On December 14, 2020, Allogene Therapeutics, Inc. (the "Company") and Overland Pharmaceuticals (CY) Inc. ("Overland")reported that Allogene Overland Biopharm (CY) Limited (the "JV Company") for the development, manufacturing and commercialization of certain of the Company’s allogeneic chimeric antigen receptor ("CAR") T cell therapies for patients in China, Taiwan, South Korea and Singapore (the "Territory") pursuant to a Share Purchase Agreement and a Shareholders’ Agreement (Filing, 8-K, Allogene, DEC 14, 2020, View Source [SID1234572867]). In connection with the formation of the joint venture, the Company also entered into a License Agreement with the JV Company.
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Pursuant to the Share Purchase Agreement, the Company acquired Seed Preferred shares in the JV Company representing 49% of the JV Company’s outstanding stock as partial consideration for the License Agreement, and Overland acquired Seed Preferred shares representing 51% of the JV Company’s outstanding stock for $117 million in upfront and certain quarterly cash payments. The JV Company shall use $77 million of such cash for operating capital and $40 million of such cash as upfront cash payment to the Company under the License Agreement described below. The Share Purchase Agreement includes customary representations and warranties on behalf of the Company, Overland and the JV Company.
Under the terms of the Shareholders’ Agreement, the board of directors of the JV Company will be comprised of five directors, with two directors designated by the Company, two directors designated by Overland and one director serving as the chief executive officer of the JV Company. The Shareholders’ Agreement provides each of the Company and Overland certain shareholder-level consent rights, certain director-level consent rights, registration rights, information rights, and pre-emptive rights for future equity issuances. The Shareholders’ Agreement shall terminate upon the consent of the parties, provided that its provisions with respect to director designation rights, shareholder-level consent rights, director-level consent rights, information rights, and pre-emptive rights shall terminate upon a qualified IPO or sale of the JV Company or its assets.
Pursuant to the License Agreement, the Company will grant the JV Company an exclusive license to develop, manufacture and commercialize specific Company product candidates targeting BCMA, CD70, FLT3, and DLL3 (the "Licensed Products") in the Territory. The Company retains exclusive rights to, among other things, develop, manufacture and commercialize the Licensed Products outside the Territory.
The Company will receive an upfront cash payment of $40 million described above as well as up to $40 million in total development milestones. In addition, the Company will receive tiered low to mid single-digit royalties on net sales in the Territory, subject to reductions in specified circumstances.
Under the License Agreement, each party has granted the other party specified intellectual property licenses to enable the other party to perform its obligations and exercise its rights under the License Agreement, including license grants to enable each party to conduct development, manufacturing and commercialization activities pursuant to the terms of the License Agreement. The Company plans to supply the JV Company with ALLO-647, which is intended to be used as part of the lymphodepletion regimen for certain CAR T cell product candidates in the Territory, pursuant to a supply agreement and for agreed upon consideration.
The License Agreement will remain in effect on a Licensed Product-by-Licensed Product and jurisdiction-by-jurisdiction basis, unless terminated earlier, until the expiration of the royalty term with respect to such Licensed Product in such jurisdiction. Each party has the right to terminate the License Agreement for the other party’s material breach of its obligations under the License Agreement, subject to cure rights. Additionally, the JV Company may terminate the License Agreement in its sole discretion and in its entirety after a certain time period with sufficient prior written notice. The Company may also terminate the licenses of specified patent rights upon notice if the JV Company challenges the enforceability or validity of any patent rights belonging to the Company that are licensed to the JV Company. Either party to the License Agreement may terminate the License Agreement if the other party declares bankruptcy. Upon termination, any license granted by the Company to the JV Company will terminate.
The License Agreement includes customary representations and warranties on behalf of the Company and the JV Company as are customarily found in transactions of this nature, including representations and operative provisions as to the licensed intellectual property, regulatory matters and compliance with applicable laws. The License Agreement also provides for certain mutual indemnities for breaches of representations, warranties and covenants.
The foregoing description of the material terms of the License Agreement, the Share Purchase Agreement and the Shareholders’ Agreement is qualified in its entirety by reference to the complete text of such agreements, which the Company intends to file with the Securities and Exchange Commission as exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2020.