On November 15, 2023, Alkermes plc (the "Company") reported the previously announced separation of its oncology business into Mural Oncology plc ("Mural"), a new, independent, publicly-traded company (the "Separation") (Filing, Alkermes, NOV 15, 2023, View Source [SID1234639963]). The Separation was effected by means of a distribution of all of the outstanding ordinary shares of Mural to the Company’s shareholders (the "Distribution"), in which each of the Company’s shareholders received one ordinary share, nominal value $0.01 per share, of Mural for every ten ordinary shares, par value $0.01 per share, of the Company (the "Distribution Ratio") held by such shareholder as of the close of business on November 6, 2023, the record date for the Distribution (the "Record Date"). The effective time of the Distribution was 12:01 a.m. Eastern time on November 15, 2023.
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Separation Agreement
In connection with the Separation, the Company entered into a separation agreement with Mural, dated as of November 13, 2023, that, among other things, sets forth the Company’s agreements with Mural regarding the principal actions to be taken in connection with the Separation, including the Distribution. The separation agreement identifies assets to be transferred to, liabilities to be assumed by and contracts to be assigned to Mural, including the operating lease for 850 and 852 Winter Street in Waltham, Massachusetts, as part of the Separation, and it provides for when and how such transfers, assumptions and assignments occur. The purpose of the separation agreement is to provide Mural and the Company with those assets necessary to operate their respective businesses and to retain or assume the respective liabilities related to those assets. Under the terms of the separation agreement, the Company granted Mural a perpetual, worldwide, non-exclusive, royalty-free, fully paid-up license (or, as the case may be, sublicense) to intellectual property controlled by the Company as of the date of the Distribution to allow Mural to use such intellectual property for the oncology business, and Mural granted the Company a perpetual, worldwide, non-exclusive, royalty-free, fully paid-up license (or, as the case may be, sublicense) to intellectual property transferred to Mural as part of the Separation for the Company’s use outside of the oncology business. Each of Mural and the Company agreed to releases with respect to pre-Distribution claims, and cross-indemnities with respect to post-Distribution claims, that are principally designed to place financial responsibility for the obligations and liabilities allocated to Mural under the separation agreement with Mural, and financial responsibility for the obligations and liabilities allocated to the Company under the separation agreement with the Company. The Company and Mural are also each subject to mutual six-month employee non-solicitation and non-hire restrictions, subject to certain customary exceptions, and certain confidentiality restrictions and information sharing obligations.
Tax Matters Agreement
In connection with the Separation, the Company also entered into a tax matters agreement with Mural, dated as of November 13, 2023. The tax matters agreement governs the Company’s and Mural’s respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the Distribution, together with certain related transactions, to qualify as tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters.
In addition, the tax matters agreement imposes certain restrictions on Mural and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) and on the Company and its subsidiaries that are designed to prevent the taking of any actions that would adversely affect, or could reasonably be expected to adversely affect, the tax-free status of the Distribution, together with certain related transactions. The tax matters agreement provides special rules that allocate tax liabilities in the event that the Distribution, together with certain related transactions, is not tax-free. In general, under the terms of the tax matters agreement, if the Distribution, together with certain related transactions, were to fail to qualify as a transaction that is tax-free for U.S. federal income tax purposes, under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code"), and if and to the extent that such failure results from certain actions, omissions or failures to act by the Company, including a prohibited change of control in the Company under Section 355(e) of the Code or an acquisition of shares or assets of the Company, then the Company will bear any resulting taxes, interest, penalties and other costs. If and to the extent that such failure results from certain actions, omissions or failures to act by Mural, including a prohibited change of control in Mural under Section 355(e) of the Code or an acquisition of shares or assets of Mural, then Mural will indemnify the Company for any resulting taxes, interest, penalties and other costs. If such failure does not result from a prohibited change of control in the Company or Mural under Section 355(e) of the Code and both the Company and Mural are responsible for such failure, liability will be shared according to relative fault. If neither Mural nor the Company is responsible for such failure, the Company will bear any resulting taxes, interest, penalties and other costs.
Employee Matters Agreement
In connection with the Separation, the Company also entered into an employee matters agreement with Mural, dated as of November 13, 2023. The employee matters agreement governs the Company’s, Mural’s and their respective subsidiaries’ and affiliates’ rights, responsibilities and obligations after the Separation with respect to, employment, benefits and compensation matters relating to employees and former employees (and their respective dependents and beneficiaries) who are or were associated with the Company, including those who became employees of Mural in connection with the Separation; the allocation of assets and liabilities generally relating to employees, employment or service-related matters and employee benefit plans; other human resources, employment and employee benefits matters; and the treatment of equity-based awards granted by the Company prior to the Separation.
Transition Services Agreements
Alkermes, Inc., a wholly-owned subsidiary of the Company ("Company Subsidiary"), and Mural Oncology, Inc., a wholly-owned subsidiary of Mural ("Mural Subsidiary"), entered into a transition services agreement on November 13, 2023, pursuant to which the Company and its subsidiaries will provide, on an interim, transitional basis, various services to Mural and its subsidiaries, including services related to corporate functions such as finance, human resources, internal audit, research and development, financial reporting, and information technology, each for a term of two years, unless earlier terminated in accordance with the terms of such agreement.
Company Subsidiary and Mural Subsidiary also entered into a second transition services agreement on November 13, 2023, pursuant to which Mural and its subsidiaries will provide certain services to the Company and its subsidiaries, each for a term of two years, unless earlier terminated in accordance with the terms of such agreement.
The foregoing descriptions of the separation agreement, the tax matters agreement, the employee matters agreement, and the transition services agreements do not purport to be complete, provide only summaries of the material terms of such agreements and are qualified in their entirety by reference to each of the agreements, which are filed as Exhibit 2.1, Exhibit 10.1, Exhibit 10.2, Exhibit 10.3, and Exhibit 10.4, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.