merger Agreement") by and among the Company, Agility Merger Sub, Inc., Agilis, and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC, dated as of July 19, 2018, pursuant to which the Company acquired Agilis in 2018 (the "Acquisition") (Filing, 8-K, PTC Therapeutics, APR 29, 2020, View Source [SID1234556842]). Also on April 29, 2020, the Company issued 2,723,826 shares of the Common Stock Consideration to certain of the Participating Rightholders pursuant to the Rights Exchange Agreement, with the issuance of the remaining 97,350 shares of the Common Stock Consideration to certain of the Participating Rightholders who are former employees of Agilis or current or former employees of the Company to be deferred until the earlier of (i) December 15, 2020 or (ii) the date on which the Company files a registration statement on Form S-3 with respect to the resale of the shares of the Common Stock Consideration pursuant to the terms of the Rights Exchange Agreement, as further described below.
Pursuant to the terms of the Rights Exchange Agreement, the Participating Rightholders have canceled and forfeited their rights under the Merger Agreement to receive (i) $174.0 million, in the aggregate, of potential milestone payments based on the achievement of certain regulatory milestones and (ii) $37.6 million, in the aggregate, of $40.0 million in development milestone payments due upon the passing of the second anniversary of the closing of the Acquisition, regardless of whether the milestones are achieved.
The Rights Exchange Agreement has no effect on the Merger Agreement other than to provide for the cancellation and forfeiture of the Participating Rightholders’ rights to receive $211.6 million, in the aggregate, of the milestone payments described above. As a result, all other rights and obligations under the Merger Agreement remain in effect pursuant to their terms, including the Company’s obligation to pay up to an aggregate maximum amount of $22.4 million upon the achievement of certain development milestones (representing the remaining portion of potential development milestone payments after deducting the $37.6 million for which rights were canceled and forfeited pursuant to the Rights Exchange Agreement from the $40.0 million in development milestone payments that are due upon the passing of the second anniversary of the closing of the Acquisition), up to an aggregate maximum amount of $361.0 million upon the achievement of certain regulatory milestones (representing the remaining portion of potential regulatory milestone payments for which rights were not canceled and forfeited pursuant to the Rights Exchange Agreement), up to a maximum aggregate amount of $150.0 million upon the achievement of certain net sales milestones and a percentage of annual net sales for Friedreich ataxia and Angelman syndrome during specified terms, ranging from 2% to 6%, pursuant to the terms of the Merger Agreement.
Pursuant to the Rights Exchange Agreement, the Company has agreed to use commercially reasonable efforts to file as promptly as practicable after the date of the Rights Exchange Agreement, but in no event earlier than the date on which the Company files a Quarterly Report on Form 10-Q following the date of the Rights Exchange Agreement, a registration statement on Form S-3 with respect to the resale of the shares of the Common Stock Consideration issued to the Participating Rightholders pursuant to the Rights Exchange Agreement and to maintain the effectiveness of such registration statement until the six-month anniversary date of the Rights Exchange Agreement or such earlier time as all shares of the Common Stock Consideration covered by the registration statement have been sold, subject to certain exceptions and the provision of certain information by the Participating Rightholders. The Rights Exchange Agreement contains customary indemnification obligations of the Company and the former Agilis equityholders with respect to the registration statement.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!