On April 5, 2022 Atreca, Inc. (the "Company") reported its entry into an Option and License Agreement (the "Option and License Agreement"), dated April 4, 2022, by and between the Company and Zymeworks Inc., a corporation organized and existing under the laws of British Columbia ("Zymeworks") (Filing, 8-K, Atreca, APR 5, 2022, View Source [SID1234611448]). Pursuant to the Option and License Agreement, the Company received from Zymeworks a non-exclusive, non-transferable, sublicensable, worldwide, royalty-free license under certain of Zymeworks’ patents and know-how (the "Zymeworks Intellectual Property") to perform preclinical research and development of antibody drug conjugates comprising antibodies owned or otherwise controlled by the Company conjugated to certain of Zymeworks’ proprietary ZymeLinkTM auristatin- or hemiasterlin-based linker-cytotoxins (each such antibody drug conjugate, an "ADC," and such license, the "Research License").
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Zymeworks has also granted the Company an exclusive option (the "Commercial Option") to obtain an exclusive, transferable, sublicensable license for up to three (3) collaboration programs under the Zymeworks Intellectual Property to research, develop, manufacture and commercialize certain ADCs worldwide for therapeutic, prophylactic and diagnostic uses for all human and non-human indications, including all oncology indications. Each collaboration program involves the Company’s research and development directed to ADCs incorporating one (1) lead antibody sequence and up to two (2) backup antibody sequences nominated by the Company (each ADC comprising antibodies incorporating a lead sequence or backup sequence and arising from a collaboration program with respect to which the Company exercises the Commercial Option, a "Licensed Product"). If the Company exercises the Commercial Option, then the Company will have the exclusive right to develop, manufacture and commercialize Licensed Products worldwide and, with respect to each collaboration program, the Company will be required to use commercially reasonable efforts to develop and commercialize at least one Licensed Product and the Company will pay to Zymeworks an option exercise fee, and lump sum payments upon the achievement of certain development and regulatory milestones and commercial milestones. In addition, with respect to each Licensed Product, the Company will pay tiered royalties on net sales of Licensed Products at single-digit royalty rates.
Unless earlier terminated or extended under certain circumstances, the term of the Research License and the Commercial Option shall be two years from the effective date, with the Company having an option upon payment of a fee to Zymeworks to extend the term for an additional year (the "Research Program Term"). Unless earlier terminated, the term of the Option and License Agreement will continue on a Licensed Product-by-Licensed Product basis until the expiration of the Company’s royalty obligations for such Licensed Product. Notwithstanding the foregoing, if the Company does not nominate an antibody sequence to be the lead antibody sequence for any collaboration program during the Research Program Term, then the term of the Option and License Agreement will expire on the expiration of the Research Program Term.
The Option and License Agreement may be terminated by the Company, in its entirety or on a collaboration program-by-collaboration program basis, for convenience upon a certain number of days’ prior written notice to Zymeworks. The Option and License Agreement may be terminated by Zymeworks upon a certain number of days’ notice to the Company if the Company or certain related parties take certain actions to challenge Zymeworks’ patent rights and certain other conditions are not met. The Option and License Agreement may be terminated by either party upon a material breach by the other party (subject to prior written notice and a cure period) or upon certain insolvency events, including bankruptcy proceedings. The Option and License Agreement includes standard and customary provisions regarding, among other things, compliance with laws and regulations, confidentiality, intellectual property, representations and warranties, liability, indemnification, and insurance.
The foregoing description of the material terms of the Option and License Agreement is qualified in its entirety by reference to the full text of the Option and License Agreement, which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, to be filed with the Securities and Exchange Commission (the "SEC"). Pursuant to Item 601(b)(10)(iv) of Regulation S-K, the Company intends to redact from the filed copy of the Option and License Agreement certain information that is both (i) not material and (ii) is the type of information that the Company treats as private or confidential.