UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 19, 2014
MEDIVATION, INC.
(Exact
name of registrant as specified in its charter)
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Delaware |
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001-32836 |
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13-3863260 |
(State or other jurisdiction
of incorporation) |
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(Commission
File No.) |
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(IRS Employer
Identification No.) |
525 Market Street, 36th Floor
San Francisco, California 94105
(Address of principal executive offices and zip code)
Registrants telephone number, including area code: (415) 543-3470
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.01. |
Completion of Acquisition or Disposition of Assets |
On October 23, 2014,
Medivation, Inc. (Medivation) entered into a License Agreement with CureTech Ltd. (CureTech) pursuant to which Medivation could acquire an exclusive license to the worldwide rights to pidilizumab, an immunomodulatory
antibody, for all potential indications. On December 19, 2014, Medivation delivered to CureTech a continuation notice and, as a result of the delivery of the continuation notice, obtained the exclusive rights to pidilizumab.
In connection with the delivery of the continuation notice, Medivation made upfront cash payments to CureTech totaling $5.0 million during the
fourth quarter of 2014. In addition, CureTech is entitled to contingent payments totaling up to $85.0 million upon attainment of certain development and regulatory milestones and up to $245.0 million upon the achievement of certain annual worldwide
net sales thresholds, as well as tiered royalties ranging from 5% to 11% on annual worldwide net sales. CureTech is also entitled to a $5.0 million milestone payment upon completion of the Manufacturing Technology Transfer, as defined in the License
Agreement.
The representations, warranties and covenants contained in the Agreement were made only for purposes of the Agreement, are
solely for the benefit of the parties (except as specifically set forth therein), may be made for the purpose of allocating contractual risk between the parties instead of establishing matters as facts, and may be subject to qualifications set forth
in confidential disclosure schedules and to standards of materiality and knowledge applicable to the contracting parties that differ from those applicable to investors generally. Investors should not rely on the representations, warranties and
covenants or any description thereof as characterizations of the actual state of facts or condition of the Medivation, CureTech, or the licensed assets.
Item 9.01. Financial Statements and Exhibits.
(a)
Financial statements of the business acquired
Medivation has concluded that according to the guidance in Financial Accounting Standards Board Accounting
Standards Codification Topic No. 805, Business Combinations, and Article 11 of Regulation S-X, the transaction meets the definition of a business and exceeds the conditions of significance set forth in Rule 1-02(w) of
Regulation S-X at the greater than 20%, but less than 40% level. The financial statements of the business acquired required by Item 9.01(a) of Form 8-K are included herewith.
(b) Pro Forma Financial Information
The pro forma financial
information required by Item 9.01(b) of Form 8-K is included herewith.
(d) Exhibits.
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Exhibit No. |
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Description |
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2.1 |
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License Agreement between Medivation, Inc. and CureTech Ltd., dated as of October 23, 2014* |
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23.1 |
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Consent of Independent Accountant |
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99.1 |
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Audited Financial Statements of CureTech Ltd. as of December 31, 2013 and for the year ended December 31, 2013, and notes thereto |
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99.2 |
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Unaudited Condensed Financial Statements of CureTech Ltd. as of September 30, 2014 and for the nine-month periods ended September 30, 2014 and 2013, and notes thereto |
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99.3 |
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Unaudited Pro Forma Condensed Combined Financial Statements as of September 30, 2014, for the nine-month periods ended September 30, 2014 and 2013, and for the year ended December 31, 2013, and notes thereto |
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Confidential treatment has been requested with respect to certain portions of this exhibit. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
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MEDIVATION, INC. |
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Dated: November 5, 2015 |
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By: |
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/s/ Richard A. Bierly |
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Richard A. Bierly Chief Financial
Officer |
EXHIBIT INDEX
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Exhibit No. |
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Description |
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2.1 |
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License Agreement between Medivation, Inc. and CureTech Ltd., dated as of October 23, 2014* |
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23.1 |
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Consent of Independent Accountant |
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99.1 |
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Audited Financial Statements of CureTech Ltd. as of December 31, 2013 and for the year ended December 31, 2013, and notes thereto |
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99.2 |
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Unaudited Condensed Financial Statements of CureTech Ltd. as of September 30, 2014 and for the nine-month periods ended September 30, 2014 and 2013, and notes thereto |
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99.3 |
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Unaudited Pro Forma Condensed Combined Financial Statements as of September 30, 2014, for the nine-month periods ended September 30, 2014 and 2013, and for the year ended December 31, 2013, and notes thereto |
* |
Confidential treatment has been requested with respect to certain portions of this exhibit. |
Exhibit 2.1
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS
DOCUMENT, MARKED BY BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
License Agreement
between
Medivation, Inc.
and
CureTech Ltd.
Dated as of October 23, 2014
LICENSE AGREEMENT
This License Agreement (this Agreement) is made and entered into as of October 23, 2014 (the Effective
Date) by and between Medivation, Inc. a Delaware corporation having its place of business at 525 Market Street, 36th Floor, San Francisco, California, 94105, and its subsidiaries
(collectively, Medivation), and CureTech Ltd., a corporation organized under the laws of Israel, having a business address at 42 Hayarkon Street, Industrial Zone, Yavne 81227, Israel (CureTech). CureTech and
Medivation are sometimes referred to herein individually as a Party and collectively as the Parties.
RECITALS
WHEREAS,
CureTech owns or controls certain intellectual property rights with respect to the Licensed Molecules (as defined herein) and the Licensed Products (as defined herein) in the Territory (as defined herein);
WHEREAS, Medivation desires to obtain a license under such intellectual property rights to develop, manufacture, commercialize and
otherwise exploit the Licensed Molecules and the Licensed Products in the Territory on the terms and conditions set forth in this Agreement, and
WHEREAS, contemporaneously with the execution of this Agreement, the Parties are entering into that certain Manufacture and Supply
Agreement, pursuant to which CureTech will affect the transfer to Medivation or its designee of CureTechs proprietary manufacturing technology and know-how associated with the Exploitation of the Licensed Products, and shall supply and
Medivation will purchase certain clinical trial supplies (the Manufacturing Agreement);
NOW, THEREFORE,
in consideration of the premises and the mutual promises and conditions set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby
agree as follows:
ARTICLE 1
DEFINITIONS
Unless
otherwise specifically provided herein, the following terms shall have the following meanings:
1.1 Accountant
has the meaning set forth in Section 4.10.2.
1.2 Acquisition Proposal has the meaning set forth in
Section 2.6.1.
1.3 Affiliate means, with respect to a Party, any Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, control and, with correlative meanings, the terms controlled by and under
common control with means: (a) the possession, directly or indirectly, of the power to elect a majority of the members of the board of directors, or similar governing body, of a business entity, whether through the ownership of voting
securities, or by contract relating to voting rights or corporate governance; or (b) the ownership, directly or indirectly, of 50% or more of the voting securities or other ownership interest of a business entity (or, with respect to a limited
partnership or other similar entity, its
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
general partner or controlling entity). For the purpose of this Agreement, (i) no Clal Entity (other than any Clal Entity controlled by CureTech, if any) shall be deemed an Affiliate of
CureTech regardless of its ownership interest during the Term, and (ii) an Affiliate of CureTech shall mean a Person that is controlled by CureTech.
1.4 Agreement has the meaning set forth in the preamble hereto.
1.5 Agreement Amendment means that certain [ * ] to [ * ] with [ * ], in the form attached
hereto as Schedule 1.5.
1.6 Antibody means (a) [ * ] or (ii) any antibody or antibody
fragment derived therefrom, including without limitation, the Existing Molecule.
1.7 Anti-Corruption Laws means
all applicable laws, regulations, orders, judicial decisions, conventions and international financial institution rules regarding public or private-sector corruption, bribery, kickbacks, speed or facilitation payments, ethical business conduct,
money laundering, embezzlement, political contributions, gifts, gratuities, expenses, entertainment, hospitalities, agency relationships, commissions, lobbying, books and records, and financial controls, including, but not limited to, the FCPA, the
U.S. Travel Act, and other anti-corruption laws.
1.8 Applicable Law means applicable laws, rules, and
regulations, including any rules, regulations, guidelines, or other requirements of Regulatory Authorities, that may be in effect from time to time.
1.9 Biosimilar Product means, with respect to a Licensed Product, or the active ingredient thereof, in a particular
country, a biological or drug product that is the same as, biosimilar to or interchangeable with such Licensed Product or the active ingredient thereof as described in 42 U.S.C. §§ 262(k)(2)(A)(i), 262(i)(2)(A), or 262(i)(2)(B), or an
equivalent determination by the applicable Regulatory Authorities in such country outside the U.S., or any other equivalent provision that comes into force during the Term. A product shall not be considered as a Biosimilar Product if Medivation or
any of its Affiliates or Sublicensees was involved in its Development.
1.10 BLA means a Biological License
Application filed pursuant to 42 USC Section 262 et seq including all documents, data and other information concerning a Licensed Product which are necessary for, or included in, FDA approval to market a Licensed Product and all supplements and
amendments, including supplemental biological license applications, that may be filed with respect to the foregoing as more fully defined in 21 C.F.R. §600 et seq. or equivalent submissions with similar requirements in other countries.
1.11 Business Day means a day other than a Saturday, Sunday, or a day on which banking institutions in San
Francisco, California or Israel are permitted or required to be closed.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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1.12 Calendar Quarter means each successive period of three calendar
months commencing on January 1, April 1, July 1 and October 1, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of
January 1, April 1, July 1 or October 1 after the Effective Date, and the last Calendar Quarter shall end on the last day of the Term.
1.13 Calendar Year means each successive period of 12 calendar months commencing on January 1 and ending on
December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on January 1
of the year in which the Term ends and end on the last day of the Term.
1.14 CBI Negative Shareholder Vote has the
meaning set forth in Section 2.9.1.
1.15 CBI Positive Shareholder Vote has the meaning set forth in
Section 2.9.1.
1.16 Shareholder Vote Date means December 12, 2014.
1.17 Change in Control with respect to CureTech, shall be deemed to have occurred if any of the following occurs
after the Effective Date:
1.17.1 any person or group (as such terms are defined below)
acquires (a) equity securities of CureTech then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (Equity
Securities) of CureTech representing 50% or more of the total voting power of all outstanding classes of Equity Securities of CureTech or (b) the power, directly or indirectly, to elect a majority of the members of CureTechs
board of directors, or similar governing body (Board of Directors); provided, however, that any change in the ownership of equity securities of any stockholder of CureTech as of the Effective Date, or any entity that controls such
stockholder, or any acquisition by another entity of the power, directly or indirectly, to elect a majority of the members of such stockholders or such controlling entitys board of directors or similar governing body shall not trigger a
Change in Control under this Section 1.17.1; or
1.17.2 CureTech enters into a merger, consolidation or similar
transaction with another Person (whether or not CureTech is the surviving entity) and as a result of such merger, consolidation or similar transaction (a) the members of the Board of Directors of CureTech immediately prior to such transaction
constitute less than a majority of the members of the Board of Directors of CureTech or such surviving Person immediately following such transaction or (b) the Equity Securities of CureTech immediately prior to such transaction represent, or
are converted into or exchanged for shares that represent, immediately following such transaction, less than a majority of the total voting power of all outstanding classes of Equity Securities of the surviving Person in substantially the same
proportions as their ownership of Equity Securities of CureTech immediately prior to such transaction; or
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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1.17.3 CureTech sells or transfers to any Third Party, in one or more
related transactions, properties or assets representing all or substantially all of CureTechs consolidated total assets; or
1.17.4 The holders of Equity Securities of CureTech approve a plan or proposal for the liquidation or dissolution of
CureTech.
For the purpose of this definition of Change in Control, (a) person and group have the meanings
given such terms under Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term group includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of
Rule 13d-5(b)(1) under the said Act. In no instance shall a Change in Control under this Agreement be deemed to include a cessation of business activity, liquidation of any similar event (including those set forth in Section 9.2.4) of CureTech,
or the approval of any plan or proposal for any of the foregoing.
1.18 Clal Entities means Clal Biotechnology
Industries Ltd., Clal Venture Capital Fund LP., and any of their respective Affiliates.
1.19 Combination
Product means a Licensed Product that comprises or contains: (a) a Licensed Molecule as an active ingredient together with one or more other active ingredients (which are not Licensed Molecules) whether or not co-formulated; and/or
(b) a Licensed Product and any other product, device and/or component packaged together or separately but sold together as a single product or a bundled product. Such other active ingredient(s), product, device and/or component shall be deemed
Other Component. Any Licensed Product containing such Licensed Molecule as a single active ingredient or component shall be deemed Single Agent Product.
1.20 Commercialization or Commercialize shall mean any and all activities directed to the
commercial manufacture, marketing, promoting, detailing, distributing, pricing and price reporting, importing, having imported, exporting, having exported, selling or offering to sell a product or therapy.
1.21 Commercially Reasonable Efforts means, with respect to a Party and with respect to the performance of
Development, Manufacture or Commercialization activities with respect to a Licensed Molecule or Licensed Product, the carrying out of such activities using efforts and resources comparable to the efforts and resources that such Party would typically
devote to compounds or products of similar market potential at a similar stage in development or product life, taking into account all scientific, commercial, and other factors that such Party would take into account, including [ * ].
1.22 Competing Product means any product, other than a Licensed Product, whether currently marketed or in
development, that contains: (a) [ * ] (b) [ * ] (c) [ * ] and (d) [ * ].
1.23
Competition Law Approvals means all material consents, approvals, licenses, permits, orders or authorizations of, or registrations, declarations or filings with, any
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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Governmental Entity, and all applicable waiting periods (and any extensions thereof), in each case, that the applicable Party(ies) determine are required pursuant to applicable Competition Laws
for the consummation of the transactions contemplated by this Agreement.
1.24 Competition Laws means any
statutes, laws, ordinances, rules, orders or regulations of, or issued by, any Governmental Entity that are designed or intended to prohibit, restrict or regulate actions that may have the purpose or effect of creating a monopoly, lessening
competition or restraining trade.
1.25 Compulsory License means a patent license that is issued or ordered to
be issued by a government of a country to an individual or entity to perform (or have performed) activities for the Development and Commercialization of a Licensed Product in that country, with the ultimate purpose of enabling an entity to market
and sell the Licensed Product in the country in which such license is issued for the benefit of public health or for public policy reasons of the country in which it is issued.
1.26 Confidential Information has the meaning set forth in Section 6.2.1
1.27 Continuation Notice has the meaning set forth in Section 2.9.1.
1.28 Control means, with respect to any item of Information, Regulatory Documentation, material, Patent, or other
intellectual property right, and subject to Section 10.4.2, possession of the right, whether directly or indirectly, and whether by ownership, license or otherwise (other than by operation of the license and other grants in Section 2.1), to
grant a license, sublicense or other right (including the right to reference any Regulatory Documentation) to or under such Information, Regulatory Documentation, material, Patent, or other intellectual property right as provided for herein without
violating the terms of any agreement with a Third Party.
1.29 CureTech has the meaning set forth in the
preamble hereto.
1.30 CureTech Assigned Regulatory Documentation has the meaning set forth in
Section 3.2.1.
1.31 CureTech Know-How means all Information owned or Controlled by CureTech or any of its
Affiliates as of the Effective Date or at any time during the Term that relates to the Exploitation of a Licensed Molecule or a Licensed Product for any purpose in the Territory.
1.32 CureTech Patents means all of the Patents owned or Controlled by CureTech or any of its Affiliates as of the Effective Date
or at any time during the Term that relate to the Exploitation of a Licensed Molecule or a Licensed Product for any purpose in the Territory. The CureTech Patents include the Existing Patents.
1.33 Development means all activities related to research, pre-clinical and other non-clinical testing, test method
development and stability testing, toxicology, formulation, process development, Manufacturing scale-up, qualification and validation, quality
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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assurance/quality control, human clinical trials, including Manufacturing in support thereof, statistical analysis and report writing, the preparation and submission of Drug Approval
Applications, regulatory affairs with respect to the foregoing and all other activities necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory
Approval. When used as a verb, Develop means to engage in Development.
1.34 Dollars or
$ means United States Dollars.
1.35 Drug Approval Application means a BLA, or any
corresponding foreign application in the Territory, including, with respect to the European Union, a Marketing Authorization Application (MAA) with respect to a Licensed Product filed with the EMA pursuant to the centralized
approval procedure or with the applicable Regulatory Authority of a country in the European Union with respect to the mutual recognition or any other national approval.
1.36 EMA means the European Medicines Agency and any successor agency thereto.
1.37 European Union or EU means the economic, scientific, and political organization of member
states known as the European Union, as it may be constituted from time to time, which as of the Effective Date consists of Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy,
Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the United Kingdom of Great Britain and Northern Ireland, and that certain portion of Cyprus included in such organization.
1.38 Existing Molecule means the antibody known as Pidilizumab (CT-011).
1.39 Existing NDA means that certain unilateral nondisclosure agreement by and between CureTech and Medivation,
dated May 27, 2014.
1.40 Existing Patents has the meaning set forth in Section 7.2.1.
1.41 Exploit means to make, have made, import, use, sell, or offer for sale, including to research, Develop,
Commercialize, register, Manufacture, have Manufactured, hold, or keep (whether for disposal or otherwise), have used, import, export, transport, distribute, promote, detail, market, or have sold or otherwise dispose of.
Exploitation means the act of Exploiting.
1.42 FCPA means the U.S. Foreign Corrupt Practices
Act of 1977 (15 U.S.C. §§78dd-1, et seq.) as amended.
1.43 FDA means the United States Food
and Drug Administration and any successor agency thereto.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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1.44 FFDCA means the United States Food, Drug, and Cosmetic Act, as
amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions, and modifications thereto).
1.45 First Commercial Sale means, with respect to a Licensed Product and a country, the first sale for monetary
value to a Third Party that is not a Sublicensee of Medivation (or Medivations Affiliate or (Sub)licensee(s)) (unless such Sublicensee is the end user of such Product) of such Licensed Product in such country after Regulatory Approval for such
Licensed Product has been obtained in such country. Sales prior to receipt of Regulatory Approval for such Licensed Product, such as so-called treatment IND sales, named patient sales, and compassionate use sales,
shall not be construed as a First Commercial Sale. In addition, sales of a Licensed Product by and between Medivation, its Affiliates and/or Sublicensees, or between the Parties (or their respective Affiliates or Sublicensees), unless such
Affiliate, Sublicensee or Party is the end user of such Product, shall not constitute a First Commercial Sale.
1.46 Force
Majeure Event has the meaning set forth in Section 10.1.
1.47 GAAP means United States generally
accepted accounting principles consistently applied.
1.48 Governmental Entity means any applicable
supra-national, federal, national, regional, state, provincial, or local regulatory agencies, departments, bureaus, commissions, councils, or other government entities.
1.49 IND means (a) an investigational new drug application filed with the FDA for authorization to commence
clinical studies and its equivalent in other countries or regulatory jurisdictions, and (b) all supplements and amendments that may be filed with respect to the foregoing.
1.50 Indication means a disease or condition for which a Licensed Product is approved or for which approval is being
sought, pursuant to an applicable and distinct IND or BLA [ * ].
1.51 Information means all technical,
scientific, and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly
procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, Manufacturing and
quality control data and information, including study designs and protocols; assays; and biological methodology; in each case (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or
hereafter developed.
1.52 Initial License Agreement Payment has the meaning set forth in Section 4.1.1.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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1.53 Knowledge means the good faith understanding of the facts and
information after performing a diligent investigation with respect to such facts and information of any senior level employees or any other employees or patent counsel who are responsible for the subject matter to which such facts and information
relate.
1.54 License Agreement Repayment has the meaning set forth in Section 2.9.4.
1.55 Licensed Molecule means: (a) any Antibody, (b) any antibody (other than an Antibody) that is
disclosed or claimed in any of the patents or patent applications listed in Schedule 7.2.1 (c) any antibody (other than an Antibody or any antibody described in clause (b)) that, selectively or non-selectively, directly or indirectly,
targets an immune pathway that is modulated by an Antibody, including, without limitation, PD-1 and (d) any variant of any of the molecules that are described in clause (a), (b) or (c) above, or (e) any antibody derived by
CureTech from any of the molecules that are described in clause (a), (b), (c), or (d) above, in each case (a)-(e), including without limitation any and all [ * ] thereof.
1.56 Licensed Product means any pharmaceutical product (i.e., expressly excluding any diagnostic product) comprising
or containing a Licensed Molecule, alone or in combination with one or more other active ingredients, in any and all forms, presentations, delivery systems, dosages and formulations.
1.57 Major EU Market means any of the United Kingdom, France, Germany, Spain and Italy.
1.58 Manufacture and Manufacturing means all activities related to the production, manufacture, processing,
filling, finishing, packaging, labeling, shipping, distribution, and holding of any Licensed Molecule or any Licensed Product, or any component thereof, including process development, process qualification and validation, scale-up, pre-clinical,
clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance, and quality control.
1.59 Manufacturing Agreement has the meaning set forth in the recitals to this Agreement.
1.60 Medivation has the meaning set forth in the preamble hereto.
1.61 Medivation Grantback Know-How means that certain Information Controlled by Medivation or any of its Affiliates
as of the effective date of the termination of this Agreement with respect to a Terminated Territory (including any termination of this Agreement in its entirety) that has been incorporated in, or otherwise used in connection with, a Returned
Licensed Product with respect to such Terminated Territory.
1.62 Medivation Grantback Patents means those
certain Patents Controlled by Medivation or any of its Affiliates as of the effective date of the termination of this Agreement with respect to a Terminated Territory (including any termination of this Agreement in its entirety) that claim the
composition or formulation of, or the method of making or using, a Returned Licensed Product with respect to such Terminated Territory.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
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1.63 [ * ] Agreement means that certain [ * ] by and between CureTech
and [ * ], effective as of [ * ].
1.64 Net Sales means, with respect to any Licensed Product, the
gross amounts invoiced by Medivation and its Affiliates and Sublicensees for sales of such Licensed Product to un-Affiliated Third Parties in the Territory, less the following deductions provided to un-Affiliated entities and actually allowed and
taken:
[ * ].
Notwithstanding the foregoing, amounts received or invoiced by Medivation or its Affiliates or Sublicensees for the sale of Licensed Products
among Medivation and its Affiliates and Sublicensees shall not be included in the computation of Net Sales hereunder, [ * ].
Notwithstanding the foregoing, Net Sales shall not include any amounts invoiced for sales of Licensed Products supplied for use in
clinical trials of Licensed Products, or under early access, compassionate use, named patient, indigent access, patient assistance or other similar reduced pricing programs.
[ * ].
Net Sales for a
Combination Product containing a Single Agent Product and Other Component(s) in a country shall be calculated as follows:
(i) If
the Single Agent Product and Other Component(s) each are sold separately in such country, [ * ].
(ii) If the Single Agent
Product is sold independently of the Other Component(s) in such country, [ * ].
(iii) If the Other Component(s) are sold
independently of the Single Agent Product therein in such country, [ * ].
(iv) If neither the public or list price of the
Other Component(s) nor the public or list price of such Single Agent Product can be determined in such country, [ * ].
[ * ].
1.65 OCS or Office of Chief Scientist means the Israeli Office of the Chief Scientist in the Ministry of
Economy.
1.66 Patents means: (a) all national, regional and international patents and patent applications,
including provisional patent applications; (b) all patent applications that claim, directly or indirectly, priority to any patent or patent applications in clause (a), including
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
9
divisionals, continuations, continuations-in-part, provisionals, converted provisionals, continued prosecution applications and requests for continued examination; (c) any and all patents
that have issued or in the future issue from the foregoing patent applications ((a) and (b)), including utility models, petty patents and design patents and certificates of invention; (d) any and all extensions or restorations by existing or
future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((a), (b), and (c)); and
(e) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.
1.67 Person means an individual, sole proprietorship, partnership, limited partnership, limited liability
partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a Governmental Entity or Regulatory Authority.
1.68 Product Trademarks means the Trademark(s) used or to be used by Medivation or its Affiliates or Sublicensees
for the Commercialization of the Licensed Products in the Territory and any registrations thereof or any pending applications relating thereto in the Territory (excluding, in any event, any Trademarks that include any corporate name or logo of
either Party or any of its Affiliates).
1.69 Public Official or Entity means (i) any officer, employee,
agent, representative, department, agency, de facto official, corporate entity, instrumentality or subdivision of any government, military or international organization, including, but not limited to, any state-owned or affiliated company or
hospital, or (ii) any candidate for political office, any political party or any official of a political party.
1.70
Regulatory Approval means, with respect to a country in the Territory, any and all approvals (including Drug Approval Applications), licenses, registrations, or authorizations of any Regulatory Authority necessary to
commercially distribute, sell, or market a Licensed Product in such country, including, where applicable, (a) pricing or reimbursement approval in such country, (b) pre- and post-approval marketing authorizations (including any
prerequisite Manufacturing approval or authorization related thereto), and (c) labeling approval.
1.71 Regulatory
Authority means any applicable supra-national, federal, national, regional, state, provincial, or local regulatory agencies, departments, bureaus, commissions, councils, or other Governmental Entities regulating or otherwise exercising
authority with respect to the Exploitation of Licensed Molecule or Licensed Products in the Territory, including the Israeli Ministry of Health, the FDA in the United States and the EMA in the European Union.
1.72 Regulatory Documentation means: all (a) applications (including all INDs and Drug Approval Applications),
registrations, licenses, authorizations, and approvals (including Regulatory Approvals); (b) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
10
communications with any Regulatory Authority) and all supporting documents with respect thereto, including all regulatory drug lists, advertising and promotion documents, adverse event files, and
complaint files; (c) any and all documentation, files (including master files), filings and correspondence relating to the Manufacture or Development of a Licensed Molecule and/or Licensed Product; (d) data contained or referenced in any
of the foregoing, in each case ((a), (b), (c) and (d)) relating to a Licensed Molecule or Licensed Product.
1.73
Regulatory Exclusivity Period means, with respect to a Licensed Product in any country in the Territory, a period of exclusivity (other than Patent exclusivity), granted or afforded by Applicable Law or by a Regulatory
Authority in such country, that confers exclusive marketing rights with respect to such Licensed Product in such country.
1.74
Returned Licensed Product means, with respect to any termination of this Agreement with respect to a Terminated Territory (including any termination of this Agreement in its entirety), any Licensed Product that is being
Developed or Commercialized by Medivation or any of its Affiliates or Sublicensees in such Terminated Territory as the effective date of such termination that comprises or contains a Licensed Molecule [ * ].
1.75 Royalty Term means, with respect to each Licensed Product and each country in the Territory, the period
beginning on the date of the First Commercial Sale of such Licensed Product in such country, and ending on the latest to occur of: (a) [ * ]; (b) [ * ] and (c) [ * ]; provided, however, [ * ].
1.76 Safety Data Exchange Agreement has the meaning set forth in Section 3.1.4.
1.77 Sublicensee means a Person, other than an Affiliate or a distributor, that is granted a sublicense by
Medivation or any of its Affiliates, including through multiple tiers of sublicensees, under the grants in Section 2.1 as provided in Section 2.2.
1.78 Term has the meaning set forth in Section 9.1.1.
1.79 Terminated Territory means each country with respect to which this Agreement is terminated by Medivation
pursuant to Section 9.2.3 or, if this Agreement is terminated in its entirety pursuant to Section 9.2.3, the entire Territory (but, for clarity, excluding any termination pursuant to Section 2.9.1).
1.80 Termination Notice has the meaning set forth in Section 2.9.1.
1.81 Territory means the entire world, excluding each Terminated Territory.
1.82 Third Party means any Person other than CureTech, Medivation and their respective Affiliates.
1.83 Third Party Owner has the meaning set forth in Section 4.4.5.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
11
1.84 Third Party Owner Agreements has the meaning set forth in
Section 4.4.5.
1.85 Trademark means any word, name, symbol, color, shape, designation or any combination
thereof, including any trademark, service mark, trade name, brand name, sub-brand name, trade dress, product configuration, program name, delivery form name, certification mark, collective mark, logo, tagline, slogan, design or business symbol, that
functions as an identifier of source or, origin, whether or not registered, and all statutory and common law rights therein, and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the
foregoing.
1.86 Trigger Date has the meaning set forth in Section 2.9.1.
1.87 U.S. Export Control Laws means all applicable U.S. laws and regulations relating to the export or re-export of
commodities, technologies, or services, including, but not limited to, the Export Administration Act of 1979, 24 U.S.C. §§ 2401-2420, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706, the Trading with the
Enemy Act, 50 U.S.C. §§ 1 et. seq., the Arms Export Control Act, 22 U.S.C. §§ 2778 and 2779, and the International Boycott Provisions of Section 999 of the U.S. Internal Revenue Code of 1986
1.88 United States or U.S. means the United States of America and its territories and possessions
(including the District of Columbia and Puerto Rico).
1.89 [ * ] Agreements means (i) that certain License
Agreement [ * ] entered into as of [ * ] by and between CureTech and Mor Research Application Ltd. (MOR), and those certain [ * ] by [ * ] to [ * ], as [ * ]; and (ii) that certain [
* ] entered into as of [ * ], by and between [ * ] and [ * ].
1.90 Valid Claim means a claim in a
Patent, which claim has not expired or been held invalid by a non-appealed or unappealable decision by a court or other appropriate body of competent jurisdiction. For the purpose of royalty determination and payment, any claim being prosecuted in a
pending patent application shall be deemed to be a Valid Claim, provided such claim is not pending for more than [ * ] years from the earliest priority date claimed with respect to such application, in which case it shall thereafter
cease to be considered a Valid Claim unless and until the patent issues.
ARTICLE 2
GRANT OF RIGHTS; CERTAIN COVENANTS;
CONTINUATION NOTICE;
2.1 Grants to Medivation. CureTech (on behalf of itself and its Affiliates) hereby grants to Medivation, effective upon the receipt by
CureTech of the amounts set forth in Section 4.1.1:
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
12
2.1.1 an exclusive (including with regard to CureTech and its Affiliates,
except to the extent necessary or useful for CureTech to fulfill its obligations of under this Agreement, the Manufacturing Agreement or any other agreement with Medivation, its Affiliates and their respective Sublicensees) license (or sublicense),
with the right to grant sublicenses in accordance with Section 2.2, under the CureTech Patents and the CureTech Know-How, to Exploit the Licensed Molecules and Licensed Products for all purposes in the Territory; and
2.1.2 an exclusive (including with regard to CureTech and its Affiliates, except to the extent necessary or useful for
CureTech to fulfill its obligations of under this Agreement, the Manufacturing Agreement or any other agreement with Medivation, its Affiliates and their respective Sublicensees) license and right of reference, with the right to grant sublicenses
and further rights of reference in accordance with Section 2.2, under the Regulatory Approvals and any other Regulatory Documentation (including, without limitation, any copyrights thereto) that CureTech or any of its Affiliates owns or
Controls with respect to the Licensed Products, [ * ], to Exploit the Licensed Molecules and Licensed Products for all purposes in the Territory.
2.2 Sublicenses. Medivation shall have the right to grant sublicenses (or further rights of reference), through multiple tiers of
Sublicensees, under the licenses and rights of reference granted in Section 2.1, to (a) any of its Affiliates or (b) any Third Party. [ * ].
2.3 Transfer of CureTech Know-How. This Section 2.3 shall apply to the transfer of CureTech Know-How which is other than CureTech
Know-How related to manufacturing (which is governed under the Manufacturing Agreement).
2.3.1 Promptly after the
Effective Date, CureTech shall, and shall cause its Affiliates to, without additional compensation, disclose and make available to Medivation, in whatever form Medivation may reasonably request (including by providing copies thereof), Regulatory
Documentation (including the CureTech Regulatory Documentation) and CureTech Know-How pertaining to any Licensed Molecules, any Licensed Products or the Exploitation thereof, including the Existing Molecule. Without limiting the foregoing, CureTech
shall, within 15 Business Days after the Effective Date, provide to Medivation, in such form and format as Medivation may reasonably request, (x) all clinical and non-clinical data, Trial master files for clinical studies, research, analyses
and other Information Controlled by CureTech and pertaining to the Licensed Molecules or Licensed Products, (y) copies of all correspondence to and from any Regulatory Authority that relates to any Licensed Molecule or any Licensed Product, and
(z) all Regulatory Documentation assigned to Medivation pursuant to Section 3.2.1 and copies of all Regulatory Documentation licensed to Medivation pursuant to Section 2.1.2.
2.3.2 CureTech shall provide Medivation with all reasonable assistance, in accordance with Section 2.4, required in
order to provide to Medivation the Regulatory Documentation, CureTech Know-How and other Information required to be produced pursuant to Section 2.3, in each case in a reasonable timely manner. [ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
13
2.3.3 On a regular basis during the Term but no less frequent than [ *
], CureTech shall disclose to Medivation CureTech Know-How generated after the Effective Date, and shall transfer such CureTech Know-How to Medivation upon Medivations reasonable request and expense.
2.4 Assistance by CureTech. Except as otherwise provided herein, Medivation shall reimburse CureTech its reasonable out-of-pocket
expenses incurred from and after the date of delivery of the Continuation Notice in providing assistance, cooperation and support to, or other activities at the request of Medivation under this Agreement, including under Section 2.3 and 3.1.1,
subject to Medivations prior consent for any such expenses expected to be incurred over [ * ]. Notwithstanding anything to the contrary, CureTechs obligations to provide such assistance, cooperation, support or other activities
shall be limited to the period commencing on the Effective Date and terminating on [ * ], provided, however, that CureTech shall use its reasonable efforts to make available its employees, to the extent they are available after
such period, to provide additional assistance upon reasonable cost and expense. In no event shall CureTech be permitted to double bill Medivation for any cost (FTE or Third Party) in connection with such assistance for which CureTech would already
be compensated pursuant to the Manufacturing Plan, as defined in the Manufacturing Agreement, but, after the Continuation Date (as defined in the Manufacturing Agreement), if it occurs, CureTech shall be permitted to bill Medivation in connection
with such assistance provided prior to the date of the Continuation Notice.
2.5 Confirmatory Patent License. CureTech shall, if
requested to do so by Medivation, promptly enter into confirmatory license agreements in the form reasonably requested by Medivation (and consistent with the terms of this Agreement, including the scope of the license grant hereunder) for purposes
of recording the licenses granted under this Agreement with such patent offices in the Territory as Medivation considers appropriate. [ * ]. Without derogating from the above, CureTech shall duly execute and file a notice to the Israeli
Registrar of Patents in connection with this Agreement, in the form attached hereto as Schedule 2.5.
2.6 Exclusivity with
Respect to the Territory.
2.6.1 During the Term, CureTech shall not, and shall cause its Affiliates not to,
(a) directly or indirectly, develop, Commercialize, manufacture or otherwise Exploit any Competing Product and/or Biosimilar Product in any country in the Territory or (b) license, authorize, appoint, or otherwise enable any Third Party to
directly or indirectly, develop, Commercialize, manufacture or otherwise Exploit any Competing Product and/or Biosimilar Product in any country in the Territory.
2.6.2 Each Party acknowledges and agrees that (a) Section 2.6.1 has been negotiated by the Parties,
(b) the geographical and time limitations on activities set forth in Section 2.6.1 are reasonable, valid and necessary in light of the Parties circumstances and necessary for the adequate protection of the business of the Licensed
Molecules and the Licensed Products and (c) Medivation would not have entered into this Agreement without the
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
14
protection afforded it by Section 2.6.1. If, notwithstanding the foregoing, a court of competent jurisdiction determines that the restrictions set forth in Section 2.6.1 are too broad
or otherwise unreasonable under Applicable Law, including with respect to duration, geographic scope or space MOR [ * ].
2.7 [
* ] Agreements. CureTech covenants and agrees that (a) it will satisfy all of its obligations under, and take all commercially reasonable steps necessary to maintain in full force and effect, the [ * ] Agreements for the respective
terms thereof; (b) it will not assign (except to an Affiliate or to a Third Party to which this Agreement has been assigned as permitted under Section 10.4), amend, restate, amend and restate, terminate in whole or in part, or otherwise
modify [ * ] Agreements without the prior written consent of Medivation (which consent shall not be unreasonably withheld, conditioned or delayed); (c) it will provide Medivation with prompt notice of any claim of a breach under any [
* ] Agreement or notice of termination of any [ * ] Agreement, made by either CureTech or MOR [ * ] as the case may be (or any party acting on behalf of such counterparty); and (d) it will promptly send to Medivation copies of
all other material correspondence to or from the counterparty to such [ * ] Agreement. [ * ].
2.8 No Distributions.
For a period of at least [ * ] years after the Effective Date, [ * ].
2.9 Shareholder Vote; Continuation Notice.
2.9.1 Promptly following the Effective Date, it is expected that CureTechs largest shareholder, Clal
Biotechnology Industries Ltd., (CBI) will seek to obtain the requisite vote of its shareholders approving the execution by CBI of that certain Guaranty letter agreement with Medivation, in the form set forth in Appendix 2.9.1
(such shareholder approval, if obtained on or before the Shareholder Vote Date, the CBI Positive Shareholder Vote and, if not obtained on or before the Shareholder Vote Date, or if CBI shareholders vote not to approve the Guaranty
on or before the Shareholder Vote Date, the CBI Negative Shareholder Vote). CureTech shall immediately provide notification to Medivation of CBI having conducted such shareholder vote, accompanied by appropriate
documentation of the results of such vote, irrespective of whether shareholder approval is obtained. On or before [ * ] (such date, the Trigger Date), Medivation shall elect either to: (x) continue to maintain in full
force and effect this Agreement, in which event Medivation shall deliver to CureTech a written notice of its decision (the Continuation Notice); or (y) terminate this Agreement immediately in its entirety, in which event
Medivation shall deliver to CureTech a written notice of its decision to terminate (the Termination Notice).
2.9.2 If Medivation delivers a Continuation Notice under Section 2.9.1 and CureTech has delivered to Medivation on
or before the Shareholder Vote Date documentation of a CBI Positive Shareholder Vote, then the upfront payment set forth in Section 4.1.2 shall apply (and not that set forth in Section 4.1.3), and the applicable royalty rate shall be as
set forth in Section 4.3.1 (and not that set forth in Section 4.3.2).
2.9.3 If, however, Medivation
delivers a Continuation Notice, and CureTech has failed to deliver to Medivation on or before the Shareholder Vote Date
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
15
documentation of a CBI Positive Shareholder Vote (either due to the fact that CBI failed to put such vote to its shareholders, or because they did not vote to so approve the Guaranty), then the
upfront payment set forth in Section 4.1.3 shall apply (and not that set forth in Section 4.1.2), and the applicable royalty rate shall be at a reduced rate, as set forth in Section 4.3.2 (and not that rate set forth in
Section 4.3.1).
2.9.4 For the avoidance of doubt, if Medivation delivers a Termination Notice, then no
payments shall be due to CureTech under Sections 4.1, 4.2, 4.3, or any other provision of this Agreement. In addition, within five (5) days after the date that is the earlier of (x) termination of this Agreement by Medivation pursuant to
Section 2.9.1 or (y) the occurrence of the CBI Negative Shareholder Vote, CureTech shall refund to Medivation the amount of the Initial License Agreement Payment, by wire transfer of immediately available funds to a bank account designated
by Medivation (the License Agreement Repayment).
ARTICLE 3
RESEARCH, DEVELOPMENT, REGULATORY AND COMMERCIALIZATION
ACTIVITIES
3.1
Development.
3.1.1 Ongoing Development. The Parties acknowledge and agree that additional Development will be
required to obtain Regulatory Approvals for the Licensed Products in the Territory. Medivation shall have the sole and exclusive right, at its sole cost and expense, to research and Develop (or have researched and Developed) the Licensed Products in
the Territory. CureTech shall not, directly or indirectly, whether alone or together with a Third Party, Develop any Licensed Product for any purpose. CureTech shall, at Medivations written request and subject to Section 2.4, provide
Medivation with transitional assistance on such Development activities, in addition to CureTechs technology transfer obligations under the Manufacturing Agreement and under Section 2.3. [ * ].
3.1.2 Diligence. Medivation shall use Commercially Reasonable Efforts to Develop at least one (1) Licensed Product
comprising the Existing Molecule, and if successful, to seek Regulatory Approval in the U.S. and a Major EU Market for one Indication, [ * ]. Except as set forth in this Section 3.1.2, Medivation shall have no other diligence
obligations, express or implied, with respect to the Development of the Licensed Products in the Territory. Nothing in this Agreement shall be construed as requiring Medivation to Develop or otherwise Exploit more than one (1) Licensed Product,
to Develop or otherwise Exploit any Licensed Product containing any Licensed Molecule other than the Existing Molecule, or to Develop or otherwise Exploit any Licensed Product if the Development or Commercialization of the Licensed Product
comprising the Existing Molecule is discontinued.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
16
3.1.3 Development Reports. Medivation has shared, and shall from time to
time hereafter share, with CureTech its plan for the Development of the Licensed Product comprising the Existing Molecule through initial Regulatory Approval in the U.S. Thereafter, at least [ * ] until initial Regulatory Approvals in the EU
and the US of the first Licensed Product , Medivation shall provide a summary report to CureTech, in reasonable detail, [ * ] it being understood that all such reports would be deemed Confidential Information of Medivation under this
Agreement.
3.1.4 Safety Data Exchange Agreement. As soon as reasonably practicable after the Effective Date, but in
no event later than 90 days after delivery of the Continuation Notice, the pharmacovigilance departments of both Parties shall meet and agree on a safety data exchange agreement (Safety Data Exchange Agreement).
3.1.5 Development Standards. Medivation will conduct Development of the Licensed Molecules or the Licensed Products,
including any and all pre-clinical and clinical studies related to the Licensed Molecules and Licensed Products, in accordance with good laboratory and clinical (if applicable) practice and Applicable Law. Medivation will employ Persons with
appropriate education, knowledge and experience to conduct and to oversee the conduct of the pre-clinical and clinical studies with respect to the Licensed Molecule and Licensed Products.
3.2 Regulatory Matters.
3.2.1 Assignment of Regulatory Documentation. CureTech hereby assigns to Medivation all of its right, title and interest
in and to all Regulatory Documentation, including, to the extent permitted by Applicable Law, all Regulatory Approvals, owned or Controlled by CureTech or any of its Affiliates as of the Effective Date that pertain to the Licensed Product (such
Regulatory Documentation, CureTech Assigned Regulatory Documentation). CureTech shall duly execute and deliver, or cause to be duly executed and delivered, in each case at its cost and expense, such instruments and shall do and
cause to be done such acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary under, or as Medivation may reasonably request in connection with, or to carry out more effectively the
purpose of, or to better assure and confirm unto Medivation its rights under, this Section 3.2.1.
3.2.2 Regulatory
Approvals.
(a) As between the Parties, Medivation shall have the sole and exclusive right to prepare, obtain, and
maintain Drug Approval Applications (including the setting of the overall regulatory strategy therefor), other Regulatory Approvals and other submissions, and to conduct communications with the Regulatory Authorities, for the Licensed Products in
the Territory (which shall include filings of or with respect to INDs and other filings or communications with the Regulatory Authorities with respect to Development activities with respect to the Licensed Molecules or Licensed Products). CureTech
shall support Medivation, as may be request and reasonably necessary, for obtaining Regulatory Approvals for the Licensed Products in the Territory,
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
17
and in the activities in support thereof, including providing all documents or other materials in CureTechs possession or control as may be necessary or useful for Medivation to obtain
Regulatory Approvals.
(b) All Regulatory Documentation (including all Regulatory Approvals) relating to the Licensed
Products with respect to the Territory granted after the Effective Date shall be owned by, and shall be the sole and exclusive property and held in the name of, Medivation or its designated Affiliate, Sublicensee, or where required by Applicable
Law, designee.
3.2.3 Complaints. CureTech shall maintain a record of any and all complaints it receives with
respect to the Licensed Products. CureTech shall notify Medivation in reasonable detail of any complaint received by it within two Business Days after receipt, and in any event in sufficient time to allow Medivation to comply with all Applicable
Laws in any country in the Territory. Notification of product complaints shall also be described in the Quality Agreement to be entered into between Medivation and CureTech.
3.3 Commercialization.
3.3.1 In General. Medivation (itself or through its Affiliates or Sublicensees) shall have the sole and exclusive right,
at its sole cost and expense, to Commercialize (or have Commercialized) the Licensed Product in the Territory.
3.3.2
Diligence. Medivation shall use Commercially Reasonable Efforts to Commercialize at least one (1) Licensed Product comprising the Existing Molecule in [ * ] following receipt of Regulatory Approval therefor in such country. Except as
set forth in this Section 3.3.2, Medivation shall have no other diligence obligations, express or implied, with respect to the Commercialization of the Licensed Products in the Territory. Nothing in this Agreement shall be construed as
requiring Medivation to Commercialize or otherwise Exploit more than one (1) Licensed Product, to Commercialize or otherwise Exploit any Licensed Product containing any Licensed Molecule other than the Existing Molecule, or to Commercialize or
otherwise Exploit any Licensed Product if the Development or Commercialization of Existing Molecule is discontinued.
3.3.3 Booking of Sales; Distribution. Medivation shall have the sole and exclusive right to invoice and book sales,
establish all terms of sale (including pricing and discounts) and warehousing, and distribute the Licensed Products in the Territory and perform or cause to be performed all related services. As between the Parties, Medivation shall have the sole
right to handle all returns, recalls, or withdrawals, order processing, invoicing, collection, distribution, and inventory management with respect to the Licensed Products in the Territory.
3.3.4 Product Trademarks. As between the Parties, Medivation shall have the sole right to determine and own the Product
Trademarks to be used with respect to the Exploitation of the Licensed Products in the Territory. CureTech shall not, and shall not permit its Affiliates to, (i) use in their respective businesses, any Trademark that is confusingly similar to,
misleading or deceptive with respect to or that dilutes any (or any part)
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
18
of the Product Trademarks, and (ii) do any act that would reasonably be expected to endanger, destroy, or similarly affect, in any material respect, the value of the goodwill pertaining to
the Product Trademarks. CureTech shall not, and shall not permit its Affiliates to, attack, dispute, or contest the validity of or ownership of any Product Trademark anywhere in the Territory or any registrations issued or issuing with respect
thereto.
ARTICLE 4
FINANCIAL TERMS; PAYMENTS AND RECORDS
4.1 Upfront Payments.
4.1.1 Initial Payment. Within five (5) days after the Effective Date, in partial consideration of, and as a
condition to, the rights granted by CureTech to Medivation hereunder, Medivation shall pay to CureTech a one-time payment of [ * ] (Initial License Agreement Payment).
4.1.2 Remaining Upfront Payment in Event of CBI Positive Shareholder Vote. If Medivation delivers a Continuation Notice
under Section 2.9.1, and CureTech has delivered documentation of a CBI Positive Shareholder Vote on or before the Shareholder Vote Date, then within five (5) days after the date of delivery of such Continuation Notice, in partial
consideration of the rights granted by CureTech to Medivation hereunder, Medivation shall pay to CureTech a one-time payment of [ * ]. For clarity, in such event no amount would be due and owing under Section 4.1.3.
4.1.3 Remaining Upfront Payment in Event of No CBI Positive Shareholder Vote. If Medivation delivers a Continuation
Notice under Section 2.9.1, and CureTech fails to deliver a CBI Positive Shareholder Vote on or before the Shareholder Vote Date, then within five (5) days after the date of delivery of such Continuation Notice, in partial consideration of
the rights granted by CureTech to Medivation hereunder, Medivation shall pay to CureTech a one-time payment of [ * ]. For clarity, in such event no amount would be due and owing under Section 4.1.2.
4.1.4 License Agreement Repayment. If the License Agreement Repayment became due and owing following the occurrence of
the CBI Negative Shareholder Vote and CureTech paid the License Agreement Repayment to Medivation, and thereafter, Medivation delivers a Continuation Notice under Section 2.9.1, then (i) [ * ] or (ii) [ * ].
4.2 Milestones.
4.2.1 Development and Regulatory Milestones. In partial consideration of the rights granted by CureTech to Medivation
hereunder and subject to the terms and conditions set forth in this Agreement, Medivation shall pay to CureTech the applicable milestone payment within [ * ] after the achievement of each of the following milestone events with respect to any
Licensed Product containing the Existing Molecule (and Medivation shall inform CureTech in writing within [ * ] of the achievement of any such milestone):
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
19
[ * ]
*[ * ].
4.2.2 [ * ] Acceptance means, with respect to the BLA, the receipt by Medivation or its Affiliate or
Sublicensee of a letter from the FDA with respect to such BLA indicating that such BLA has been accepted for filing and further FDA review. Validation means the receipt by Medivation or its Affiliate or Sublicensee of confirmation
from the EMA that the MAA submission is sufficiently complete to begin the formal review process. Submission means the submission by Medivation or its Affiliate or Sublicensee of the Drug Approval Application to the
Pharmaceuticals and Medical Devices Agency in Japan. [ * ]
4.2.3 Medivation shall have the right to [ *
] from the [ * ] milestone above of [ * ] an amount equal to [ * ] if the [ * ], and upon delivery of [ * ] to CureTech within thirty (30) days after such delivery.
4.2.4 Sales-Based Milestones. In partial consideration of the license rights granted by CureTech to Medivation hereunder
and subject to the terms and conditions set forth in this Agreement (including Section 4.4), the first time that aggregate Net Sales of all Licensed Products in the Territory in a Calendar Year equals or exceeds a threshold (each, a
Net Sales Milestone Threshold) set forth in the left-hand column of the table immediately below, Medivation shall pay to CureTech a milestone payment in the corresponding amount set forth in the right-hand column below (each, a
Sales-Based Milestone Payment). Each Sales-Based Milestone Payment shall be due within [ * ] days after the end of the Calendar Quarter in which the corresponding Net Sales Milestone Threshold was achieved, and shall be due
only once under this Agreement when such Net Sales Milestone Threshold is reached for the first time in a Calendar Year.
|
|
|
Net Sales Milestone Threshold
for a particular Calendar Year |
|
Sales-Based Milestone Payment
Amount |
$400,000,000 |
|
[ * ] |
[ * ] |
|
[ * ] |
[ * ] |
|
[ * ] |
[ * ] |
|
[ * ] |
4.2.5 One Time Payments. Each milestone payment in this Section 4.2 shall be
payable only upon the first achievement of such milestone and no amounts shall be due for subsequent or repeated achievements of such milestone, whether by the same or a different Licensed Product. The maximum aggregate amount payable by Medivation
(a) pursuant to Section 4.2.1 is [ * ] and (b) pursuant to Section 4.2.4 is $245,000,000.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
20
4.3 Royalties.
4.3.1 Royalty Rates in the Territory. As further consideration for the rights granted to Medivation hereunder and
subject to the terms and conditions set forth in this Agreement (including Section 4.3.3 and Section 4.4), during the Royalty Term Medivation shall pay to CureTech a royalty on the aggregate Net Sales of all Licensed Products in the
Territory during each Calendar Year at the following rates:
|
|
|
|
|
Aggregate Net Sales of all Licensed Products in the Territory |
|
Royalty Rate |
|
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
4.3.2 Alternative Royalty Rate in Event of No CBI Positive Shareholder Vote. If
Medivation delivers a Continuation Notice under Section 2.9.1, and CureTech fails to deliver a CBI Positive Shareholder Vote on or before the Shareholder Vote Date under Section 2.9.1, then as further consideration for the rights granted
to Medivation hereunder and subject to the terms and conditions set forth in this Agreement (including Section 4.3.3 and Section 4.4), during the Royalty Term Medivation shall pay to CureTech a royalty on the aggregate Net Sales of all
Licensed Products in the Territory during each Calendar Year at the following rates:
|
|
|
|
|
Aggregate Net Sales of all Licensed Products in the Territory |
|
Royalty Rate |
|
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
[ * ] |
|
|
[ |
* ] |
4.3.3 Royalty Rate for Non-Patented Products. Notwithstanding Section 4.3.1 and
Section 4.3.2, for any Licensed Product for which there is no Valid Claim of a CureTech Patent claiming the composition of the Licensed Molecule contained in such Licensed Product in the country in which sold, or claiming its use in an
Indication for which Regulatory Approval has been obtained by Medivation for such Licensed Product in such country (because no such Valid Claims exist or existed during the Royalty Term for such Licensed Product in such country), either
(i) [ * ]; or (ii) [ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
21
4.3.4 Royalty Term. Notwithstanding anything to the contrary herein,
Medivation shall have no obligation to pay any royalty with respect to Net Sales of any Licensed Product in any country after the Royalty Term for such Licensed Product in such country has expired, and the Net Sales of any Licensed Product in any
country after such Royalty Term expiration in such country shall not be counted towards the aggregate Net Sales for the purpose of determining the royalty rate in Section 4.3.1 or Section 4.3.2, as applicable. Following the expiration of the
Royalty Term with respect to any Licensed Product in any country, the grants in Section 2.1 shall become exclusive, fully-paid, royalty-free, perpetual and irrevocable with respect to such Licensed Product in such country.
4.4 Reductions and Offsets. Notwithstanding Section 4.2 and Section 4.3:
4.4.1 In the event that, during the Royalty Term for a Licensed Product in any country in the Territory, unit sales of
all Biosimilar Products with respect to such Licensed Product in such country in a Calendar Quarter equal or exceed [ * ] of the sum of unit sales of such Licensed Product and all Biosimilar Products with respect to such Licensed Product in
such country (Biosimilar Competition), then, [ * ].
4.4.2 If, during the Term, in the reasonable
opinion of Medivation, the Exploitation of any Licensed Molecule or any Licensed Product by Medivation or any of its Affiliates or its and their respective Sublicensees in any country in the Territory infringes or misappropriates, or is reasonably
expected to infringe or misappropriate, any Patent, trade secret, or other intellectual property right of a Third Party in such country (which such Third Party is not [ * ], then Medivation shall have the first right, but not the obligation,
to negotiate and obtain a license from such Third Party as necessary or useful for Medivation and its Affiliates and its and their respective Sublicensees to Exploit such Licensed Molecule or such Licensed Product in such country. If, pursuant to
the immediately foregoing sentence, Medivation obtains a license from a Third Party under a Patent or trade secret owned or otherwise controlled by such Third Party that claims a Licensed Product, its use or manufacture in a particular country,
Medivation shall be entitled to [ * ] (Third Party Payments); provided, however, that [ * ]; and provided, further, that any Third Party Payments [ * ]. For clarity, CureTech shall be responsible for any and
all payment obligations to any Third Party that exist, known or unknown, as of the Effective Date, including all payments under any [ * ] Agreements, and payments owed under Section 4.4.5 .
4.4.3 Notwithstanding the above, if at any time a Third Party in any country shall, under the right of a Compulsory
License manufacture, use, sell, offer to sell, or import any Licensed Product with respect to which royalties would be payable hereunder, Medivation may [ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
22
4.4.4 As between Medivation and CureTech, CureTech shall, either by itself
or through any of its Affiliates, be solely responsible for any and all payments due to (i) MOR [ * ]; and (ii) [ * ] pursuant to the [ * ] Agreements.
4.4.5 With respect to any claim brought against either Medivation or any of its Affiliates, or against CureTech or any
of its Affiliates arising after the Effective Date by or on behalf of any Third Party [ * ]:
[ * ].
4.5 Royalty Payments and Reports. Medivation shall calculate all amounts payable to CureTech pursuant to Section 4.2 and
Section 4.3 at the end of each Calendar Quarter, which amounts shall be converted to Dollars, in accordance with Section 4.7. Within [ * ] days after the end of each Calendar Quarter during which there are Net Sales giving rise to a
payment obligation under this Article 4, Medivation shall submit to CureTech a report identifying, [ * ]. Concurrently with each such report, Medivation shall pay to CureTech all sales milestones and royalties payable by it pursuant to
Section 4.2 or Section 4.3, as applicable.
4.6 Estimated Sales Levels. CureTech acknowledges and agrees that
(a) sales levels set forth in Section 4.2.4 and Section 4.3.1 shall not be construed as representing an estimate or projection of anticipated sales of the Licensed Products, or implying any level of diligence or Commercially
Reasonable Efforts, in the Territory and (b) such sales levels are merely intended to define Medivations royalty and other payment obligations, as applicable, in the event such sales levels are achieved.
4.7 Mode of Payment; Offsets. All payments to either Party under this Agreement shall be made by deposit of Dollars in the requisite
amount to such bank account as the receiving Party designates by notice to the paying Party; provided, however, that such notice must be provided at least [ * ] Business Days prior to the date on which such payment is due. For the purpose of
calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), a Party shall convert any amount expressed in a foreign currency into Dollar
equivalents using [ * ].
4.8 Taxes.
4.8.1 Taxes on Income. Each Party shall be solely responsible for the payment of all taxes imposed on its share of
income arising directly or indirectly from the efforts of the Parties under this Agreement.
4.8.2 Tax Cooperation.
To the extent any Party is required to deduct and withhold taxes on any payment to the other Party, such Party shall pay the amounts of such taxes to the proper Governmental Authority in a timely manner and promptly transmit to the other Party an
official tax certificate or other evidence of such withholding sufficient to enable such other Party to claim such payment of taxes. The other Party shall provide the paying Party any tax forms that may be reasonably necessary in order for the
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
23
paying Party not to withhold tax or to withhold tax at a reduced rate under an applicable law or bilateral income tax treaty. Notwithstanding anything to the contrary, the paying Party shall
determine, at its sole discretion, as to whether any such withholding is required by Applicable Laws. Each Party shall provide the other with reasonable assistance to enable the recovery or exemption, as permitted by applicable Laws, of withholding
taxes, value added taxes, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding tax or value added tax. For clarity, Medivation shall not be responsible
for any gross-up of withholding tax required to be deducted from any payments to CureTech related to this Agreement.
4.9 Financial
Records. Medivation shall, and shall cause its Affiliates and its and their respective Sublicensees to, keep complete and accurate books and records pertaining to Net Sales of Licensed Products in sufficient detail to calculate all amounts
payable hereunder. Medivation shall, and shall cause its Affiliates and its and their respective Sublicensees to, retain such books and records until the later of (a) [ * ], and (b) [ * ].
4.10 Audit.
4.10.1 Procedures. At the request of CureTech, Medivation shall, and shall cause its Affiliates and its and their
respective Sublicensees to, permit an independent auditor designated by CureTech and reasonably acceptable to the Medivation, at reasonable times and upon reasonable notice, to audit the books and records maintained pursuant to Section 4.9 to
ensure the accuracy of all reports and payments made hereunder; provided, however, that neither Medivation nor any of its Affiliates or Sublicensees shall be obligated to make such books and records available to such auditor until such auditor has
entered into a confidentiality agreement in a form reasonably acceptable to Medivation. Any such audit may not (a) be conducted for any Calendar Quarter more than [ * ] after the end of such Calendar Quarter, (b) be conducted more
than [ * ] or (c) be repeated for any Calendar Quarter. The cost of any such audit shall be borne by CureTech, unless such audit reveals a variance of more than [ * ] from the reported amounts, in which case Medivation shall bear
the cost of the audit. Unless disputed pursuant to Section 4.10.2, if an audit concludes that (x) additional amounts were owed by Medivation for the audited period, Medivation shall pay such additional amounts, or (y) excess payments
were made by Medivation, CureTech shall reimburse such excess payments, in either case ((x) or (y)), within [ * ] days after the date on which such audit is completed by CureTech.
4.10.2 Audit Dispute. In the event of a dispute with respect to any audit conducted under Section 4.10.1, CureTech
and Medivation shall work in good faith to resolve the disagreement. If the Parties are unable to reach a mutually acceptable resolution of any such dispute within [ * ] days, the dispute shall be submitted for resolution to a certified
public accounting firm jointly selected by each Partys certified public accountants or to such other Person as the Parties shall mutually agree (the Accountant). The decision of the Accountant shall be final and the costs of
such arbitration as well as the initial audit shall be borne between the Parties in such manner as the Accountant shall determine. If the
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
24
Accountant concludes that (x) additional amounts were owed by Medivation for the audited period, Medivation shall pay such additional amounts, or (y) excess payments were made by
Medivation, CureTech shall reimburse such excess payments, in either case ((x) or (y)), within [ * ] days after the date on which such decision is made by the Accountant.
4.10.3 Confidentiality. CureTech shall treat all information subject to review under this Article 4 in accordance with
the confidentiality provisions of Article 6 and the Parties shall cause the Accountant to enter into a confidentiality agreement in a form reasonably acceptable to Medivation with Medivation obligating the Accountant to retain all such financial
information in confidence pursuant to such confidentiality agreement.
4.10.4 Right to Offset in the Event of a
Breach. Each Party shall have the right to offset any amount owed by the other Party to such first Party under or in connection with this Agreement, including pursuant to Article 8 or in connection with any breach, against any payments owed by
such first Party to such other Party under this Agreement. Such offsets shall be in addition to any other rights or remedies available under this Agreement or Applicable Law.
ARTICLE 5
INTELLECTUAL
PROPERTY
5.1 Ownership of Intellectual Property.
5.1.1 Ownership of Newly Generated Technology. As between the Parties, Medivation shall own and retain all right, title,
and interest in and to any and all: Information and inventions that are conceived, discovered, developed, or otherwise made solely by or on behalf of either Medivation or CureTech or any of its Affiliates in connection with the activities conducted
under or in connection with this Agreement, whether or not patented or patentable, and any and all Patents and other intellectual property rights with respect thereto, including any such Information or invention or any Patent or intellectual
property rights with respect thereto created or generated solely or by CureTech or any of its Affiliates or jointly with Medivation or any of its Affiliates (the Collaboration IP), and CureTech agrees to assign and hereby assigns
to Medivation all right, title and interest in and to any such Collaboration IP. CureTech shall, without additional compensation, cooperate to make any necessary assignments to fully effect the ownership provided for in this Section 5.1.1.
5.1.2 Ownership of Product Trademarks. As between the Parties, Medivation shall own all right, title, and interest to
the Product Trademarks in the Territory and CureTech agrees to assign and hereby assigns to Medivation all right, title and interest it currently has or may obtain in and to any such Product Trademarks.
5.1.3 Ownership of Corporate Names. As between the Parties, each Party shall retain all right, title and interest in and
to its corporate names.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
25
5.2 Maintenance and Prosecution of Patents.
5.2.1 Patent Prosecution and Maintenance of CureTech Patents. CureTech shall have the right through the use of outside
counsel reasonably acceptable to Medivation, to prepare, file, prosecute, and maintain the CureTech Patents in each country in the Territory and to be responsible for any related interferences, derivations, re-issuances, re-examinations, opposition
and other post grant proceedings with respect thereto. CureTech shall provide Medivation with copies of all correspondence it receives from the US Patent and Trademark Office (the USPTO), the European Patent Office
(EPO) and equivalent patent offices in foreign jurisdictions, relating to the CureTech Patents. Before CureTech submits any material filing or response to such patent authorities with respect to the CureTech Patents, CureTech
shall provide Medivation with drafts of such filing or response and provide Licensee with a reasonable opportunity to review and comment on such filing or response. CureTech shall not unreasonably reject the requests or suggestions of Medivation
with respect to such CureTech drafts or with respect to strategies for filing and prosecuting the CureTech Patents in the Territory. CureTech shall not prosecute the CureTech Patents pursuant to this Section 5.2.1 in a manner that would
reasonably be expected to have a material adverse effect on the Commercialization of the Licensed Products in the Territory without Medivations prior written consent. CureTech shall not abandon any CureTech Patents in a country in the
Territory without providing Medivation at least [ * ] days prior written notice and first obtaining Medivations written consent to do so. If CureTech decides to abandon any CureTech Patent, (x) Medivation shall, at its sole
cost and expense (subject to clause (z) below, have the option to continue to prosecute and maintain any such abandoned CureTech Patent in CureTechs name, (y) CureTech shall not have the right to review and comment on the
documentation, filings and communications with patent offices related to any such abandoned CureTech Patents, and (z) the claims within such CureTech Patents shall no longer be deemed Valid Claims for the purpose of calculating the Royalty Term
for the applicable Licensed Product in the applicable country. Medivation shall reimburse CureTech its reasonable out-of-pocket expenses incurred in the preparation, filing, prosecution and maintenance of the CureTech Patents filed after the
Effective Date under this Section 5.2.1, within [ * ] days of Medivations receipt of an invoice therefor.
5.2.2 Patent Prosecution and Maintenance of Medivation Patents. As between the Parties, Medivation shall have the sole
right, but not the obligation, to prepare, file, prosecute, and maintain any Patents owned or Controlled by Medivation or any of its Affiliates that claim any Licensed Molecule or Licensed Product or the Exploitation thereof, including any Patents
covering the Collaboration IP (the Medivation Patents) worldwide, at Medivations sole cost and expense.
5.2.3 Patent Term Extension and Supplementary Protection Certificate. As between the Parties, Medivation shall have the
sole right to make decisions regarding, and to apply for, patent term extensions, including supplementary protection certificates and any other extensions that are now or become available in the future, wherever applicable, for the CureTech Patents,
Collaboration IP and the Medivation Patents in any country in the Territory. In the event that applicable law in any country in the Territory
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
26
provides for the extension of the term of any patent included among CureTech Patents, Medivation Patents and Collaboration IP claiming Licensed Products, such as under the U.S. Drug Price
Competition and Patent Term Restoration Act of 1984 (hereinafter the Hatch-Waxman Act), the Supplementary Certificate of Protection of the Member States of the European Union and other similar measures in any other country,
Medivation shall apply for and use its reasonable efforts to obtain such an extension or, should the law require CureTech to so apply, CureTech agrees to do so at Medivations request. CureTech agrees to cooperate with Medivation or its
Affiliate or Sublicensee, as applicable, in obtaining such extensions and shall execute such documents and take such additional action as Medivation may reasonably request in connection therewith.
5.2.4 Patent Listings. As between the Parties, Medivation shall have the sole right to make and submit all filings with
Regulatory Authorities in the Territory with respect to the CureTech Patents, Collaboration IP and the Medivation Patents. Medivation shall make, in its sole discretion, any determination with respect to the strategy for CureTech Patents, Medivation
Patents and Collaboration IP claiming Program Licensed Molecules or Licensed Products with respect to patent listings, certifications, notices and patent enforcement procedures under the Hatch-Waxman Act, the Biologics Price Competition and
Innovation Act of 2009, the national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83 in the European Union or other international equivalents (hereinafter the BPCIA). CureTech shall cooperate, as reasonably requested by
Medivation, in connection with the foregoing. CureTech hereby authorizes Medivation to (a) provide in any NDA or BLA or in connection with the BPCIA a list of patents which includes CureTech Patents and Collaboration IP claiming Licensed
Molecules or Licensed Products and such other information as Medivation believes is appropriate; (b) exercise any rights that may otherwise be exercisable by the patent owner under the BPCIA and (c) exercise any rights that may be
exercisable as reference product sponsor under the BPCIA, including: (i) providing a list of patents that relate to the Licensed Product including CureTech Patents and Collaboration IP claiming Licensed Molecules or Licensed Products,
(ii) engaging in the patent resolution provisions of the BPCIA, and (iii) determining which patents will be the subject of immediate patent infringement action under Section 351(l)(6) of the Biologics Price Competition and Innovation
Act.
5.2.5 Cooperation. With respect to each CureTech Patent, the Party that is not preparing, filing, prosecuting
or maintaining such Patent pursuant to Section 5.2.1, Section 5.2.2 or Section 5.2.3, or applying for a patent term extension for such Patent pursuant to Section 5.2.3, or making a filing with a Regulatory Authority with respect
to such Patent pursuant to Section 5.2.4 (such Party in each case, the Non-Prosecuting Party) shall, at such Non-Prosecuting Partys sole cost and expense, cooperate fully with the other Party (the Prosecuting
Party) in the preparation, filing, prosecution, maintenance, and listing of such Patent under this Agreement, at the non-prosecuting Partys sole cost and expense; provided that Medivation shall reimburse CureTech its reasonable
out-of-pocket expenses incurred under this Section 5.2.5, within [ * ] days of Medivations receipt of an invoice therefor. Such cooperation shall include:
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
27
(a) executing all papers and instruments, or requiring its employees or contractors to execute
such papers and instruments, so as to (i) effectuate the ownership of intellectual property set forth in Section 5.1; (ii) enable the Prosecuting Party to prepare, file, prosecute and maintain the CureTech Patents and the Medivation
Patents in the Territory; and (iii) obtain and maintain any Patent extensions, supplementary protection certificates, and the like with respect to the CureTech Patents and Medivation Patents in the Territory, in each case ((i), (ii), and (iii))
to the extent provided for in this Agreement;
(b) promptly informing the Prosecuting Party of any matters coming to the Non-Prosecuting
Partys attention that may materially affect the preparation, filing, prosecution, or maintenance of any such CureTech Patents in the Territory;
(c) with respect to patent extensions, taking such action as patent holder as may be required under any Applicable Law to obtain a patent
extension or supplementary protection certificate;
(d) with respect to patent listings made by Medivation pursuant to
Section 5.2.4, (i) providing to Medivation all Information necessary or reasonably useful to enable Medivation to make such filings with Regulatory Authorities, including a correct and complete list of CureTech Patents covering any
Licensed Product and (i) cooperating with Medivations reasonable requests in connection therewith, including meeting any submission deadlines, in each case ((i) and (ii)), to the extent required or permitted by Applicable Law; and
(e) providing the Prosecuting Party with reasonable access during normal business hours to all records and personnel necessary or reasonably
useful for the preparation, filing, prosecution, maintenance or listing of the applicable Patent, including inventor declarations, laboratory notes and notebooks.
5.3 Enforcement of Patents.
5.3.1 Each Party shall promptly notify the other Party in writing of (a) any alleged or threatened infringement of
any CureTech Patent or Collaboration IP in any jurisdiction in the Territory or (b) any certification filed under the Hatch-Waxman Act or the notice of the filing of an application under Section §351(k) of the Biologics Price Competition
and Innovation Act, including, but not necessarily limited to, notices pursuant to §§101 and 103 of the Hatch-Waxman Act from Persons who have filed an abbreviated new drug application or a 505(b)(2) application, or a §351(k)
application under the Biologics Price Competition and Innovation Act, or any foreign equivalent of any of the foregoing, claiming that a CureTech Patent or Collaboration IP claiming a Licensed Product is invalid or that infringement thereof will not
arise from the manufacture, use or sale of any Licensed Product by a Third Party., in each case ((a) and (b)) of which such Party becomes aware (an Infringement). In any event, such notification and copies thereof shall be
provided to the other Party within [ * ] days after receipt of such certification.
5.3.2 Enforcement of CureTech
Patents and Collaboration IP. As between the Parties, Medivation shall have the first right, but not the obligation, to initiate
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
28
an infringement action against any Infringement with respect to any CureTech Patent or patent within Collaboration IP, including as a defense or counterclaim in connection with any Third Party
Infringement Claim in the Territory. In the event Medivation initiates any such action, CureTech shall have the right to join as a party to such action and participate with its own counsel at its sole cost and expense; provided, however, that
Medivation shall retain control of such action, including the response to any defense or defense of any counterclaim raised in connection therewith. If Medivation does not take commercially reasonable steps to initiate an infringement action against
any Infringement by the earlier of (a) the date that is [ * ] days following the date first notice is provided per Section 5.3.1 above with respect to such Infringement, or (b) [ * ] Business Days before the time limit,
if any, set forth in Applicable Law for filing of such infringement actions, then (x) Medivation shall so notify CureTech and (y) CureTech may initiate an infringement action against Infringement.
5.3.3 Enforcement of Medivation Patents. Medivation shall have the sole right, but not the obligation, to initiate an
infringement action against any Infringement of the Medivation Patents, including as a defense or counterclaim in connection with any Third Party Infringement Claim, worldwide, at its sole cost and expense, and Medivation shall retain control of
such action.
5.3.4 Cooperation. The Parties agree to cooperate fully in any infringement action initiated pursuant
to this Section 5.3, including, in the case of CureTech, by making the inventors (to the extent available) of the relevant Patents reasonably available to Medivation upon Medivations request and expense. Where a Party initiates such an
infringement action, the other Party shall, where necessary, furnish a power of attorney solely for such purpose or shall join in, or be named as a necessary party to, such action. Unless otherwise set forth herein, the Party entitled to bring an
infringement action shall have the right to settle such action; provided, however, that neither Party shall have the right to settle any infringement action under this Section 5.3 in a manner that has a material adverse effect on the rights or
interest of the other Party under this Agreement, or in a manner that imposes any costs or liability on, or involves any admission by, the other Party, without the express written consent of such other Party (which consent shall not be unreasonably
withheld, conditioned or delayed). In connection with any activities with respect to any infringement action initiated pursuant to this Section 5.3, the controlling Party shall: (a) keep the other Party reasonably informed regarding its
actions with respect to such infringement action; (b) consult with the other Party as to the strategy for such infringement action; (c) provide the other Party with drafts of all material official papers and statements prior to their
submission in such infringement action, in sufficient time to allow the other Party to review, consider and substantively comment thereon; and (d) reasonably consider the other Partys comments on all such official papers and statements.
For the avoidance of doubt, [ * ].
5.3.5 Costs and Recovery. The out-of-pocket costs and expenses incurred
by or on behalf of Medivation relating to any infringement action commenced by Medivation pursuant to this Section 5.3 shall be paid by Medivation and, at Medivations election, Medivation shall be entitled to [ * ]. For clarity, if
CureTech elects to participate in any infringement action commenced by Medivation pursuant to this Section 5.3 by joining as a party to such action and participating with its own counsel at its sole cost and expense, or
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
29
CureTech initiates an infringement action pursuant to Section 5.3.2(y), or otherwise participates, [ * ]. The costs and expenses relating to any infringement action commenced by
CureTech pursuant to this Section 5.3 shall be solely borne by CureTech. Except as otherwise agreed by the Parties in connection with a cost sharing arrangement, any recovery realized as a result of any infringement action against an
Infringement (whether by way of settlement or otherwise) shall be first allocated to reimburse the Parties for their out-of-pocket costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the
totality of such expenses). Any remainder after such reimbursement is made shall be, (a) with respect to any infringement action commenced by Medivation pursuant to this Section 5.3, [ * ].
5.4 Invalidity or Unenforceability Defenses or Actions.
5.4.1 Notice. Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of
invalidity or unenforceability of any CureTech Patent, Medivation Patent, or patent within Collaboration IP by a Third Party, including in a declaratory judgment action or similar action or claim filed by a Third Party or as a defense or as a
counterclaim in any infringement action, of which such Party becomes aware.
5.4.2 CureTech Patents and Collaboration
IP. Medivation shall have the first right, but not the obligation, to defend and control the defense of the validity and enforceability of any CureTech Patent or any Collaboration IP in the Territory. CureTech may participate in any such defense
in the Territory with counsel of its choice at its sole cost and expense; provided, however, that Medivation shall retain control of the defense. If Medivation elects not to defend or control the defense of the validity and enforceability of
any CureTech Patent in the Territory, or otherwise fails to initiate and maintain any such defense within [ * ] days after the applicable claim is filed, then CureTech may conduct and control such defense at its sole cost and expense.
5.4.3 Medivation Patents. Medivation shall have the sole right, but not the obligation, to defend and control the
defense of the validity and enforceability of the Medivation Patents at its sole cost and expense worldwide.
5.4.4
Cooperation. Each Party shall assist and cooperate with the other Party as such other Party may reasonably request from time to time in connection with its activities set forth in this Section 5.4, including by being joined as a party
plaintiff in such action or proceeding, providing access to relevant documents and other evidence, and making its employees available at reasonable business hours. In connection with any activities with respect to any defense of the validity and
enforceability of any CureTech Patent in the Territory initiated pursuant to this Section 5.4, the controlling Party shall: (a) keep the other Party reasonably informed regarding its actions with respect to such defense; (b) consult
with the other Party as to the strategy for such defense; (c) provide the other Party with drafts of all material official papers and statements prior to their submission in such defense, in sufficient time to allow the other Party to review,
consider and substantively comment thereon; and (d) reasonably consider the other Partys comments on all such official papers and statements. [ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
30
5.4.5 Costs and Expenses. The out-of-pocket costs and expenses incurred by
or on behalf of Medivation in connection with any defense commenced by Medivation pursuant to this Section 5.4 shall be paid by Medivation; provided, however that Medivation shall have the right to [ * ]. For clarity, if CureTech elects
to participate in any such defense in the Territory with counsel of its choice at its sole cost and expense pursuant to Section 5.4.2, or CureTech conducts and controls such defense at its sole cost and expense pursuant to Section 5.4.2,
or otherwise participates, [ * ].
5.5 Infringement Claims by Third Parties.
5.5.1 Notice. If the manufacture, sale, or use of a Licensed Product in the Territory pursuant to this Agreement results
in any claim, suit, or proceeding by a Third Party alleging patent infringement by Medivation or any of its Affiliates or any of its or their respective Sublicensees (a Third Party Infringement Claim), including any defense or
counterclaim in connection with an infringement action, Medivation shall promptly notify CureTech thereof in writing.
5.5.2 Control of Defense. Medivation shall have all rights to defend and control the defense of any such Third Party
Infringement Claim, using counsel of its own choice. Without limitation of the foregoing, if Medivation finds it necessary or desirable to join CureTech in the defense of a Third Party Infringement Claim, CureTech shall execute all papers and
perform such acts as shall be reasonably required at Medivations sole cost and expense. Medivation shall keep CureTech reasonably informed of all material developments in connection with any such Third Party Infringement Claim. [ * ].
5.5.3 Costs and Expenses. Except as otherwise provided in ARTICLE 8, the out-of-pocket costs and expenses incurred
by or on behalf of Medivation in connection with or relating to any defense of a Third Party Infringement Claim with respect to a Licensed Product commenced by Medivation pursuant to this Section 5.5 shall be allocated between the Parties as
follows: with respect to any Third Party Infringement Claim with respect to any Patent owned or otherwise controlled by a Third Party that claims the composition or therapeutic use of a Licensed Molecule, paid by Medivation, [ * ]. For
clarity, if CureTech participates in any such Third Party Infringement Claim, [ * ].
5.6 Product Trademarks.
5.6.1 Prosecution of Product Trademarks. For clarity, Medivation shall have the right to register, prosecute, and
maintain the Product Trademarks. All costs and expenses of registering, prosecuting, and maintaining the Product Trademarks shall be borne solely by Medivation. CureTech shall, at its sole cost and expense, provide all assistance and documents
reasonably requested by Medivation in support of its prosecution, registration, and maintenance of the Product Trademarks.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
31
5.6.2 Enforcement of Product Trademarks. Medivation shall have the sole
right to take such action as Medivation deems necessary against a Third Party based on any actual or threatened infringement, dilution, misappropriation, or other violation of, or unfair trade practices or any other like offense relating to, the
Product Trademarks by a Third Party in the Territory. Medivation shall bear the costs and expenses relating to any enforcement action commenced pursuant to this Section 5.6.2 and any settlements and judgments with respect thereto, and shall
retain any damages or other amounts collected in connection therewith.
5.6.3 Third Party Claims. Medivation shall
have the sole right to defend against any alleged, threatened, or actual claim by a Third Party that the use or registration of the Product Trademarks in the Territory infringes, dilutes, misappropriates, or otherwise violates any Trademark or other
right of that Third Party or constitutes unfair trade practices or any other like offense, or any other claims as may be brought by a Third Party against a Party in connection with the use of the Product Trademarks with respect to a Licensed Product
in the Territory. Medivation shall bear the costs and expenses relating to any defense commenced pursuant to this Section 5.6. and any settlements and judgments with respect thereto, and shall retain any damages or other amounts collected in
connection therewith.
ARTICLE 6
CONFIDENTIALITY AND NON-DISCLOSURE
6.1 Product Information. CureTech recognizes that by reason of, inter alia, Medivations status as an exclusive licensee
pursuant to the grants under Section 2.1, Medivation has an interest in CureTechs retention in confidence of certain CureTech Know-How. Accordingly, during the Term, CureTech shall, and shall cause its Affiliates and shareholders,
including any of the Clal Entities, and its and their respective officers, directors, employees, and agents to, keep completely confidential, and not publish or otherwise disclose, and not use directly or indirectly for any purpose other than to
fulfill CureTechs obligations hereunder, any Information provided by or on behalf of CureTech to Medivation in connection with this Agreement (including its existence), whether prior to, on or after the Effective Date, relating to any Licensed
Molecule or Licensed Product, or the Exploitation of any of the foregoing (the Product Information); except to the extent (a) the Product Information is in the public domain through no fault of CureTech, its Affiliates or any
of its or their respective officers, directors, employees, shareholders or agents; or (b) such disclosure or use is expressly permitted under Section 6.3. For purposes of Section 6.3, Medivation shall be deemed to be the disclosing
Party with respect to Product Information and Licensed Know-How (including any Licensed Know-How relating to the Manufacture of the Licensed Product) under Section 6.3 and CureTech shall be deemed to be the receiving Party with respect thereto.
[ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
32
6.2 Confidentiality Obligations.
6.2.1 At all times during the Term and for a period of [ * ] years thereafter, each Party shall, and shall cause
its officers, directors, employees and agents to, keep confidential and not publish or otherwise disclose to a Third Party (including, in the case of CureTech, any shareholder of CureTech, including any Clal Entity) and not use, directly or
indirectly, for any purpose, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement or is
reasonably necessary or reasonably useful for the performance of, or the exercise of such Partys rights under, this Agreement. Confidential Information means any technical, business, or other information provided by or on
behalf of one Party to the other Party in connection with this Agreement, whether prior to, on, or after the Effective Date, including any information relating to, any Licensed Molecule or any Licensed Product (including the Regulatory
Documentation), any Development or Commercialization of any Licensed Molecule or any Licensed Product, any know-how with respect thereto developed by or on behalf of the disclosing Party or its Affiliates (including CureTech Know-How), or the
scientific, regulatory or business affairs or other activities of either Party.
6.2.2 [ * ]. Notwithstanding the
foregoing, the confidentiality and non-use obligations under this Section 6.2 with respect to any Confidential Information shall not include any information that:
6.2.3 is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like
through no fault of the receiving Party in breach of this Agreement;
6.2.4 can be demonstrated by documentation or
other competent proof to have been in the receiving Partys possession prior to disclosure by the disclosing Party without any obligation of confidentiality with respect to such information;
6.2.5 is subsequently received by the receiving Party from a Third Party who is not bound by any obligation of
confidentiality with respect to such information;
6.2.6 has been published by a Third Party or otherwise enters the
public domain through no fault of the receiving Party in breach of this Agreement; or
6.2.7 can be demonstrated by
documentation or other competent evidence to have been independently developed by or for the receiving Party without reference to the disclosing Partys Confidential Information.
Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the
receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party. Further, any combination of Confidential Information shall not be
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
33
considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of
the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.
CureTech and its Affiliates shall not disclose to their shareholders (including any of the Clal Entities) any Confidential Information of
Medivation or Product Information beyond that minimum required to be disclosed to such shareholders by Applicable Law (or as necessary to enable such Clal Entities to fulfill their obligations under the Guaranty, as set forth in Section 6.5.4).
If CureTech or its Affiliate is required by Applicable Law or Section 6.5.4 to disclose such Product Information or Confidential Information of Medivation to its shareholders, it will (i) submit the proposed disclosure in writing to
Medivation as far in advance as reasonably practicable (and, where possible, not less than three (3) Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon (which comments shall,
to the extent possible, be taken into account). CureTech or its Affiliate shall accept all reasonable comments thereto by Medivation, (ii) limit such disclosure to the minimum and, to only that which is required by Applicable Law or
Section 6.5.4, and (iii) use commercially reasonable efforts to seek confidential treatment of such information by such shareholder, to the extent such confidential treatment is applicable and reasonably available consistent with
Applicable Law. Each Party shall be responsible for its own legal and other external costs and expenses in connection with the foregoing.
6.3 Mutual Permitted Disclosures. Subject to Section 6.5, each Party may disclose Confidential Information to the extent that such
disclosure is:
6.3.1 made in response to a valid order of a court of competent jurisdiction or other
supra-national, federal, national, regional, state, provincial and local governmental or regulatory body of competent jurisdiction or, if in the reasonable opinion of the receiving Partys legal counsel, such disclosure is otherwise required by
Applicable Law, including by reason of public filing required pursuant to securities laws or the rules of a stock exchange on which the securities of the disclosing Party or any Clal Entities are listed (or to which an application for listing has
been submitted); provided, however, that the receiving Party shall first have given notice to the disclosing Party and given the disclosing Party a reasonable opportunity to quash such order or to obtain a protective order or confidential treatment
requiring that the Confidential Information and documents that are the subject of such order be held in confidence by such court or agency or, if disclosed, be used only for the purposes for which the order was issued; and provided, further, that if
Confidential Information is disclosed by reason of said public filing, the receiving Party shall provide the Disclosing Party sufficient time in advance as reasonably practicable (and, where possible, not less than three (3) Business Days prior
to the anticipated date of disclosure) so as to provide the Disclosing Party a reasonable opportunity to review and comment on said public filing (which comments shall, to the extent possible, be taken into account) and provided, further, that the
Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in response to such court or governmental order and to the minimum required under
Applicable Law; or
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
34
6.3.2 made by or on behalf of the receiving Party to a patent authority as
may be reasonably necessary or useful for purposes of obtaining or enforcing a Patent; provided, however, that reasonable measures shall be taken to assure confidential treatment of such information, to the extent such protection is available.
6.4 Other Permitted Disclosures. Each Party may disclose Confidential Information of the other Party to the extent that such disclosure
is:
6.4.1 made by such Party or any of its Affiliates or its or their respective sublicensees or licensors or to
its or their attorneys, auditors, advisors, consultants, contractors, existing or prospective collaboration partners, licensees, sublicensees, or any Regulatory Authorities, or other Third Parties for use by such Person as may be necessary or useful
in connection with the Exploitation of any Licensed Molecule or any Licensed Product (including in connection with any filing, application or request for Regulatory Approval) by or on behalf of such Party in accordance with this Agreement, or
otherwise in connection with the performance of such Partys obligations or exercise of such Partys rights as contemplated by this Agreement; or
6.4.2 made by or on behalf of such Party to potential or actual investors or acquirers as may be necessary or useful in
connection with their evaluation of such potential or actual investment or acquisition; provided, however, that such persons shall be subject to obligations of confidentiality and non-use with respect to such Confidential Information substantially
similar to the obligations of confidentiality and non-use of Medivation pursuant to this Article 6 (with a duration of confidentiality and non-use obligations as appropriate that is no less than five years from the date of disclosure).
6.5 Registration, Filing and Disclosure of the Agreement.
6.5.1 The terms of this Agreement are confidential and shall not be disclosed by either Party except pursuant to this
Section 6.5.
6.5.2 To the extent a Party determines in good faith that it is required by Applicable Law to
publicly file or otherwise disclose the terms of this Agreement with a Governmental Entity, including public filings pursuant to securities laws or the rules of a stock exchange on which the securities of the disclosing Party or any of the Clal
Entities are listed (or to which an application for listing has been submitted), such disclosing Party shall provide the proposed redacted form of this Agreement (or such other disclosure regarding the terms of this Agreement) to the other Party
with a reasonable amount of time prior to filing or disclosure for the other Party to review and approve such redacted form or other disclosure regarding the terms of this Agreement (which approval shall not be unreasonably conditioned, withheld or
delayed). The Party making such filing, registration, notification or disclosure shall submit this Agreement or such disclosure in a manner consistent with the agreed redaction or disclosure and shall use commercially reasonable efforts to seek
confidential
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
35
treatment for the redacted terms, to the extent such confidential treatment is applicable and reasonably available consistent with Applicable Law. Each Party shall be responsible for its own
legal and other external costs and expenses in connection with any such filing, registration or notification.
6.5.3
Each Party may disclose to potential acquirers, partners and investors, in each case, pursuant to obligations of confidentiality no less stringent than those set forth in this Article 6, the terms of this Agreement
6.5.4 CureTech shall have the right to disclose the terms of this Agreement to those Clal Entities that are signatories
to that certain Guaranty dated as of even date herewith, and to disclose Confidential Information of Medivation and Product Information to such Clal Entities, solely as and to the extent necessary to enable such Clal Entities to fulfill its
obligations under such Guaranty, and such Clal Entities shall have the right to disclose the material terms of this Agreement or such Confidential Information or Product Information only as and to the extent set forth in such Guaranty.
6.6 Use of Name. Except as expressly provided herein, neither Party shall mention or otherwise use the name, logo, or Trademark of the
other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material, or other form of publicity without the prior written approval of such other Party in each
instance. The restrictions imposed by this Section 6.6 shall not prohibit either Party from making any disclosure identifying the other Party that is required by Applicable Law or the rules of a stock exchange on which the securities of the
disclosing Party are listed (or to which an application for listing has been submitted).
6.7 Public Announcements. The Parties
have agreed upon the content of a joint press release that shall be issued substantially in the form attached hereto as Schedule 6.7, the release of which the Parties shall coordinate in order to accomplish such release promptly upon
execution of this Agreement. Neither CureTech nor any of its Affiliates shall issue any other public announcement, press release, or other public disclosure regarding this Agreement or its subject matter without Medivations prior written
consent, except and to the extent required by Applicable Law or stock exchange regulations; provided, that in the event CureTech is, in the opinion of its counsel, required by Applicable Law or the rules of a stock exchange on which its securities
are listed (or to which an application for listing has been submitted) to make such a public disclosure, CureTech shall submit the proposed disclosure in writing to Medivation as far in advance as reasonably practicable (and, where possible, not
less than three Business Days prior to the anticipated date of disclosure) so as to provide a reasonable opportunity to comment thereon, and CureTech shall accept all reasonable comments thereto by Medivation. Notwithstanding the foregoing,
Medivation, its Affiliates and its and their respective Sublicensees shall have the right to publicly disclose research, development and commercial information (including with respect to regulatory matters) regarding the Licensed Molecules or
Licensed Products; provided, however, such disclosure is subject to the provisions of this Article 6 with respect to CureTechs Confidential Information. Neither Party shall be required to seek the permission of the other Party to repeat any
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
36
information regarding the terms of this Agreement or any amendment hereto that has already been publicly disclosed by such Party, or by the other Party, in accordance with this Section 6.7,
provided that such information remains accurate as of such time and provided the frequency and form of such disclosure are reasonable.
6.8 Publications. CureTech may not publish peer reviewed manuscripts, or provide other forms of public disclosure including abstracts
and presentations, of results of studies or activities with respect to the Licensed Molecules or Licensed Products or CureTech Know-How, without the prior written consent of Medivation. Medivation shall be free to publicly disclose the results of,
and information regarding, activities under this Agreement, subject to prior review by CureTech for issues of patentability and protection of its Confidential Information, in a manner consistent with Applicable Law and industry practices
6.9 Return of Confidential Information. Upon the effective date of the termination of this Agreement for any reason, upon the written
request of a Party, the non-requesting Party shall either, at the requesting Partys election: (a) promptly destroy all copies of Confidential Information in the possession of the non-requesting Party to which the non-requesting Party does
not retain rights under the surviving provisions of this Agreement and confirm such destruction in writing to the requesting Party; or (b) promptly deliver to the requesting Party, at the non-requesting Partys sole cost and expense, all
copies of Confidential Information in the possession of the non-requesting Party to which the non-requesting Party does not retain rights under the surviving provisions of this Agreement; provided, however, the non-requesting Party shall be
permitted to retain one copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder or for archival purposes. Notwithstanding the foregoing, the non-requesting Party also shall be permitted to retain
such additional copies of or any computer records or files containing such Confidential Information that have been created solely by the non-requesting Partys automatic archiving and back-up procedures, to the extent created and retained in a
manner consistent with the non-requesting Partys standard archiving and back-up procedures, as well as one copy for legal, regulatory or corporate governance purposes, but not for any other use or purpose. All Confidential Information shall
continue to be subject to the terms of this Agreement for the period set forth in Section 6.2.1.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
7.1 Mutual Representations and Warranties. CureTech and Medivation each represents and warrants to the other, as of the Effective Date,
that:
7.1.1 It is a corporation duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its organization, and has all requisite power and authority, corporate or otherwise, to execute, deliver, and perform this Agreement.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
37
7.1.2 The execution and delivery of this Agreement and the performance by
it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and do not violate: (a) such Partys charter documents, bylaws, or other organizational documents; (b) in any material respect,
any agreement, instrument, or contractual obligation to which such Party is bound; (c) any requirement of any Applicable Law; or (d) any order, writ, judgment, injunction, decree, determination, or award of any court or Governmental Entity
presently in effect applicable to such Party.
7.1.3 This Agreement is a legal, valid, and binding obligation of
such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency, or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the
availability of specific performance, and general principles of equity (whether enforceability is considered a proceeding at law or equity).
7.2 Additional Representations, Warranties and Covenants of CureTech. CureTech further represents and warrants to Medivation, as of the
Effective Date, and covenants, as follows:
7.2.1 All CureTech Patents existing as of the Effective Date (the
Existing Patents) are listed on Schedule 7.2.1 and all Existing Patents (a) are (i) to CureTechs Knowledge, subsisting and are not invalid or unenforceable, in whole or in part and (ii) are solely and
exclusively owned by CureTech and/or [ * ], free of any encumbrance, lien or claim of ownership by any other Third Party and (b) have been prosecuted, filed and maintained properly and correctly, and all applicable fees have been paid on
or before the due date for payment. With respect to any pending applications included in Existing Patents, such applications are being diligently prosecuted in the respective patent offices in the Territory in accordance with Applicable Law and
CureTech and its Affiliates have presented all relevant references, documents, or information of which it and, to CureTechs Knowledge, the inventors are aware to the relevant patent examiner at the relevant patent office.
7.2.2 As described in Schedule 7.2.2, true, complete, and correct copies of the file wrappers and other documents
and materials relating to the prosecution, defense, maintenance, validity, and enforceability of the Existing Patents have been made available to Medivation prior to the Effective Date.
7.2.3 The Existing Patents represent all Patents within CureTechs or its Affiliates ownership or Control
covering the Exploitation of the Licensed Molecules or the Licensed Products in the Territory as of the Effective Date. To CureTechs or any of its Affiliates Knowledge, there is no Information owned or Controlled by CureTech or any of
its Affiliates or any inventor of any invention within the CureTech Patents as of the Effective Date that relates to the Licensed Molecule or the Licensed Products that is not within the CureTech Know-How. All rights and licenses (other than by
applicable regulatory and government authorities) that are required with respect to and under the Existing Patents and CureTech Know-How to Exploit the Licensed Molecule and Licensed Products have been granted to Medivation under Section 2.1,
and there are no other such rights or licenses with respect to the Existing Patents and CureTech Know-How that would be required for Medivation to Exploit the Licensed Molecule and the Licensed Products.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
38
7.2.4 Each of the Existing Patents properly identifies each and every
inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Existing Patent is issued or such application is pending. No person (other than CureTech or [ * ]) has any ownership interest in any of
the Existing Patents or inventions claimed therein.
7.2.5 None of CureTech, any of its Affiliates, any Clal Entity
or, to CureTechs Knowledge, [ * ] or [ * ]: (i) has, except as disclosed in Schedule 7.2.5(i), previously entered into any agreement, whether written or oral, that materially affects, or could reasonably be expected
to materially affect, (a) any of the rights and licenses granted to or obligations imposed upon Medivation in this Agreement, or the legality, validity, enforceability or binding nature of this Agreement or such rights or obligations,
(b) the Existing Patents, or any molecule claimed therein, or CureTech Know-How, or (c) the Exploitation of the Licensed Molecules or Licensed Products as contemplated herein; or (ii) has, except as disclosed in Schedule
7.2.5(ii), assigned, transferred, licensed, conveyed, or otherwise encumbered its right, title, or interest in or to (a) the Existing Patents or any molecule claimed therein, CureTech Know-How, CureTech Regulatory Documentation, the
Licensed Molecules, or the Licensed Products (including by granting any covenant not to sue with respect thereto) or (b) any Patent or other intellectual property or proprietary right, Regulatory Documentation or Information that would be
Existing Patents, CureTech Know-How, or CureTech Regulatory Documentation but for such assignment, transfer, license, conveyance, or encumbrance (in each case, (a) and (b), which assignment, transfer, license, conveyance, or other encumbrance
of CureTechs right, title, or interest, materially affects, or could reasonably be expected to materially affect, (1) any of the rights and licenses granted to or obligations imposed upon Medivation in this Agreement, or the legality,
validity, enforceability or binding nature of this Agreement or such rights or obligations; (2) the Existing Patents, or any molecule claimed therein; CureTech Know-How; CureTech Regulatory Documentation; the Licensed Molecules; the Licensed
Products; any Patent or other intellectual property or proprietary right, Regulatory Documentation or Information that would be Existing Patents, CureTech Know-How, or CureTech Regulatory Documentation but for such assignment, transfer, license,
conveyance, or encumbrance; or (3) the Exploitation of the Licensed Molecules or Licensed Products as contemplated herein); and (iii) shall enter into any such agreements, grant any such right, title, or interest to any Person that is
inconsistent with, or otherwise diminish the rights and licenses granted to Medivation under this Agreement.
7.2.6
Except as disclosed in Schedule 7.2.6, no Third Party has any right to, nor has it asserted any such right, to manufacture or supply any Licensed Molecule or Licensed Product, or any component thereof.
7.2.7 Except as disclosed in Schedule 7.2.7, no claim or litigation has been brought or, to the Knowledge of
CureTech, threatened by any Person alleging that, and neither CureTech or any of its Affiliates has any Knowledge of any claim, whether or not asserted, that (a) any Existing Patent is invalid or unenforceable, or (b) the conception,
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
39
reduction to practice, disclosing, copying, making, assigning, or licensing of the Existing Patents or the CureTech Regulatory Documents or the CureTech Know-How existing as of the Effective
Date, or the Exploitation of the Licensed Molecules or Licensed Products as contemplated herein, violates, infringes, constitutes misappropriation or otherwise conflicts or interferes with, or would violate, infringe, or otherwise conflict or
interfere with, any intellectual property or proprietary right of any Person.
7.2.8 Subject to Schedule
7.2.8, to CureTechs Knowledge, the Development, Manufacture and Commercialization of the Licensed Molecules as licensed hereunder will not infringe any Patent or other intellectual property or proprietary right of any Person.
7.2.9 Except as disclosed in Schedule 7.2.9, the Exploitation of the Licensed Molecules or the Licensed Products
is not subject to any other license or agreement to which CureTech or any of its Affiliates is a party.
7.2.10
Except as disclosed in Schedule 7.2.10, the [ * ] Agreements specify completely and accurately the [ * ].
7.2.11 To CureTechs or any of its Affiliates Knowledge, no Person is infringing or threatening to infringe
or misappropriating or threatening to misappropriate the Existing Patents, any proprietary CureTech Know-How, or the Regulatory Documentation.
7.2.12 Each Person who is an inventor of or who has or has had any rights in or to any Existing Patents or any CureTech
Know-How has assigned and has executed an agreement assigning its entire right, title, and interest in and to such Existing Patents and CureTech Know-How to CureTech in all countries in which Existing Patents have been filed in the Territory.
7.2.13 CureTech has obtained the right (including under any Patents and other intellectual property rights) to use all
Information and all other materials (including any formulations and manufacturing processes and procedures) developed or delivered by any Third Party under any agreements between CureTech or any of its Affiliates, on the one hand, and any such Third
Party, on the other hand, with respect to any Licensed Molecule or Licensed Product, and CureTech has the rights under each such agreement to transfer such rights, Information or other materials to Medivation and its designees and to grant
Medivation the right to use such rights, Information or other materials in the Exploitation of the Licensed Molecule and the Licensed Products as contemplated hereunder without restriction.
7.2.14 Prior to the Effective Date, CureTech has provided to Medivation true and complete copies of all agreements
between and/or among CureTech and any of its Affiliates and/or Third Parties that relate to the Licensed Molecules or Licensed Products[ * ].
7.2.15 The inventions claimed by the Existing Patents (a) were not conceived, discovered, developed, or otherwise
made in connection with any research activities funded, in whole or in part, by the federal government of the United States or any agency thereof, (b) are not a subject invention as that term is described in 35 U.S.C.
Section
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
40
201(e), and (c) are not otherwise subject to the provisions of the Patent and Trademark Law Amendments Act of 1980, as amended, codified at 35 U.S.C. §§ 200-212, as amended,
CureTech has made (and will make) available to Medivation all Regulatory Documentation, CureTech Know-How and other Information in its possession or Control regarding or related to any Licensed Molecule or any Licensed Product and all such
Regulatory Documentation, CureTech Know-How and other Information are (and, if made available after the Effective Date, will be) true, complete, and correct. Without limiting the foregoing, CureTech has disclosed to Medivation all material
information of which CureTech is aware regarding the safety or efficacy of any Licensed Molecule or any Licensed Product.
7.2.16 The proprietary CureTech Know-How has been kept confidential or has been disclosed to Third Parties only under
terms of confidentiality. To the Knowledge of CureTech and its Affiliates no breach of such confidentiality has been committed by any Third Party.
7.2.17 Except as disclosed in Schedule 7.2.17, CureTech and its Affiliates have generated, prepared, maintained,
and retained all Regulatory Documentation that is required to be maintained or retained pursuant to and in accordance with good laboratory and clinical (if applicable) practice and Applicable Law, and all such information is true, complete and
correct and what it purports to be. All data contained within the Regulatory Documentation is owned by CureTech free and clear of all encumbrances, and CureTech has all rights to use, license, sublicense, and distribute such data. CureTech has
delivered or made available to Medivation accurate and complete copies of: (A) each IND made on behalf of CureTech, including all related supplements, amendments and the like; and (B) all material correspondence with a Regulatory Authority
concerning any Licensed Product or Licensed Molecule. CureTech has made available to Medivation each annual report filed by it with the FDA or any similar state or non-US Regulatory Authority with respect to any Licensed Molecule or Licensed
Product.
7.2.18 Neither CureTech nor any of its Affiliates, nor any of its or their respective officers, employees,
contractors or agents (a) has made an untrue statement of material fact or fraudulent statement to the FDA or any other Regulatory Authority with respect to the Development of any Licensed Molecule or Licensed Product, (b) has failed to
disclose a material fact required to be disclosed to the FDA or any other Regulatory Authority with respect to the Development of any Licensed Molecule or Licensed Product, or (c) has committed an act, made a statement, or failed to make a
statement with respect to the Development of any Licensed Molecule or Licensed Product that could reasonably be expected to provide a basis for the FDA to invoke its policy respecting Fraud, Untrue Statements of Material Facts, Bribery, and
Illegal Gratuities, set forth in 56 Federal Registry 46191 (September 10, 1991) and any amendments thereto or any analogous laws or policies in the Territory. [ * ].
7.2.19 Prior to the Effective Date, CureTech has obtained the written approval and has satisfied any and all other
obligations, conditions and prerequisites from the OCS that is or maybe necessary to execute and effectuate this Agreement.
7.2.20 CureTech and its Affiliates have conducted, and their respective contractors and consultants have conducted, all
Development of the Licensed
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
41
Molecules or the Licensed Products prior to the Effective Date, including any and all pre-clinical and clinical studies related to the Licensed Molecules and Licensed Products, in accordance with
good laboratory and clinical (if applicable) practice and Applicable Law. No clinical trial of any Licensed Product or Licensed Molecule has been suspended, put on hold or terminated prior to completion, and no IND that is required to be submitted
with the appropriate Regulatory Authority before beginning clinical testing in human subjects for the Licensed Product or Licensed Molecule has been suspended, withdrawn, rejected or refused, in each case, (i.e. with respect to clinical trials or
IND submission), as a result of any action by a Regulatory Authority or voluntarily by CureTech based on any serious adverse effect or effects on human health. Except as disclosed in Schedule 7.2.20, CureTech has not received any notice or
other communication indicating that a Regulatory Authority has commenced or threatened to initiate any action to withdraw approval or terminate clinical development of any Licensed Molecule or Licensed Product, or to enjoin or place any restriction
on the testing of or any other activity with respect to same. CureTech and its Affiliates have employed (and, with respect to such tests and studies that CureTech will perform, will employ) Persons with appropriate education, knowledge and
experience to conduct and to oversee the conduct of the pre-clinical and clinical studies with respect to the Licensed Molecule and Licensed Products
7.2.21 As of the Effective Date, CureTech is not in breach of, nor do any circumstances exist upon which [ * ]
might claim that CureTech is in breach of, [ * ] Agreement, and nothing contained in this Agreement is in conflict with or shall constitute a violation of, [ * ] Agreement.
7.3 Additional Representations, Warranties and Covenants of the Parties. Each Party (or the specified Party, as applicable) further
represents and warrants to the other Party, as of the Effective Date, and covenants, as follows:
7.3.1 Neither such
Party nor any of its Affiliates has been debarred or is subject to debarment and neither such Party nor any of its Affiliates has used (or will use, as applicable) in any capacity in connection with the Development of any Licensed Molecule or
Licensed Product, any Person who has been debarred pursuant to Section 306 of the FFDCA, or who is the subject of a conviction described in such section. Such party shall inform the other Party in writing promptly if it or any such Person used
in any capacity in connection with the Development of any Licensed Molecule or Licensed Product is debarred or is the subject of a conviction described in Section 306, or if any action, suit, claim, investigation or legal or administrative
proceeding is pending or, to the best of its or its Affiliates Knowledge, is threatened, relating to the debarment or conviction of it or any such Person used in any capacity in connection with the Development of any Licensed Molecule or
Licensed Product.
7.3.2 Compliance with Laws.
(a) Such Party shall comply with all Applicable Laws pertaining to the Development, use, import, export, transport, handling, storage, or
distribution of the Licensed Molecules or the Licensed Products or otherwise pertaining to Exploitation of the Licensed Molecules or the Licensed Products or performance by such Party of its obligations under this Agreement, including the
maintenance of ongoing quality assurance and testing procedures to comply with applicable regulatory requirements.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
42
(b) Such Party agrees, in its performance of this Agreement, to comply with all Applicable Laws,
including the FCPA, U.S. Export Control Laws and Anti-Corruption Laws in the Territory.
(c) CureTech represents and warrants that it is
not identified on the List of Specially Designated Nationals & Blocked Persons (SDNs) as designated by the U.S. Treasury Departments Office of Foreign Assets Control. In connection with this Agreement, CureTech
shall not sell any Licensed Molecules or the Licensed Products or engage in any other transaction in, to, or with (i) any of the following countries: Cuba, Iran, Sudan, North Korea, or Syria, or any other country that becomes subject to
sanctions imposed by the U.S. Government, or (ii) any individual or entity that is listed in the following: (A) List of Specially Designated Nationals & Blocked Persons, Office of Foreign Assets Control, U.S. Treasury Department;
(B) List of Debarred Parties, Directorate of Defense Trade Controls, U.S. State Department; (C) Denied Persons List, Bureau of Industry and Security, U.S. Department of Commerce; (D) Entity List, Bureau of Industry and Security, U.S.
Department of Commerce; (E) Unverified List, Bureau of Industry and Security, U.S. Department of Commerce; or (F) the Palestinian Legislative Counsel (PLC) List, Office of Foreign Assets Control, U.S. Treasury Department. CureTech agrees
that it will notify Medivation promptly upon the occurrence of any event that would breach this covenant or render this representation and warranty incorrect.
(d) CureTech represents and warrants that it shall take no action that would cause Medivation to be in violation of the FCPA, U.S. Export
Control Laws or any other applicable Anti-Corruption Laws in the Territory. Further, CureTech shall immediately notify Medivation if CureTech has any information or suspicion that there may be a violation of the FCPA or any other Anti-Corruption Law
in connection with the performance of this Agreement.
(e) CureTech and its employees and agents have not, and shall not, directly or
indirectly through Third Parties, pay, promise or offer to pay, or authorize the payment of, any money or give any promise or offer to give, or authorize the giving of anything of value, to a Public Official or Entity or other person for purposes of
corruptly obtaining or retaining business for or with, or directing business to, any Person, including, without limitation, Medivation or CureTech, by (i) influencing any official act, decision or omission of such Public Official or Entity;
(ii) inducing such Public Official or Entity to do or omit to do any act in violation of the lawful duty of such Public Official or Entity; (iii) securing any improper advantage; or (iv) inducing such Public Official or Entity to
affect or influence any act or decision of another Public Official or Entity.
(f) CureTech and its employees and agents have not and
shall not directly or indirectly promise, offer or provide any corrupt payment, gratuity, emolument, bribe, kickback, excessive gift or hospitality or other illegal or unethical benefit to a customer or a Third Party customer or to a Public Official
or Entity. In addition, CureTech and its employees and agents shall ensure that no part of any payment, commission, reimbursement or fee paid by
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
43
Medivation pursuant to this Agreement or otherwise will be used directly or indirectly as a corrupt payment, gratuity, emolument, bribe, kickback, excessive gift or hospitality or other illegal
or unethical benefit to a customer or to Third Party customer or to a Public Official or Entity.
(g) No owner, shareholder (direct or
beneficial), officer, director, employee, third-party representative, agent, or other individual with any direct or indirect beneficial interest in CureTech or any immediate family relation of any such person (collectively, Interested
Persons), is a Public Official or Entity. CureTech shall notify Medivation immediately if, during the term of this Agreement, (i) any Interested Person becomes a Public Official or Entity, or (ii) any Public Official or Entity
acquires a legal or beneficial interest in CureTech.
(h) CureTech agrees that in the event that any of the covenants contained in this
Section 7.3.2 are not complied with in accordance with their terms, Medivation shall have the right, at its sole discretion, to terminate this Agreement immediately upon written notice to CureTech. CureTech also agrees that any breach by it of
any provision of this Section 7.3.2 shall entitle Medivation to injunctive and other equitable relief to secure the enforcement of these provisions, in addition to any other remedies (including damages) which may be available to Medivation.
(i) CureTech agrees to reasonably cooperate with Medivation with respect to any investigation or audit relating to the performance of
this Agreement and the FCPA, U.S. Export Control Laws or any other Anti-Corruption Law in the Territory.
7.3.3 This
Agreement, including without limitation, the representations and warranties of CureTech in this Agreement, and the information, documents and materials furnished to Medivation in connection with its period of diligence prior to the Effective Date,
do not (a) contain any representation, warranty or information that is false or misleading with respect to any material fact, or contain any untrue statement of a material fact, (b) omit to state any material fact necessary to make the
statements or facts contained therein, in light of the circumstances under which they were made, not misleading, or (c) contain any willful or fraudulent misrepresentation of material fact.
7.4 DISCLAIMER OF WARRANTIES. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY
WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY,
MERCHANTABILITY, OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
44
ARTICLE 8
INDEMNITY
8.1
Indemnification Obligations.
8.1.1 Indemnification of CureTech. Medivation shall indemnify CureTech, its
Affiliates and its and their respective directors, officers, employees, and agents (the CureTech Indemnitees), and defend and hold each of them harmless, from and against any and all losses, damages, liabilities, costs, and
expenses (including reasonable attorneys fees and expenses) (collectively, Losses) in connection with any and all suits, investigations, claims, or demands of Third Parties (collectively, Third Party
Claims) arising from or occurring as a result of:
(a) the breach by Medivation of this Agreement;
(b) the gross negligence or willful misconduct on the part of any Medivation Indemnitee in performing Medivations obligations under
this Agreement; or
(c) the Exploitation by Medivation or any of its Affiliates or its or their respective Sublicensees of any Licensed
Product or Licensed Molecule in the Territory;
except, in each case ((a) through (c)), for those Losses for which CureTech has an
obligation to indemnify any Medivation Indemnitee pursuant to Section 8.1.2, as to which Losses each Party shall indemnify each of the CureTech Indemnitees or Medivation Indemnitees, as applicable, to the extent of its respective liability for
such Losses relative to the other Party.
8.1.2 Indemnification of Medivation; Cap. CureTech shall indemnify
Medivation, its Affiliates and its and their respective directors, officers, employees, and agents (the Medivation Indemnitees), and defend and hold each of them harmless, from and against any and all Losses in connection with any
and all Third Party Claims arising from or occurring as a result of:
(a) the breach by CureTech of this Agreement;
(b) the gross negligence or willful misconduct on the part of any CureTech Indemnitee in performing CureTechs obligations under this
Agreement;
(c) the Exploitation of any Licensed Molecule or Licensed Product anywhere in the Territory prior to the Effective Date by
the CureTech Indemnitees; or
(d) the Exploitation of any Licensed Molecule or any Licensed Product in a Terminated Territory from and
after the effective date of termination of this Agreement with respect to such Terminated Territory;
except, in each case ((a) through
(d)), for those Losses for which Medivation has an obligation to indemnify any CureTech Indemnitee pursuant to Section 8.1.1, as to which Losses each Party shall indemnify each of the Medivation Indemnitees or the CureTech Indemnitees, as
applicable, to the extent of its respective liability for such Losses relative to the other Party.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
45
Notwithstanding anything to the contrary, except with respect to the intentional misconduct or
fraud of CureTech Indemnitees, CureTechs liability for indemnification of Medivation under this Section 8.1.2 shall not exceed [ * ]. For clarity, the forgoing cap on liability shall not pertain to CureTechs indemnification
obligations under Section 4.4.5.
8.2 Indemnification Procedures.
8.2.1 Notice of Claim. All indemnification claims in respect of a Medivation Indemnitee or a CureTech Indemnitee shall
be made solely by Medivation or CureTech, as applicable (each of Medivation or CureTech in such capacity, the Indemnified Party). The Indemnified Party shall give the Indemnifying Party prompt written notice (an
Indemnification Claim Notice) within [ * ] Business Days of becoming aware of any Third Party Claim asserted or threatened against a Medivation Indemnitee or a CureTech Indemnitee, as applicable, that could give rise to a
right of indemnification under this Agreement, but in no event shall the Indemnifying Party be liable for any Losses to the extent such Losses result from any delay in providing such Indemnification Claim Notice. Each Indemnification Claim Notice
must contain a description of the Third Party Claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time). The Indemnified Party shall furnish promptly to the Indemnifying Party copies
of all papers and official documents received in respect of any Losses and Third Party Claims.
8.2.2 Control of
Defense. Except with respect to any Third Party Claim that is a Third Party Infringement Claim, the process for the defense of which shall be governed by Section 5.5, at its option, the Indemnifying Party may assume the defense of any Third
Party Claim by giving written notice to the Indemnified Party within [ * ] days after the Indemnifying Partys receipt of an Indemnification Claim Notice. The assumption of the defense of a Third Party Claim by the Indemnifying Party
shall not be construed as an acknowledgment that the Indemnifying Party is liable to indemnify any Medivation Indemnitee or CureTech Indemnitee, as applicable, in respect of such Third Party Claim, nor shall it constitute a waiver by the
Indemnifying Party of any defenses it may assert against a Medivation Indemnities or CureTech Indemnitees, as applicable, claim for indemnification. Upon assuming the defense of a Third Party Claim, the Indemnifying Party may appoint as
lead counsel in the defense of the Third Party Claim any legal counsel selected by the Indemnifying Party. If the Indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the Indemnifying
Party all original notices and documents (including court papers) received by any Medivation Indemnitee or CureTech Indemnitee, as applicable, in connection with the Third Party Claim. If the Indemnifying Party assumes the defense of a Third Party
Claim, except as provided in Section 8.2.3, the Indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party or any Medivation Indemnitee or CureTech Indemnitee, as
applicable, in connection with the analysis, defense or settlement of such Third
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
46
Party Claim. If it is ultimately determined that the Indemnifying Party is not obligated to indemnify, defend or hold harmless a Medivation Indemnitee or CureTech Indemnitee, as applicable, from
and against a Third Party Claim, the Indemnified Party shall reimburse the Indemnifying Party for any and all costs and expenses (including attorneys fees and costs of suit) and any Losses incurred by the Indemnifying Party in its defense of
such Third Party Claim.
8.2.3 Right to Participate in Defense. Except with respect to any Third Party Claim that is
a Third Party Infringement Claim, the process for the defense of which shall be governed by Section 5.5, any Indemnified Party shall be entitled to participate in, but not control, the defense of a Third Party Claim and to employ counsel of its
choice for such purpose; provided, however, that such employment shall be at the Indemnified Partys sole cost and expense unless (a) the employment thereof has been specifically authorized in writing by the Indemnifying Party,
(b) the Indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 8.2.2 (in which case the Indemnified Party shall control the defense), or (c) the interests of the Indemnified Party and any
Medivation Indemnitee or CureTech Indemnitee, as applicable, on the one hand, and the Indemnifying Party, on the other hand, with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of all
such Persons under Applicable Law, ethical rules or equitable principles (in which case the Indemnifying Party shall control its defense and the Indemnified Party shall control the defense of the Medivation Indemnitees or the CureTech Indemnitees,
as applicable).
8.2.4 Settlement. With respect to any Third Party Claims where the Indemnifying Party has assumed
the defense of the Third Party Claim in accordance with Section 8.2.2 that relate solely to the payment of money damages in connection with a Third Party Claim that shall not result in any Medivation Indemnitee or CureTech Indemnitee, as
applicable, becoming subject to injunctive or other relief, and as to which the Indemnifying Party shall have acknowledged in writing the obligation to indemnify all Medivation Indemnitees or CureTech Indemnitees, as applicable, hereunder, the
Indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Third Party Claim, on such terms as the Indemnifying Party, in its sole discretion, shall deem appropriate;
provided, however, that the Indemnifying Party may not enter into any compromise or settlement unless such compromise or settlement includes as an unconditional term thereof, the giving by each claimant or plaintiff to the Indemnified Party and all
Medivation Indemnitees or CureTech Indemnitees, as applicable, of a release from all liability in respect of such claim. With respect to all other Third Party Claims where the Indemnifying Party has assumed the defense of the Third Party Claim in
accordance with Section 8.2.2, the Indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Third Party Claim; provided, however, that it obtains the prior written
consent of the Indemnified Party (which consent shall not be unreasonably conditioned, withheld or delayed). Where the Indemnifying Party has assumed the defense of a Third Party Claim in accordance with Section 8.2.2, the Indemnifying Party
shall not be liable for any settlement or other disposition of such Third Party Claim by a Medivation Indemnitee or a CureTech Indemnitee that is reached without
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
47
the prior written consent of the Indemnifying Party. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall not, and the
Indemnified Party shall ensure that each Medivation Indemnitee or CureTech Indemnitee, as applicable, does not, admit any liability with respect to or settle, compromise or discharge, any Third Party Claim for which it has or intends to seek
indemnification under Section 8.1 without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably conditioned, withheld or delayed).
8.2.5 Cooperation. Regardless of whether the Indemnifying Party chooses to defend or prosecute any Third Party Claim,
the Indemnified Party shall, and shall cause each Medivation Indemnitee or CureTech Indemnitee, as applicable, to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and
attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include access during normal business hours afforded to the Indemnifying Party to, and
reasonable retention by the Indemnified Party and any Medivation Indemnitee or CureTech Indemnitee, as applicable, of, records and information that are reasonably relevant to such Third Party Claim, and making all Medivation Indemnitees or CureTech
Indemnitees, as applicable, and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder; provided, however, that neither Party shall be required to
disclose legally privileged information unless and until procedures reasonably acceptable to such Party are in place to protect such privilege, and the Indemnifying Party shall reimburse the Indemnified Party for all its reasonable and verifiable
out-of-pocket expenses in connection therewith.
8.2.6 Expenses. Except as provided above, the costs and expenses,
including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any claim shall be reimbursed on a Calendar Quarter basis by the Indemnifying Party, without prejudice to the Indemnifying Partys right to
contest any Medivation Indemnitees or CureTech Indemnitees, as applicable, right to indemnification and subject to refund if the Indemnifying Party is ultimately held not to be obligated to indemnify a Medivation Indemnitee or CureTech
Indemnitee, as applicable.
8.2.7 Special, Indirect, and Other Losses. EXCEPT WITH RESPECT TO THE INTENTIONAL
MISCONDUCT OR FRAUD OF A PARTY OR A PARTYS BREACH OF ITS OBLIGATIONS UNDER ARTICLE 6, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR INDIRECT, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE
SUBJECT MATTERS THEREOF, INCLUDING BUSINESS INTERRUPTION OR LOST PROFITS, WHETHER IN CONTRACT, WARRANTY, NEGLIGENCE, TORT, STRICT LIABILITY OR OTHERWISE, REGARDLESS OF WHETHER A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES IN ADVANCE OR
WHETHER SUCH DAMAGES ARE REASONABLY FORESEEABLE; [ * ].
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
48
8.3 Insurance.
8.3.1 Prior to the commencement of services under this Agreement, Medivation and CureTech shall each purchase and
maintain in effect commercial general liability insurance, including products liability coverage, to cover their respective liabilities related to their Exploitation activities and obligations under this Agreement as is normal and customary in the
pharmaceutical industry generally for Persons similarly situated but in no event shall the limits of commercial general liability insurance, including product liability insurance, be less than [ * ] per occurrence and annual aggregate. [ *
].
8.3.2 [ * ]. Each Party will endeavor to provide the other Party with thirty (30) days written
notice prior to cancellation, non-renewal or material change in such insurance which materially adversely affects the rights of the other Party hereunder. Any claims-made insurance policy shall include a
provision accounting for a reporting period of no less than [ * ] after the Effective Date provided, however, that if CureTech undertakes the Exploitation of any Licensed Molecule or any Licensed Product in a Terminated Territory, it shall
prior to the commencement of such Exploitation, purchase and maintain insurance under and in accordance with this Section 8.3 for the duration of such Exploitation.
ARTICLE 9
TERM AND
TERMINATION
9.1 Term and Expiration.
9.1.1 This Agreement shall commence on the Effective Date and, unless earlier terminated in accordance with this Article
9, or in accordance with Section 2.9.1, shall continue in force and effect until the date of expiration of the last Royalty Term for the last Licensed Product (such period, the Term).
9.1.2 Following the expiration of the Term, the grants in Section 2.1 shall become exclusive, fully-paid,
royalty-free, perpetual and irrevocable.
9.2 Termination.
9.2.1 Material Breach. If either Party (the Non-Breaching Party) believes that the other Party (the
Breaching Party) has materially breached its obligations under this Agreement, then the Non-Breaching Party may deliver notice of such material breach to the Breaching Party (a Default Notice). If the Breaching
Party does not dispute that it has committed a material breach of one or more of its material obligations under this Agreement and fails to cure such breach within [ * ] days after receipt of the Default Notice, or if such breach is not
capable of being cured during such [ * ]-day period, or the Breaching Party fails to commence actions within such [ * ]-day period to cure such breach and thereafter diligently continue such actions, the Non-Breaching Party may
terminate this Agreement in its entirety upon written notice to the Breaching Party. In the event that after the receipt of a Default Notice the Breaching Party initiates a dispute resolution
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
49
procedure under Section 10.8 within [ * ] days of receipt of the Default Notice to resolve the dispute regarding the alleged material breach, then the cure period set forth in this
Section 9.2.1 shall be tolled and the termination shall become effective only if it is determined through the dispute resolution procedures in Section 10.8 that the Breaching Party has committed a material breach of one or more of its
material obligations under this Agreement and the Breaching Party fails to cure such breach within [ * ] days after the issuance of such determination, or if such breach is not capable of being cured during such [ * ]-day period, or
the Breaching Party fails to commence actions within such [ * ]-day period to cure such breach and thereafter diligently continue such actions. Notwithstanding the foregoing, the Parties agree that termination pursuant to this
Section 9.2.1 is a remedy to be invoked only if the breach cannot be adequately remedied through a combination of specific performance and the payment of money damages.
9.2.2 Safety. Medivation shall have the right to terminate this Agreement in its entirety immediately upon written
notice to CureTech if Medivation reasonably determines that it is not feasible for Medivation to pursue the Exploitation of the Licensed Molecules or Licensed Products in the Territory due to safety concerns, including due to adverse events related
to the Licensed Molecules or the Licensed Products.
9.2.3 Termination for Convenience. At any time during the Term,
Medivation may terminate this Agreement, in its entirety or on a country-by-country basis, for any or no reason, upon [ * ] days prior written notice to CureTech, provided, however, that if during [ * ], Medivation delivers a
notice of termination under this Section 9.2.3, such termination shall be effective on [ * ], except for termination by Medivation pursuant to Section 2.9.1, in which event termination shall be immediately effective and no payment
shall be owed to CureTech under Sections 4.1, 4.2, 4.3, or any other provision of this Agreement.
9.2.4 Termination for
Insolvency. In the event that either Party (a) files for protection under bankruptcy or insolvency laws, including, but not limited to any rehabilitation, recovery or freeze order(s) proceedings, or otherwise becomes subject to any such
proceedings, (b) makes an assignment for the benefit of creditors, (c) applies for, appoints or suffers appointment of a receiver, liquidator, trustee or similar officer over such Party or substantially all of its property, that is not
discharged within [ * ] days after such filing, (d) proposes or is a party to a written agreement of composition, extension or reorganization of its debts, applies for or is a party to any settlement with its creditors, (e) proposes
or is a party to any dissolution, winding-up or liquidation, (f) files a petition (or other document) under any bankruptcy or insolvency act, or otherwise voluntarily becomes the subject of any such proceedings or has any such petition (or
other document) filed against it, or involuntarily becomes the subject of any such proceedings, that is not discharged within [ * ] days of the filing thereof, or (g) admits in writing its inability generally to meet its obligations as
they fall due in the general course, then in any case ((a) - (g)), or in the case of similar proceedings under any applicable jurisdiction or proceedings having similar effect, the other Party may terminate this Agreement in its entirety effective
immediately upon written notice to such Party.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
50
9.3 Rights in Insolvency/Bankruptcy. All rights and licenses granted under or pursuant to
this Agreement by Medivation or CureTech are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of right to
intellectual property as defined under Section 101 of the U.S. Bankruptcy Code. The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and
elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction. The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S.
Bankruptcy Code or any analogous provisions in any other country or jurisdiction, or in any other event set forth in Section 9.2.4, the Party that is not a party to such proceeding shall be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Partys possession, shall be promptly delivered to it (a) upon any such commencement of a
bankruptcy proceeding upon the non-subject Partys written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement, or (b) if not delivered under clause
(a) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.
9.4 Activities During Pendency of Termination. It is expressly understood and agreed that following any receipt by CureTech of notice
of termination under this Agreement by Medivation, CureTech shall limit any and all expenditures that are reimbursable by Medivation under this Agreement to only those necessary under the circumstances.
9.5 Consequences of Termination in Entirety. In the event of a termination of this Agreement in its entirety (but not any expiration)
for any reason:
9.5.1 Except as set forth in this Section 9.5, all rights and licenses granted by either Party
hereunder shall immediately terminate.
9.5.2 Except in the event of a termination by Medivation pursuant to
Section 9.2.2 (safety), pursuant to Section 9.2.1 for uncured material breach by CureTech, or pursuant to Section 2.9.1, Medivation shall, and hereby does effective as of the effective date of termination, grant CureTech an exclusive
license, with the right to grant multiple tiers of sublicenses, under the Medivation Grantback Patents and Medivation Grantback Know-How, to Exploit in the Territory any Returned Licensed Product [ * ].
9.5.3 Except in the event of a termination by Medivation pursuant to Section 9.2.2 (safety), pursuant to
Section 9.2.1 for uncured material breach by CureTech, or pursuant to Section 2.9.1, Medivation shall, where permitted by Applicable Law, (a) transfer and assign to CureTech all of its right, title, and interest in all Regulatory
Approvals, Regulatory Documentation then owned by Medivation and in its name applicable to the Returned Licensed Products in the Territory, and (b) notify the applicable Regulatory Authorities and take any other action reasonably necessary to
effect the transfer set forth in the foregoing clause (a).
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
51
9.5.4 Except in the event of a termination by Medivation pursuant to
Section 9.2.2 (safety), pursuant to Section 9.2.1 for uncured material breach by CureTech, or pursuant to Section 2.9.1, Medivation shall assign to CureTech all right, title, and interest of Medivation in each Product Trademark.
9.6 Consequences of Termination of Terminated Territory. From and after the effective date of termination of this Agreement with
respect to a Terminated Territory by Medivation pursuant to Section 9.2.3 (but not in the case of any termination of this Agreement in its entirety):
9.6.1 All rights and licenses granted by CureTech hereunder (a) shall automatically be deemed to be amended to
exclude, if applicable, the right to market, promote, detail, distribute, sell, offer for sale, file any Drug Approval Application for, or seek any Regulatory Approval for Licensed Products in such Terminated Territory, and (b) shall otherwise
survive and continue in effect in such Terminated Territory solely for the purpose of furthering any Development or Manufacturing of the Licensed Products in the Terminated Territory in support of Commercialization of such Licensed Product outside
the Terminated Territory, including the right to make, have made, use, have used, research, Develop, Manufacture, have Manufactured, hold, keep (whether for disposal or otherwise), export and transport Licensed Products in such Terminated Territory,
in each case under this clause (b), solely in furtherance of the Commercialization of the Licensed Product outside the Terminated Territory.
9.6.2 Subject to this Section 9.6, Medivation shall, and hereby does as of the effective date of termination, grant
CureTech (a) an exclusive license (except to the rights retained by Medivation in Section 9.6.1(b)) in such Terminated Territory, with the right to grant sublicenses only with the prior written consent of Medivation (which consent shall
not be unreasonably withheld, conditioned or delayed), under the Medivation Grantback Patents and Medivation Grantback Know-How, to Commercialize (including to market, promote, detail, distribute, sell and offer for sale) in such country in the
Terminated Territory any Returned Licensed Product, and (b) a non-exclusive license, with the right to grant sublicenses only with the prior written consent of Medivation (which consent shall not be unreasonably withheld, conditioned or
delayed), under the Medivation Grantback Patents and Medivation Grantback Know-How, to otherwise Exploit (but not to Commercialize) any Returned Licensed Product in support of the commercialization of the Returned Licensed Products in such
Terminated Territory; in each case, [ * ].
9.6.3 Medivation shall, where permitted by Applicable Law,
(a) transfer to CureTech all of its right, title, and interest in all Regulatory Approvals owned by Medivation its Affiliates and (if such Regulatory Approvals are Controlled by Medivation) their respective Sublicensees and then in its name
that are solely applicable to any Returned Licensed Product in such Terminated Territory, as such Regulatory Approvals exists as of the
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
52
effective date of such termination of this Agreement with respect to such Terminated Territory; provided, however, that Medivation retains a license and right of reference under any Regulatory
Approval transferred pursuant to this clause as necessary or reasonably useful for Medivation to Commercialize Licensed Products in such Terminated Territory and otherwise Exploit (but not Commercialize) Licensed Products anywhere in the Territory
in support of such Commercialization, and (b) notify the applicable Regulatory Authorities and take any other action reasonably necessary to effect the transfer set forth in the foregoing clause (a).
9.6.4 Medivation shall grant CureTech a right of reference to all Regulatory Documentation then owned by Medivation and
in Medivations name that are not transferred to CureTech pursuant to Section 9.6.3 that are necessary or reasonably useful for CureTech or any of its Affiliates or its or their respective sublicensees to Develop or Commercialize any
Returned Licensed Products in such Terminated Territory.
9.6.5 Promptly following the effective date of termination
the Parties shall enter into an agreement governing the Parties respective rights and responsibilities with respect to the coordination of safety-related regulatory obligations, including the reporting of adverse events and other safety or
quality data. Such agreement shall set forth terms and conditions with respect to such activities that are reasonable and customary in the industry for agreements of that nature.
9.6.6 CureTech shall not, and shall not permit any of its Affiliates or any of its and their respective licensees,
sublicensees or distributors to, distribute, market, promote, offer for sale or sell the Licensed Products directly or indirectly (a) to any Person for use in Territory or (b) to any Person in such Terminated Territory that CureTech or any
of its Affiliates or any of its or their respective licensees, sublicensees or distributors knows (i) is reasonably likely to distribute, market, promote, offer for sale or sell any Licensed Product for use in the Territory or assist another
Person to do so, or (ii) has directly or indirectly distributed, marketed, promoted, offered for sale or sold any Licensed Product for use in the Territory or assisted another Person to do so. If CureTech or any of its Affiliates receives or
becomes aware of the receipt by a licensee, sublicensee or distributor of any orders for any Licensed Product in the Territory, such Person shall refer such orders to Medivation. CureTech shall cause its Affiliates and its and their respective
licensees, sublicensees and distributors to notify Medivation of any receipt of any orders for any Licensed Product in the Territory.
9.6.7 Medivation shall not, and shall not permit any of its Affiliates or any of its and their respective Sublicensees
or distributors to, distribute, market, promote, offer for sale or sell the Licensed Products directly or indirectly (a) to any Person for use in such Terminated Territory or (b) to any Person in the Territory that Medivation or any of its
Affiliates or any of its or their respective Sublicensees or distributors knows (i) is reasonably likely to distribute, market, promote, offer for sale or sell any Licensed Product for use in such Terminated Territory or assist another Person
to do so, or (ii) has directly or indirectly distributed, marketed, promoted, offered for sale or sold any Licensed Product for use in such Terminated Territory or assisted another Person to do so. If Medivation or any of
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
53
its Affiliates receives or becomes aware of the receipt by a Sublicensee or distributor of any orders for any Licensed Product in such Terminated Territory, such Person shall refer such orders to
CureTech. Medivation shall cause its Affiliates and its and their respective Sublicensees and distributors to notify CureTech of any receipt of any orders for any Licensed Product in such Terminated Territory.
9.6.8 From and after the effective date of termination of this Agreement with respect to such Terminated Territory,
CureTech shall use commercially reasonable efforts not to do any act or fail to do any act in connection with any Licensed Product in such Terminated Territory that would reasonably be expected to have a material adverse impact on (a) the
expected Regulatory Approval of any Licensed Product (including the labeling with respect thereto) in any country in the Territory or (b) the Commercialization of any Licensed Product in any country in the Territory.
9.7 Reverse Royalty. In consideration of the licenses granted by Medivation to CureTech pursuant to Section 9.5.2 or
Section 9.6.2 and other consideration provided to CureTech pursuant to Section 9.5, Section 9.6, or Section 9.8, as the case may be, CureTech shall pay Medivation a royalty on Net Sales of each Returned Licensed Product in each
country for such Returned Licensed Product in such country, [ * ].
9.8 Transition. In the event of termination of this
Agreement, whether in its entirety or with respect to a Terminated Territory, CureTech and Medivation shall work together to effectuate and coordinate a smooth and efficient transition of relevant obligations and rights to CureTech as reasonably
necessary for CureTech to Exploit the Returned Licensed Products after termination of this Agreement (either in its entirety or with respect to a Terminated Territory) as and to the extent set forth in this ARTICLE 9.
9.9 Remedies. Except as otherwise expressly provided herein, termination of this Agreement (either in its entirety or with respect to
one or more country(ies)) in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.
9.10 Accrued Rights; Surviving Obligations.
9.10.1 Termination or expiration of this Agreement (either in its entirety or with respect to one or more country(ies))
for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration; provided, however, that in no event shall CureTech accrue any rights to any milestone payment under
Section 4.2 based on any milestone that occurs on or after the date of delivery by either Party of a termination notice pursuant to Section 9.2 or Section 2.9.1. Such termination or expiration shall not relieve a Party from obligations
that are expressly indicated to survive the termination or expiration of this Agreement. Without limiting the foregoing, Sections [ * ], and Articles [ * ] of this Agreement shall survive the termination or expiration of this Agreement
for any reason.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
54
9.10.2 Notwithstanding the termination of Medivations licenses and
other rights under this Agreement with respect to a Terminated Territory, Medivation shall have the right for [ * ] year after the effective date of such termination to sell or otherwise dispose of all Licensed Product then in its inventory
and any in-progress inventory as though this Agreement had not terminated with respect to such Terminated Territory, and such sale or disposition shall not constitute infringement of CureTechs or its Affiliates Patent or other
intellectual property or other proprietary rights. For the avoidance of doubt, [ * ].
ARTICLE 10
MISCELLANEOUS
10.1
Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement if such failure or
delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not),
terrorist acts, insurrections, riots, civil commotion, strikes, lockouts, or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any
Governmental Entity (except to the extent such delay results from the breach by the non-performing Party or any of its Affiliates of any term or condition of this Agreement or by the Clal Entities of any obligation under the Guaranty) (each, a
Force Majeure Event). The non-performing Party shall notify the other Party of such Force Majeure Event within [ * ] days after such occurrence by giving written notice to the other Party stating the nature of the Force
Majeure Event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use
commercially reasonable efforts to remedy its inability to perform.
10.2 Change in Control of CureTech. CureTech (or its
successor) shall provide Medivation with written notice of any Change in Control of CureTech within [ * ] Business Days following the [ * ] of such Change in Control. In the event of a Change in Control of CureTech, Medivation shall
have the right, in its sole and absolute discretion, by written notice delivered to CureTech (or its successor) at any time during the [ * ] days following the written notice contemplated by the foregoing sentence, to require CureTech and the
Change in Control party to adopt reasonable procedures to be agreed upon in writing to restrict access to Confidential Information of Medivation to those persons who had access to such Confidential Information prior to such Change in Control, except
to the extent reasonably necessary for CureTech to continue to exercise its rights or perform its obligations under this Agreement or as required by Applicable Law.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
55
10.3 Export Control. This Agreement is made subject to any restrictions concerning the
export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time. Each Party agrees that it will not export, directly or indirectly, any technical information acquired from
the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to
do so from the appropriate agency or other Governmental Entity in accordance with Applicable Law.
10.4 Assignment.
10.4.1 Without the prior written consent of the other Party (which consent shall not be unreasonably conditioned,
withheld or delayed), neither Party shall sell, transfer, assign, delegate, pledge, or otherwise dispose of, whether voluntarily, involuntarily, by operation of law or otherwise, this Agreement or any of its rights or duties hereunder; provided,
however, that Medivation may make such an assignment without CureTechs consent to any of its Affiliates or to a successor, whether in a merger, sale of stock, sale of assets or any other transaction, of the assets of the business to which this
Agreement relates.
10.4.2 The rights to Information, materials and intellectual property: (a) controlled by a
Third Party permitted assignee of a Party, which Information, materials and intellectual property were controlled by such assignee immediately prior to such assignment other than as a result of a license or other agreement between such Third Party
and the assigning Party; or (b) controlled by an Affiliate of a Party who becomes an Affiliate through any Change in Control of such Party, which Information, materials and intellectual property were controlled by such Affiliate immediately
prior to such Change in Control other than as a result of a license or other agreement between such Third Party and the assigning Party, in each case ((a) and (b)), shall be automatically excluded from the rights licensed or granted to the other
Party under this Agreement.
10.4.3 CureTech shall not have the right to undergo a Change in Control event without
the prior written consent of Medivation (which consent shall not be unreasonably withheld, conditioned or delayed).
10.5
Subcontracting. Subject to Section 2.2, Medivation may subcontract with a Third Party to perform any or all of its obligations hereunder; provided, however, that no such permitted subcontracting shall relieve Medivation of any liability or
obligation hereunder except to the extent satisfactorily performed by such subcontractor.
10.6 Severability. If any provision of
this Agreement is held to be illegal, invalid, or unenforceable under any present or future law, and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (a) such provision
shall be fully severable, (b) this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part hereof, (c) the
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
56
remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance herefrom, and
(d) in lieu of such illegal, invalid, or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid, and enforceable provision as similar in terms to such illegal, invalid, or unenforceable provision
as may be possible and reasonably acceptable to the Parties. To the fullest extent permitted by Applicable Law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid, or unenforceable in any respect.
10.7 Governing Law and Service.
10.7.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of Delaware,
excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
10.7.2 Service. Each Party further agrees that service of any process, summons, notice or document by registered mail to
its address set forth in Section 10.9.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.
10.8 Dispute Resolution; Arbitration.
10.8.1 Dispute Resolution. In the event of a dispute arising out of or relating to this Agreement, either Party shall
provide written notice of the dispute to the other, in which event the dispute shall be referred to the Senior Officers of each Party, for attempted resolution by good faith negotiations within [ * ] days after such notice is received. In the
event the Senior Officers do not resolve such dispute within the allotted [ * ] days, or a Party reasonably believes such matter will not be so resolved, either Party may seek to resolve the dispute through arbitration in accordance with
Section 10.8.2.
10.8.2 Arbitration.
(a) Claims. Any claim, dispute, or controversy of whatever nature arising between the Parties out of or relating to this Agreement, or
concerning the interpretation, effect, termination, validity, performance or breach of this Agreement (Claim) that is not resolved under Section 10.8.1 within the required [ * ]-day time period, shall be resolved by
final and binding arbitration before a panel of three experts with relevant industry experience (the Arbitrators). Each of CureTech and Medivation shall promptly select one Arbitrator each, which selections shall in no event be
made later than [ * ] days after the notice of initiation of arbitration. The third Arbitrator shall be chosen promptly by mutual agreement of the Arbitrator chosen by CureTech and the Arbitrator chosen by Medivation, but in no event later
than [ * ] days after the date that the last of such Arbitrators was appointed. The Arbitrators shall determine what discovery will be permitted, consistent with the goal of reasonably controlling
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
57
the cost and time that the Parties must expend for discovery, provided, however, that the Arbitrators shall permit such discovery as he or she deems necessary to permit an equitable resolution of
the dispute. The arbitration shall be administered by the American Arbitration Association (or its successor entity) in accordance with the then current Commercial Rules of the American Arbitration Association including the Procedures for Large,
Complex Commercial Disputes (including the Optional Rules for Emergency Measures of Protection), except as modified in this Agreement. The arbitration shall be held in New York, New York, and the Parties shall use reasonable efforts to expedite the
arbitration if requested by either Party.
(b) Arbitrators Award. The Arbitrators shall, within [ * ] days after the
conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded. The decision or award rendered by
the Arbitrators shall be final and non-appealable, and judgment may be entered upon it in accordance with Applicable Law in the State of Delaware or any other court of competent jurisdiction. The Arbitrators shall be authorized to award compensatory
damages, but shall not be authorized to reform, modify or materially change this Agreement or any other agreements contemplated hereunder.
(c) Costs. Each Party shall bear its own counsel fees, costs, and disbursements arising out of the arbitration described in this
Section 10.8.2, and shall pay an equal share of the fees and costs of the Arbitrators and all other general fees related to the arbitration; provided, however, the Arbitrators shall be authorized to determine whether a Party is the prevailing
Party, and if so, to award to that prevailing Party reimbursement for its reasonable counsel fees, costs and disbursements (including expert witness fees and expenses, photocopy charges, or travel expenses), or the fees and costs of the Arbitrators.
(d) Compliance with this Agreement. Unless the Parties otherwise agree in writing, during the period of time that any arbitration
proceeding is pending under this Agreement, the Parties shall continue to comply with all those terms and provisions of this Agreement that are not the subject of the pending arbitration proceeding.
(e) Injunctive or Other Equity Relief. Nothing contained in this Agreement shall deny any Party the right to seek injunctive or other
equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing arbitration proceeding.
(f) Confidentiality of Proceedings. All arbitration proceedings and decisions of the Arbitrator under this Section 10.8 shall be
deemed Confidential Information of both Parties under Article 6.
10.9 Notices.
10.9.1 Notice Requirements. Any notice, request, demand, waiver, consent, approval, or other communication permitted or
required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
58
delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the
applicable Party at its respective address specified in Section 10.9.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 10.9.1. Such notice shall be
deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery
service. Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter. This Section 10.9.1 is not intended to govern the day-to-day business communications necessary between the Parties in
performing their obligations under the terms of this Agreement.
10.9.2 Address for Notice.
|
|
|
If to Medivation, to: |
|
Medivation, Inc. 525 Market St.
36th Floor
San Francisco, CA 94105 Attention: General Counsel
Facsimile: +1-415-543-3411 |
|
with a copy (which shall not constitute notice) to: |
|
|
|
|
Cooley LLP 3175 Hanover Street
Palo Alto, California 94304 Attention: Barbara A. Kosacz
Facsimile: +1-650-849-7400 |
|
|
If to CureTech, to: |
|
CureTech Ltd. 42 Hayarkon St.
Yavne 81227 ISRAEL
Attention: Chief Executive Officer Facsimile: +972-8-
932-4001 |
|
with a copy (which shall not constitute notice) to: |
|
|
|
|
Meitar Liquornik Geva Leshem Tal 16 Abba
Hillel Rd. Ramat Gan 5250608 ISRAEL
Attention: Haim Gueta, Adv.; Boaz Mizrahi, Adv. Facsimile:
+972-3-610-3111 |
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
59
10.10 Entire Agreement; Amendments. This Agreement, together with the Schedules attached
hereto, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises, and representations, whether written or oral, with respect
thereto are superseded hereby, including the Existing NDA. Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth in this Agreement. No amendment, modification, release, or
discharge of any term or condition of this Agreement shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties. In the event of any inconsistencies between this Agreement and any schedules or
other attachments hereto, the terms of this Agreement shall control.
10.11 Equitable Relief. Each Party acknowledges and agrees
that the restrictions set forth in Section 2.6 and Article 6 are reasonable and necessary to protect the legitimate interests of the other Party and that such other Party would not have entered into this Agreement in the absence of such
restrictions, and that any breach or threatened breach of any provision of such Section or Articles may result in irreparable injury to such other Party for which there will be no adequate remedy at law. In the event of a breach or threatened breach
of any provision of such Section or Articles, the non-breaching Party shall be authorized and entitled to seek from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance, and an equitable
accounting of all earnings, profits, and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such non-breaching Party may be entitled in law or equity. Both Parties agree
to waive any requirement that the other (a) post a bond or other security as a condition for obtaining any such relief, and (b) show irreparable harm, balancing of harms, consideration of the public interest, or inadequacy of monetary
damages as a remedy. Nothing in this Section 10.11 is intended, or should be construed, to limit either Partys right to equitable relief or any other remedy for a breach of any other provision of this Agreement.
10.12 Waiver and Non-Exclusion of Remedies. Any term or condition of this Agreement may be waived at any time by the Party that is
entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. The waiver by either Party of any right hereunder or of the
failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise. The rights and remedies provided herein
are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.
10.13 No Benefit to Third Parties. Covenants and agreements set forth in this Agreement are for the sole benefit of the Parties and
their successors and permitted assigns, and they shall not be construed as conferring any rights on any other Persons.
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
60
10.14 Further Assurance. Each Party shall duly execute and deliver, or cause to be duly
executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents, and instruments, as may be necessary or as the other Party may reasonably
request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof, or to better assure and confirm unto such other Party its rights and remedies under this Agreement.
10.15 Independent Contractors. It is expressly agreed that CureTech, on the one hand, and Medivation, on the other hand, shall be
independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture, or agency. Neither Party shall have the authority to make any statements, representations, or commitments of any kind, or to
take any action, that is considered binding on the other Party, without the prior written consent of such other Party. Neither Party is the agent of the other for any purpose whatsoever, and neither Party has any authority, express or implied, to
enter into any contracts or assume any obligations for the other, to pledge the credit of the other, to extend credit to anyone in the other Partys name, or make any warranties or representations on behalf of the other, except where expressly
authorized in writing to do so. All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party.
10.16 References. Unless otherwise specified, (a) references in this Agreement to any Article, Section or Schedule mean
references to such Article, Section or Schedule of this Agreement, (b) references in any Section to any clause are references to such clause of such Section, and (c) references to any agreement, instrument, or other document in this
Agreement refer to such agreement, instrument, or other document as originally executed or, if subsequently amended, replaced, or supplemented from time to time, as so amended, replaced, or supplemented and in effect at the relevant time of
reference thereto.
10.17 Construction. Except where the context otherwise requires, wherever used, the singular shall include the
plural, the plural the singular, the use of any gender shall be applicable to all genders and the word or is used in the inclusive sense (and/or). Whenever this Agreement refers to a number of days, unless otherwise specified, such
number refers to calendar days. The captions of this Agreement are for convenience of reference only and in no way define, describe, extend, or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement.
The term including, include, or includes as used herein mean including, without limiting the generality of any description preceding such term. The language of this Agreement shall be deemed to be the language
mutually chosen by the Parties and no rule of strict construction shall be applied against either Party.
10.18 Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
61
of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile or electronically transmitted signatures and such signatures shall be deemed to bind
each Party as if they were original signatures.
[SIGNATURE PAGE FOLLOWS.]
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
62
THIS LICENSE AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the
date first written above.
|
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|
Medivation, Inc. |
|
|
|
CureTech Ltd. |
|
|
|
|
|
By: |
|
/s/ David Hung, M.D. |
|
|
|
By: |
|
/s/ Michael Schickler |
Name: |
|
David Hung, M.D. |
|
|
|
Name: |
|
Michael Schickler |
Title: |
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|
|
|
Title: |
|
CEO |
|
|
|
|
|
By: |
|
/s/ Rick Bierly |
|
|
|
By: |
|
/s/ Ofer Gonen |
Name: |
|
Rick Bierly |
|
|
|
Name: |
|
Ofer Gonen |
Title: |
|
|
|
|
|
Title: |
|
|
[ * ] = CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS BEEN
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT
TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
63
List:
The
following Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K:
|
|
|
Schedule 1.5 |
|
Form of [**] |
Schedule 7.2.1(c) |
|
List of Patents |
Schedule 2.5 |
|
Form of Notice to the Israeli Registrar of Patents |
Schedule 6.7 |
|
Form of Press Release |
Schedule 7.2.1 |
|
List of Existing Patents |
Schedule 7.2.2 |
|
Description of Documents and Materials Relating to Existing Patents |
Disclosure Schedules:
Schedule
7.2.5(i)
Schedule 7.2.5(ii)
Schedule 7.2.6
Schedule 7.2.7
Schedule 7.2.8
Schedule 7.2.9
Schedule 7.2.10
Schedule 7.2.17
Schedule 7.2.18
Schedule 7.2.20
|
|
|
Appendix 2.9.1 |
|
Guaranty letter agreement |
Medivation undertakes to furnish supplemental copies of any of the omitted schedules upon request by the Securities and
Exchange Commission.
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration Statement on Forms S-8 (No. 333-132983, No. 333-190842, No.
333-187203, No. 333-157051, and No. 333-199946) of Medivation, Inc. of our report dated November 5, 2015 relating to the financial statements of CureTech Ltd., which appears in this current report on Form 8-K of Medivation, Inc.
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|
Tel-Aviv, Israel |
|
Kesselman & Kesselman |
November 5, 2015 |
|
Certified Public Accountants (Isr.) |
|
|
A member firm of PricewaterhouseCoopers International Limited |
Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,
P.O Box 50005 Tel-Aviv 6150001 Telephone: +972-3-7954555, Fax:+972-3-7954556, www.pwc.com/il
Exhibit 99.1
CureTech Ltd.
ANNUAL
REPORT 2013
CureTech Ltd.
ANNUAL REPORT 2013
TABLE OF
CONTENTS
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Page |
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REPORT OF INDEPENDENT AUDITORS |
|
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2 |
|
FINANCIAL STATEMENTS IN NEW ISRAELI SHEKELS (NIS): |
|
|
|
|
Statements of financial position |
|
|
3 |
|
Statements of income |
|
|
4 |
|
Statements of comprehensive income (loss) |
|
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5 |
|
Statements of changes in equity (capital deficiency) |
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6 |
|
Statements of cash flows |
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7 |
|
Notes to financial statements |
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|
8-30 |
|
INDEPENDENT AUDITORS REPORT
To the Management and Board of Directors of
CureTech Ltd.
We have audited the
accompanying financial statements of CureTech Ltd., which comprise the statement of financial position as of December 31, 2013, and the related statements of income, comprehensive income, changes in capital deficiency and cash flows for the
year then ended.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB); this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend
on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Companys preparation and
fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control. Accordingly,
we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
As discussed in note 2a, the accompanying
financial statements do not include comparative figures for the prior year as required by IAS 1 Presentation of financial statements. In our opinion, inclusion of comparative figures is necessary to obtain a proper understanding of the
current periods financial statements.
In our opinion, except for the exclusion of comparative information as discussed in the preceding paragraph,
the financial statements referred to above present fairly, in all material respects, the financial position of CureTech Ltd. at December 31, 2013, and the results of its operations and its cash flows for the year then ended in accordance with
International Financial Reporting Standards, as issued by the International Accounting Standards Board (IASB).
|
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|
Tel-Aviv, Israel |
|
/s/ Kesselman & Kesselman |
November 5, 2015 |
|
Certified Public Accountants (lsr.) |
|
|
A member firm of PricewaterhouseCoopers International Limited |
Kesselman & Kesselman, Trade Tower, 25 Hamered Street, Tel-Aviv 6812508, Israel,
P.O Box 50005 Tel-Aviv 6150001 Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
CureTech Ltd.
STATEMENT OF FINANCIAL POSITION
|
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|
|
|
|
|
|
|
|
Note |
|
|
December 31, 2013 |
|
|
|
|
|
|
NIS in thousands |
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
5 |
|
|
|
5,564 |
|
Other current assets |
|
|
|
|
|
|
212 |
|
Related parties receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS |
|
|
|
|
|
|
5,776 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
Long term deposit |
|
|
|
|
|
|
17 |
|
Property, plant and equipment, net |
|
|
6 |
|
|
|
3,866 |
|
|
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT ASSETS |
|
|
|
|
|
|
3,883 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
|
|
|
|
9,659 |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Trade payables |
|
|
|
|
|
|
918 |
|
Other payables and accruals |
|
|
|
|
|
|
1,110 |
|
Related parties payables |
|
|
|
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
|
|
|
|
|
2,040 |
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
Liability for employee rights upon retirement, net |
|
|
8 |
|
|
|
15 |
|
Liability for future payment of royalties |
|
|
7 |
|
|
|
17,702 |
|
|
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT LIABILITIES |
|
|
|
|
|
|
17,717 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS |
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
|
|
19,757 |
|
|
|
|
|
|
|
|
|
|
CAPITAL DEFICIENCY: |
|
|
9 |
|
|
|
|
|
Share capital |
|
|
|
|
|
|
4 |
|
Premium on shares |
|
|
|
|
|
|
187,384 |
|
Treasury shares |
|
|
|
|
|
|
(405,341 |
) |
Capital reserves |
|
|
|
|
|
|
2,347 |
|
Differences from translation of financial statements into the presentation currency |
|
|
|
|
|
|
(12,633 |
) |
Retained earnings |
|
|
|
|
|
|
218,141 |
|
|
|
|
|
|
|
|
|
|
TOTAL CAPITAL DEFICIENCY |
|
|
|
|
|
|
(10,098 |
) |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND CAPITAL DEFICIENCY |
|
|
|
|
|
|
9,659 |
|
|
|
|
|
|
|
|
|
|
Date of approval of the financial statements: November 5, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board |
|
|
|
Chief Executive Officer |
|
|
|
Chief Financial Officer |
Dr. Aharon Schwartz |
|
|
|
Dr. Michael Schickler |
|
|
|
Mr. Moti Hacham |
The accompanying notes are an integral part of the financial statements.
3
CureTech Ltd.
STATEMENT OF INCOME
|
|
|
|
|
|
|
|
|
|
|
Note |
|
|
Year ended December 31, 2013 |
|
|
|
|
|
|
NIS in thousands |
|
RESEARCH AND DEVELOPMENT EXPENSES, net |
|
|
14 |
|
|
|
16,870 |
|
GENERAL AND ADMINISTRATIVE EXPENSES |
|
|
|
|
|
|
2,538 |
|
OTHER INCOME, net |
|
|
|
|
|
|
(36 |
) |
|
|
|
|
|
|
|
|
|
OPERATING LOSS |
|
|
|
|
|
|
19,372 |
|
GAIN FROM CHANGE IN FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS, net |
|
|
7 |
|
|
|
(398,784 |
) |
FINANCIAL INCOME |
|
|
|
|
|
|
(269 |
) |
FINANCIAL EXPENSES |
|
|
|
|
|
|
403 |
|
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSES, net |
|
|
|
|
|
|
134 |
|
|
|
|
|
|
|
|
|
|
INCOME FOR THE YEAR |
|
|
|
|
|
|
379,278 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements.
4
CureTech Ltd.
STATEMENT OF COMPREHENSIVE INCOME
|
|
|
|
|
|
|
Year ended December 31, 2013 |
|
|
|
NIS in thousands |
|
INCOME FOR THE YEAR |
|
|
379,278 |
|
OTHER COMPREHENSIVE LOSS FOR THE YEAR (net of income tax): |
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
|
|
|
Differences from translation of financial statements |
|
|
(11,769 |
) |
Remeasurement of liability for employee rights upon retirement, net |
|
|
(10 |
) |
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
|
|
367,499 |
|
|
|
|
|
|
The accompanying notes are an integral part of the financial statements.
5
CureTech Ltd.
STATEMENT OF CAPITAL DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
Premium on shares |
|
|
Treasury shares |
|
|
Capital reserves |
|
|
Differences from translation of financial statements into the presentation currency |
|
|
Retained earnings (accumulated deficit) |
|
|
Total |
|
|
|
NIS in thousands |
|
BALANCE AT JANUARY 1, 2013 |
|
|
17 |
|
|
|
173,170 |
|
|
|
, |
|
|
|
2,516 |
|
|
|
(864 |
) |
|
|
(161,137 |
) |
|
|
13,702 |
|
CHANGES DURING THE YEAR |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ENDED DECEMBER 31, 2013: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for the year |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10 |
) |
|
|
(11,769 |
) |
|
|
379,278 |
|
|
|
367,499 |
|
Share options forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(186 |
) |
|
|
|
|
|
|
|
|
|
|
(186 |
) |
Share based compensation expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27 |
|
|
|
|
|
|
|
|
|
|
|
27 |
|
Share issuance |
|
|
* |
|
|
|
14,214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,214 |
|
Purchase of treasury shares due to exercise of repurchase option |
|
|
(13 |
) |
|
|
|
|
|
|
(405,341 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(405,354 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT DECEMBER 31, 2013 |
|
|
4 |
|
|
|
187,384 |
|
|
|
(405,341 |
) |
|
|
2,347 |
|
|
|
(12,633 |
) |
|
|
218,141 |
|
|
|
(10,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Represents an amount of less than NIS 1 thousand. |
The accompanying notes are an integral
part of the financial statements.
6
CureTech Ltd.
STATEMENT OF CASH FLOWS
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in thousands |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
Income for the year |
|
|
379,278 |
|
|
|
|
|
|
Adjustments required to reflect the cash flows from operating activities: |
|
|
|
|
Income and expenses not involving cash flows: |
|
|
|
|
Depreciation of property, plant and equipment |
|
|
1,061 |
|
Capital gain from sale of property, plant and equipment |
|
|
(40 |
) |
Share-based compensation expenses |
|
|
(159 |
) |
Change in the value of liability for employee rights upon retirement, net |
|
|
2 |
|
Amortization of leasing deposit |
|
|
8 |
|
Changes in the fair value of derivative financial instruments, net |
|
|
(398,784 |
) |
|
|
|
|
|
|
|
|
(397,912 |
) |
|
|
|
|
|
Changes in operating asset and liability items: |
|
|
|
|
Decrease in other current assets |
|
|
321 |
|
Changes in related parties, net |
|
|
59 |
|
Decrease in trade payables |
|
|
(466 |
) |
Decrease in other payables and accruals |
|
|
(2,026 |
) |
|
|
|
|
|
|
|
|
(2,112 |
) |
|
|
|
|
|
Net cash used in operating activities |
|
|
(20,746 |
) |
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
Long term deposits |
|
|
|
|
Proceeds from sale of property, plant and equipment |
|
|
65 |
|
Purchases of property, plant and equipment |
|
|
(16 |
) |
|
|
|
|
|
Net cash provided by investing activities |
|
|
49 |
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
Exercise of options |
|
|
|
|
Share issuance (net of issuance expenses) |
|
|
14,214 |
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
14,214 |
|
|
|
|
|
|
DECREASE IN CASH AND CASH EQUIVALENTS |
|
|
(6,483 |
) |
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
|
12,618 |
|
EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS |
|
|
(571 |
) |
|
|
|
|
|
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF YEAR |
|
|
5,564 |
|
|
|
|
|
|
ADDITIONAL INFORMATION ON INVESTING AND FINANCING OPERATIONS NOT INVOLVING CASH FLOWS -exercise of repurchase
option: |
|
|
|
|
Derivative financial instruments |
|
|
(386,912 |
) |
|
|
|
|
|
Treasury shares |
|
|
405,354 |
|
|
|
|
|
|
Liability for future payment of royalties |
|
|
(18,442 |
) |
|
|
|
|
|
The accompanying notes are an integral part of the financial statements.
7
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - GENERAL:
|
a. |
CureTech Ltd. (hereafter the Company) is a private company which was established in 1995 in Israel. It is engaged in the development of novel, broad-spectrum, immune modulating products for the
treatment and control of cancer. At this stage the Company conducts Phase II clinical trials. The Companys offices are located at Yavne. |
|
b. |
As of December 31, 2013, the principal shareholders of the Company are Clal Biotechnology Industries Ltd. (hereafter CBI, the parent company) and Clal Venture Capital Fund Limited
Partnership. As to the notice from Teva Pharmaceutical Industries Ltd.s (hereafter Teva) regarding the termination of its collaboration agreements with the Company, see note 7 below. |
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
|
a. |
Basis of presentation of financial statements |
The financial statements of the Company
as of December 31, 2013, and for the year ended on this date have been prepared in compliance with International Financial Reporting Standards (IFRSs), as issued by the International Accounting Standards Board (IASB), except that the financial
information do not include comparative figures for the prior year period as required by IAS 1 Presentation of Financial Statements. The purpose of these financial statements is to meet the reporting requirements of the Securities and
Exchange Commission (SEC), according to Medivation Inc. requirements (see note 15d).
The following should be indicated in connection with
the presentation of these financial statements:
|
1) |
Unless otherwise stated, the significant accounting policies described below have been applied on a consistent basis in relation to all presented years. |
|
2) |
The financial statements have been prepared under the historical cost convention, subject to adjustments in respect of revaluation of amounts of financial assets and financial liabilities (including derivatives) at fair
value through profit or loss presented at fair value. |
|
3) |
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
Companys accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in (note 3). Actual results could differ
significantly from those estimates and assumptions. |
|
4) |
The operating cycle of the Company is 12 months. |
|
5) |
The Company analyzes the expenses recognized in the income statements using the classification method based on the functional category to which the expense belongs. |
8
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
b. |
Translation of foreign currency balances and transactions: |
|
1) |
Functional and presentation currency |
Items included in the financial statements of the
Company are measured using the currency of the primary economic environment in which the Company operates (hereinafter - the Functional Currency), which is the U.S. dollar. The financial statements of the Company are presented in New
Israeli Shekels (NIS), which is the parent companys functional and presentation currency.
|
2) |
Transactions and balances |
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognized in profit or loss.
Translation differences on non-monetary financial assets
and liabilities such as equities (shares or options) classified as financial instruments at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss.
|
3) |
Translation of financial statements of the Company |
The results and financial position of the
Company are translated into the presentation currency as follows:
|
(a) |
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; |
|
(b) |
Income and expenses for each income statement are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); |
|
(c) |
All resulting exchange differences are recognized in other comprehensive income. |
The changes
during the reported years in the exchange rates of the US Dollar and the Israel CPI are set forth below:
|
|
|
|
|
|
|
|
|
|
|
Exchange |
|
|
|
|
|
|
rate of one |
|
|
|
|
|
|
dollar |
|
|
CPI |
|
|
|
% |
|
|
% |
|
Year ended December 31, 2013 |
|
|
(7.0 |
) |
|
|
1.9 |
|
The exchange rate of the Dollar as of December 31, 2013 is $1-NIS 3.471.
9
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
c. |
Property, plant and equipment |
Property, plant and equipment is initially stated at the
cost of acquisition. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably. When a part of property, plant and equipment is being replaced, its carrying value is derecognized. Repairs and maintenance are charged to the income statement during the period in which they are
incurred.
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition of the items. Depreciation and impairment on property, plant and equipment are charged to the income statement.
Depreciation is calculated using the straight-line method to depreciate the cost of the property, plant and equipment items to their residual
values over their estimated useful lives, as follows:
|
|
|
|
|
Office furniture and equipment |
|
|
7-14 years |
|
Computer and software |
|
|
3 years |
|
Laboratory equipment |
|
|
7 years |
|
Leasehold improvements are amortized by the straight-line method over the shorter of the term of the lease or
the estimated useful life of the improvements.
The assets residual values and useful lives are reviewed, and adjusted if
appropriate, at least once a year.
An assets carrying amount is written down immediately to its recoverable amount if the
assets carrying amount is greater than its estimated recoverable amount. Depreciation and impairment losses in respect of property, plant and equipment which is presented at cost are charged to income or loss.
Gains and losses on disposals are determined by comparing the net proceeds with the carrying amount and are recognized in the income statement
among other income, net.
Research and Development
Research expenses are accounted for as expenses as incurred. Cost incurred in respect of development projects (attributable to the design and
testing of new or improved products) are recognized as intangible assets when the following criteria are met:
|
|
|
It is technically feasible to complete the intangible assets so that it will be available for use; |
|
|
|
Management intends to complete the intangible asset and use it or sell it; |
|
|
|
There is an ability to use or sell the intangible asset; |
|
|
|
It can be demonstrated how the intangible asset will generate probable future economic benefits; |
|
|
|
Adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and |
|
|
|
The expenditure attributable to the intangible asset during its development can be reliably measured. |
10
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
Other development costs that do not meet the above criteria are recognized as cost as
incurred. Development costs previously recognized as an expense are not recognized as an asset on a subsequent period. Capitalized development costs are presented as intangible assets and amortized as from the time the asset is available for use
through its useful life in accordance with the straight line method.
Development assets are tested at least on an annual basis for
impairment in accordance with the provisions of IAS 36 Impairment of Assets.
Through December 31, 2013, the
Company did not meet with the criteria for capitalization of development costs as intangible assets and accordingly, no assets have so far been recognized in the financial statements in respect of the capitalized development costs.
Grants from the government are recognized at their fair value where
there is a reasonable assurance that the grant will be received and the Company will comply with all attached conditions. Forgivable loans given to the Company by the government are accounted for as a government grant, where there is a reasonable
assurance that the Company will comply with the conditions for loan forgiveness.
Government grants relating to costs are recognized in
income or loss on a systematic basis over the periods in which the Company recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants from the Office of the Chief Scientist in the Ministry of Economy (hereafter the Chief Scientist) as
participation in research and development activities carried out by the Company (hereafter Chief Scientist Grants) fall within the scope of forgivable loans as specified in IAS 20 Accounting for
government Grants and Disclosure of government Assistance (hereafter IAS 20).
Grants received from the
Chief Scientist after January 1, 2009, are measured and accounted for in accordance with IAS 39. If on the date the right for the Chief Scientist Grant is established (hereafter entitlement date) the management of the Company concludes
that there is no reasonable assurance that the Chief Scientist Grant to which entitlement has been established (hereafter the received grant), will not be repaid, the Company recognizes a financial liability on that date, which is
accounted for under the provisions of IAS 39 regarding financial liabilities measured at amortized cost. The difference between the received grant and the fair value of the said financial liability at date of initial recognition is accounted for as
a government grant recognized in income or loss as a reduction of research and development expenses.
11
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
In a case where on entitlement date, Companys management reaches the conclusion that
there is reasonable assurance that the received grant will not be repaid, the grant is charged, at that date, to income or loss as a reduction of R&D expenses. Should in subsequent periods Companys management concludes, for the first time,
that there is no reasonable assurance that the received grant will not be repaid, the Company recognizes a financial liability on that date, which is accounted for under the provisions of IAS 39 regarding financial liabilities measured at amortized
cost.
As to Chief Scientist Grants received through December 31, 2008, in cases where on entitlement date, the management of the
Company concludes that there is no reasonable assurance that the received grant will not be repaid, the Company recognizes a provision which is measured in accordance with the guidelines specified in IAS 37 Provisions, Contingent
Liabilities and Contingent Assets (hereafter IAS 37).
In a case where on entitlement date, the Company reaches
the conclusion that there is reasonable assurance that the received grant will not be repaid, and accordingly, on that date the grant was charged to income or loss and in subsequent periods it becomes for the first time more likely than not that the
Company will be required to pay royalties to the Chief Scientist, the Company recognizes the provision against income or loss, measured in accordance with the provisions set in IAS 37.
The Company classifies its financial assets in the following categories:
financial assets at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Companys management determines the classification of its financial assets
at initial recognition.
|
a) |
Financial assets at fair value through profit or loss |
This category includes financial assets
designated at fair value through profit or loss. A financial asset is classified into this category if it was designated for this category by management. Assets in this category are classified as current assets if held for trading or expected to be
settled within 12 months from date of statements of financial position; otherwise, they are classified as non-current assets.
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They are included in current assets, except for maturities longer than 12 months after the statement of financial position date. These are classified as non-current assets. The
Companys loans and receivables are presented among accounts receivable, cash and cash equivalents and long-term deposit items in the statement of financial position.
12
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
2) |
Recognition and measurement |
Ordinary purchases and sales of financial assets are recognized
on trade-date, which is the date on which the Company commits to purchase or sell the asset. Such investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.
Financial assets, which are carried at fair value through profit or loss, are initially recognized at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognized when the rights to receive cash flows
from the investments have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership associated with these assets. Financial assets at fair value through profit or loss are presented in
subsequent periods at fair value. Loans and receivables are presented at depreciated cost based on the effective interest method.
Gains
or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented as a separate item in the income statement in the period in which they arise.
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets is impaired. The amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original effective interest rate. The
carrying amount of the asset is reduced and the amount of the loss is recognized in the income statement.
As to measurement of fair value
of Companys financial instruments see note 4.
|
g. |
Cash and cash equivalents |
Cash and cash equivalents include cash in hand, short-term
deposits with banks, other short-term highly liquid investments with original maturities of three months or less.
|
h. |
Share based compensation |
The Company operates a number of equity-settled, share-based
compensation plans for employees, under which the Company receives services from employees as consideration for equity instruments of the Company. The fair value of the employee services received in exchange for the grant of the options is
recognized as an expense in the statement of income and at the same time it is charged to capital reserve in equity. The total amount to be expensed over the options vesting period is determined by reference to the fair value of the options
granted at the time of grant, excluding the impact of service condition and non-market vesting conditions (for example, profitability and sales growth targets).
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At the end of each reporting
period, the Company revises its estimates of the number of options that are expected to vest and recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
Upon exercise of the options and issuance of shares, the proceeds received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium.
13
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
i. |
Liability for future payments of royalties |
The Companys liability for future
payments of royalties to Teva, was initially recognized at fair value. In subsequent periods, the liability is measured at amortized cost.
Companys ordinary shares and preferred shares are classified as
share capital. Each ordinary Company shares confers upon its holders identical rights.
Incremental costs directly attributable to issuance
of new shares are presented in equity as a deduction (net of taxes) of proceeds of issuance.
When the Company purchases the Companys
equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Companys equity holders until the shares are reissued.
Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity.
|
k. |
Current and deferred taxes |
The current income tax charge is calculated on the basis of
the tax laws enacted or substantively enacted at the statement of financial position date in Israel, where the Company operates and generates taxable income. Companys management periodically evaluates tax aspects applicable to its taxable
income in accordance with the relevant tax laws and makes the required provisions.
As of statement of financial position date the Company
has accumulated losses for tax purposes and accordingly, no current taxes were included in the financial statements.
Deferred income tax
is recognized, using the liability method, on temporary differences arising between the tax basis of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise
from the initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for all temporary differences that are tax deductible, up to the amount of the differences that are expected
to be utilized in the future, against taxable income. Since at this stage the Company does not expect to have taxable income, no deferred taxes have so far been included in the financial statements.
14
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
1) |
Severance pay liability |
Labor laws and agreements in Israel require the Company to pay
severance pay to employees dismissed or retiring from their employ in certain other circumstances. A defined contribution plan is a post-employment benefit plan under which the Company pays fixed contributions into a separate and independent entity.
The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is
a post-employment benefit plan that is not a defined contribution plan.
The Companys severance pay liability in respect of most of
its employees is accounted for as a defined benefit plan. As part of the Companys defined benefit obligation to relevant employees, the amounts of benefits that such employees are entitled to receive upon retirement is based on the number of
years of employment and the employees last monthly salary.
Total liability for employee rights upon retirement as recognized in the
statement of financial position is the present value of the defined benefit obligation at the statement of financial position date, less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary
using the projected unit credit method.
The present value of the obligation is determined by discounting the estimated future cash
outflows (after taking into account the expected rate of salary increases) using interest rates of government bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of
the related liability, since the Companys management is in the opinion that as of December 31, 2013, Israel doesnt have a deep market for high-quality corporate bonds.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in
other comprehensive income in the period in which they arise.
Interest costs in respect of the defined benefit plan are charged or
credited to finance costs.
An Amendment to IAS 19, Employee benefits, became effective on January 1, 2013. The amendment
replaces interest costs and expected returns on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (assets). The Company implemented the amendment retrospectively; it did not
have a material effect on the Companys financial statements.
The remaining employees (which are not covered under a defined benefit
plan) are subject to the rules and regulations of Section 14 to the Severance Pay Law. The severance pay obligation in connection with these employees is accounted for as a defined contribution plan.
The Companys obligation to these employees is funded by purchase of insurance policies and making regular contributions to pension and
severance pay funds. The Company has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expenses commensurate with receipt from employees of the service in respect of which they
are entitled for the contributions.
15
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
|
2) |
Vacation and recreation benefits |
Under labor laws, every employee is legally entitled to
vacation and recreation benefits, both computed on an annual basis. This entitlement is based on the term of employment. The Company charges a liability and expense due to vacation and recreation pay, based on the benefits that have been accumulated
for each employee.
|
m. |
New International Financial Reporting Standards, Amendments to Standards and New interpretations: |
Standards and amendments to existing standards that are effective or were early adopted by the Company:
|
1) |
IFRS 13 - Fair Value Measurements (hereafter IFRS 13) |
IFRS 13
aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of
fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs.
The Company applied IFRS 13 for the first time commencing January 1, 2013. IFRS 13 was applied prospectively. The disclosure requirements
of the new guidance do not need to be applied in comparative information for periods before initial application of IFRS 13. The first time application of IFRS 13 did not have material impact on the measurement of items in the financial statements of
the Company.
|
2) |
Amendment to IAS 1 Financial Statements Presentation (hereinafter Amendment to IAS 1) |
The Amendment to IAS 1 changes the disclosure of other comprehensive income items (OCI) in the statement of comprehensive income. Set forth
below are key points of Amendment to IAS 1:
|
|
|
Items presented in OCI should be separated into two groups, based on whether or not they may be recycled to profit or loss in the future. Accordingly, items that will not be recycled will be presented separately from
items that may be recycled in the future. |
|
|
|
Entities that choose to present OCI items before the related tax effect will be required to show separately the amount of tax relating to each of the two groups. |
|
|
|
The title used by IAS 1 for the statement of comprehensive income has changed to statement of profit or loss and other comprehensive income. However IAS 1 still permits entities to use other titles.
|
The Company applied Amendment to IAS 1 for the first time commencing January 1, 2013. Amendment to IAS 1 was applied
retrospectively for all reported periods. Since all other comprehensive items of the Company may not be reclassified in the future to profit or loss, the first time application of Amendment to IAS 1 did not have material impact on the financial
statements.
16
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions
concerning the future. The resulting accounting estimates will by definition, not necessarily be equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are those relating to the fair value of the financial assets of the Company (including its derivatives).
The fair value of financial instruments that are not traded in an active market is determined by using a variety of valuation techniques. The
Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. The Company has used discounted cash flow analysis to determine the fair value of
its financial assets that are not traded in active markets, see also note 7e.
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT:
|
a. |
Financial risk factors |
The Companys activities expose it to a variety of
financial risks such as foreign exchange risk and liquidity risk, as part of its normal course of business. The Companys risk management objective is to monitor risks and minimize the possible influence that results from this exposure,
according to its evaluations and expectations of the parameters that affect the risks.
Risk management is performed by the Chief financial
officer (CFO) of the Company in conformity with the policy approved by the Board of Directors. The CFO identifies and evaluates the financial risks as needed. The Board provides written principals for overall risk management.
The Company is exposed to foreign exchange risks arising from various
currency exposures, primarily with respect to the NIS and Euro. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in foreign currencies which are not the functional currency.
As of the date of the statement of financial position, the Company funds its
operations using own equity, shareholders investments and government grants. The table below analyses the Companys financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial
position date to the contractual maturity date (the amounts in the table represent undiscounted contractual cash flows):
|
|
|
|
|
|
|
|
|
|
|
Less than |
|
|
5 years |
|
|
|
1 year |
|
|
or more |
|
|
|
NIS in thousands |
|
December 31, 2013: |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
2,028 |
|
|
|
|
|
Liability for future payment of royalties |
|
|
|
|
|
|
154,459 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,028 |
|
|
|
154,459 |
|
|
|
|
|
|
|
|
|
|
17
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (continued):
|
b. |
Fair value of financial instruments |
As of December 31, 2013, most of the
Companys financial instruments are classified to loans and receivable category as defined in IAS 39 Financial Instruments Recognition and Measurement. As to the Companys derivative financial instrument and
liability for future payment of royalties, see note 7e and note 2i, respectively.
NOTE 5 - CASH AND CASH EQUIVALENTS:
|
|
|
|
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in thousands |
|
Cash in bank and cash on hand |
|
|
1,746 |
|
Short-term bank deposits |
|
|
3,818 |
|
|
|
|
|
|
|
|
|
5,564 |
|
|
|
|
|
|
18
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment and the related accumulated depreciation, grouped by major classification,
and the movement therein in 2013, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
Accumulated depreciation |
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciated |
|
|
|
as of |
|
|
Additions |
|
|
Disposals |
|
|
Differences |
|
|
Balance |
|
|
as of |
|
|
Additions |
|
|
Disposals |
|
|
Differences |
|
|
Balance |
|
|
balance as |
|
|
|
beginning |
|
|
during |
|
|
during |
|
|
from |
|
|
as of end |
|
|
beginning |
|
|
during |
|
|
during |
|
|
from |
|
|
as of end |
|
|
of end |
|
|
|
of year |
|
|
the year |
|
|
the year |
|
|
translation |
|
|
of year |
|
|
of year |
|
|
the year |
|
|
the year |
|
|
translation |
|
|
of year |
|
|
of year |
|
Machines and laboratory equipment |
|
|
7,850 |
|
|
|
10 |
|
|
|
(453 |
) |
|
|
(544 |
) |
|
|
6,863 |
|
|
|
3,477 |
|
|
|
911 |
|
|
|
(428 |
) |
|
|
(272 |
) |
|
|
3,688 |
|
|
|
3,175 |
|
Computer software and hardware |
|
|
410 |
|
|
|
4 |
|
|
|
|
|
|
|
(29 |
) |
|
|
385 |
|
|
|
272 |
|
|
|
69 |
|
|
|
|
|
|
|
(21 |
) |
|
|
320 |
|
|
|
65 |
|
Office furniture |
|
|
95 |
|
|
|
|
|
|
|
|
|
|
|
(6 |
) |
|
|
89 |
|
|
|
32 |
|
|
|
5 |
|
|
|
|
|
|
|
(2 |
) |
|
|
35 |
|
|
|
54 |
|
Leasehold improvements |
|
|
1,107 |
|
|
|
|
|
|
|
|
|
|
|
(77 |
) |
|
|
1,030 |
|
|
|
573 |
|
|
|
44 |
|
|
|
|
|
|
|
(42 |
) |
|
|
575 |
|
|
|
455 |
|
Other equipment |
|
|
313 |
|
|
|
2 |
|
|
|
|
|
|
|
(22 |
) |
|
|
293 |
|
|
|
157 |
|
|
|
32 |
|
|
|
|
|
|
|
(13 |
) |
|
|
176 |
|
|
|
117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,775 |
|
|
|
16 |
|
|
|
(453 |
) |
|
|
(678 |
) |
|
|
8,660 |
|
|
|
4,511 |
|
|
|
1,061 |
|
|
|
(428 |
) |
|
|
(350 |
) |
|
|
4,794 |
|
|
|
3,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 7 - TERMINATION OF COLLABORATION WITH TEVA:
|
a. |
On January 31, 2013 Teva announced the termination of the collaboration with the Company, in accordance with agreements which were signed between the Company and Teva. |
Further to the abovementioned notice and under the agreements between the Company and Teva, all of Tevas rights and obligations in
connection with the said collaboration agreements have terminated and Teva is no longer obligated to invest a further amount of up to $50 million in the Company; the call options granted to Teva to purchase the remaining Company shares, which are
held by other shareholders, were also cancelled; Company shares held by Teva were converted into Company ordinary shares and the option, which was granted to the Company to repurchase all of Company shares held by Teva came into effect (hereafter
the repurchase option); the term of the repurchase option is 180 days. The repurchase option may be exercised by the Company as follows: if the Companys board of directors resolves to exercise this option, or if Company
shareholders holding 90% of the voting rights, which are not held by Teva, decide to exercise the option. As of January 31, 2013, the fair value of the repurchase option was estimated at $ 106 million (NIS 395.2 million) and was charged in
the statement of income under the gain from change in fair value of derivative financial instruments item. See also note 7e.
|
b. |
The repurchase option may be exercised by the Company through one of the following two alternatives: (1) a cash payment which is equal to the sum of amounts paid by Teva to the Company and its shareholders for
shares issued to Teva by the Company (hereafter the equity investment), or (2) future royalties on sales the Company will pay Teva one dollar immediately, and will also undertake to pay Teva future contingent royalties
of 20% of the revenues arising to the Company from sales of the Companys products, up to a total equal to 125% of Tevas equity investments. |
|
c. |
On April 30, 2013, the Company filed to the Tel Aviv District Court an application to approve a distribution in accordance with Section 303 to the Companies Law. Subject to the approval of the application by
the court, the Company will exercise the repurchase option in accordance with the second alternative presented above and will purchase Tevas stake in the Company all in accordance with the terms stipulated in the agreements between the Company
and Teva and in the Companys constitutional documents. |
|
d. |
On September 2, 2013, (hereafter exercise date) the Company completed the repurchase of Tevas stake in the Company (in accordance with the provisions applicable to the termination of the
collaboration agreements between Teva and the Company). The value of the repurchase option as of exercise date was assessed by an external valuator at $ 107 million (NIS 386.9 million). The change in the value of the option over the period
through exercise date was recognized in the statement of income under the gain from change in fair value of derivative financial instruments item. In consideration for the exercise of the option the Company will pay Teva royalties
amounting to 20% of its future revenues from sales of Companys products (as defined in the agreement), or licenses for use of Companys products, up to a total amount of $ 44.5 million (NIS 154.4 million). As of exercise date, the
value of the liability to Teva amounted to $ 5.1 million (NIS 18.4 million). Subsequent to the exercise of the repurchase option and the recording of the liability for the payment of future royalties against Companys acquisition of
Company shares, the cost of acquisition of those shares was presented as a deduction from equity under the treasury shares item. On the exercise date the share transfer deeds, which authorize the transfer of Company shares held by Teva
to the Company, were signed; the letter of undertaking for payment of the consideration in respect of the exercise of the option as above was also signed on that date. See also note 7e. |
20
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 7 - TERMINATION OF COLLABORATION WITH TEVA (continued):
|
e. |
The repurchase option was classified as a derivative financial instrument and categorized under level 3, since data about the asset not based on observable market information (unobservable inputs). Until Teva announced
on the termination of the collaboration with the Company, the fair value of the repurchase option was estimated at NIS 0, since the probability of the termination was negligible. After Tevas announcement, the fair value of the repurchase
option was estimated by valuation methods based on multiple parameters and scenarios, by discounting the expected future contractual cash flows using a typical discount rate on the broad market for similar financial instruments, or by commonly used
economic models for pricing derivatives. The discount rate that used for the fair value estimation is 13%. |
The higher the
discount rate is, the fair value is lower. A change of 1% will lead to an increase/ decrease of approximately $7.5 million of the derivative fair value.
The following table lists the change in the derivative financial instrument measured at level 3:
|
|
|
|
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in |
|
|
|
thousands |
|
Repurchase option: |
|
|
|
|
Opening balance for the year |
|
|
, |
|
Transfers to level 3 |
|
|
|
|
Revaluations during the year charged to the income statement (gain from change in fair value of derivative financial
instruments item) : |
|
|
|
|
On the date of termination agreement with Teva |
|
|
395,168 |
|
Through repurchase options exercise date |
|
|
3,616 |
|
Differences from translation of financial statements |
|
|
(11,872 |
) |
Exercise of repurchase option |
|
|
(386,912 |
) |
|
|
|
|
|
Closing balance for the year |
|
|
, |
|
|
|
|
|
|
NOTE 8 - LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT, net:
|
a. |
Severance pay liability |
Labor laws and agreements require the Company to pay severance
pay to employees dismissed or retiring from their employ in certain other circumstances or to make deposits with defined contribution plans in accordance with Section 14 to the Severance Pay Law. The Companys severance pay liability is
calculated in accordance with employment agreements in force based on the employees salary and period of employment which create the entitlement to receive severance pay from the Company.
The Companys severance pay liabilities are generally funded by making deposits into insurance companies and severance pay funds. That
part of the Companys severance pay liability, which is not covered by deposits in accordance with Section 14 to the Severance Pay Law, is accounted for as defined benefit plans.
The Company has a severance pay liability which constitutes a
defined benefit plan. The Company deposits funds to cover this liability in severance pay funds and managerial insurance policies. The liability for employee rights upon retirement, net item presented in the statement of financial
position as of December 31, 2013 reflects the difference between the severance pay liability and the assets of the severance pay plans.
21
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 8 - LIABILITY FOR EMPLOYEE RIGHTS UPON RETIREMENT, net (continued):
|
|
|
|
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in |
|
|
|
thousands |
|
c. Amounts presented in the statement of income: |
|
|
|
|
Current service cost |
|
|
229 |
|
Net interest expenses |
|
|
1 |
|
|
|
|
|
|
Total employee benefit costs |
|
|
230 |
|
|
|
|
|
|
d. Plans liabilities - net: |
|
|
|
|
Total liabilities |
|
|
(1,822 |
) |
Total fair value of plans assets |
|
|
1,807 |
|
|
|
|
|
|
Net liabilities |
|
|
(15 |
) |
|
|
|
|
|
e. Changes in the present value of the liability: |
|
|
|
|
Balance at beginning of the year |
|
|
1,503 |
|
Interest expenses |
|
|
62 |
|
Current service cost |
|
|
218 |
|
Benefits payments |
|
|
(34 |
) |
Remeasurement of liability |
|
|
73 |
|
|
|
|
|
|
Balance at end of year |
|
|
1,822 |
|
|
|
|
|
|
f. Changes in the fair value of plan assets: |
|
|
|
|
Balance at beginning of the year |
|
|
1,500 |
|
Interest income |
|
|
61 |
|
Employee contributions |
|
|
228 |
|
Benefits paid |
|
|
(34 |
) |
Transfer of benefits out of plan assets |
|
|
(11 |
) |
Remeasurement of plan assets |
|
|
63 |
|
|
|
|
|
|
Balance at end of year |
|
|
1,807 |
|
|
|
|
|
|
Set forth below are the principal actuarial
assumptions used to determine the present value of the defined benefit liability:
|
|
|
|
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
% |
|
Discount rate |
|
|
3.6 |
|
|
|
|
|
|
Rate of inflation |
|
|
2.7 |
|
|
|
|
|
|
Salary growth rate |
|
|
2.5 |
|
|
|
|
|
|
22
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 9 - EQUITY:
|
|
|
|
|
|
|
|
|
|
|
Number of shares |
|
|
|
December 31, 2013 |
|
|
|
Authorized |
|
|
Issued and paid |
|
Ordinary shares of NIS 0.01 par value |
|
|
3,367,300 |
|
|
|
1,431,719 |
* |
|
|
|
|
|
|
|
|
|
Preferred Series A shares of NIS 0.01 par value |
|
|
150,000 |
|
|
|
109,900 |
|
|
|
|
|
|
|
|
|
|
Preferred Series B shares of NIS 0.01 par value |
|
|
140,000 |
|
|
|
111,008 |
|
|
|
|
|
|
|
|
|
|
Preferred Series C shares of NIS 0.01 par value |
|
|
22,700 |
|
|
|
22,697 |
|
|
|
|
|
|
|
|
|
|
* |
Out of which 1,276,700 shares were repurchased from Teva and classified as treasury shares. |
The preferred shares shall confer upon their holders the following
rights:
Each preferred share shall be convertible, without additional consideration, at
the option of the holder thereof, at any time, into such number of fully-paid and non-assessable ordinary share(s) as is determined by dividing the applicable original issue price for such share by the conversion price (as defined below) at the time
in effect for such share, provided that any non-fully paid preferred shares will be converted into non-fully paid ordinary shares. As of the time of adoption of these Articles of Association, the conversion price of each preferred share shall equal
to the original issue Price thereof, subject to adjustment as set forth in section 3.3 to the Articles of Association. The conversion price of the preferred shares, as in effect from time to time, is referred to as the conversion price.
The ordinary shares shall confer upon the holders thereof all the rights attached to the ordinary shares in these Articles of
Association, including, without limitation, the right to receive notice of, and to participate in, General Meetings and, to vote thereat with each ordinary share entitling the holder thereof, as detailed in the Articles of Association of the Company
, to one vote on each matter upon which a vote is held at a General Meeting, the right to participate and share equally, on a per share basis, in distribution of dividends (subject to the preferential rights of the preferred shares as detailed in
the Articles of Association of the Company (Winding Up; Distribution Preference), and the right to participate and share equally, on a per share basis, in distribution of surplus property/assets and funds of the Company in the event of a
winding up, liquidation, dissolution or Deemed Liquidation Event (as defined in the Article) of the Company, subject to the preferential rights of the preferred shares set forth in the Articles of Association of the Company (Winding Up;
Distribution Preference).
23
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 9 - EQUITY (continued):
|
2) |
Liquidation preference |
In the event of a Distribution Event (as defined in the Companys
Articles of Association) Series C preferred shares holders are entitled to receive prior and in preference to the Series B preferred shares holders an amount equivalent to 150% of the original issue price plus interest at a rate of 2% of the
original issue price. In the event of a Distribution Event (as defined in the Companys Articles of Association) Series B preferred shares holders are entitled to receive prior and in preference to the Series A preferred shares holders an
amount equivalent to 150% of the original issue price plus interest at a rate of 2% of the original issue price. Series A preferred shares holders are entitled to receive, prior and in preference to the ordinary shares holders, an amount equivalent
to the original issue price plus interest at a rate of 2% of the original issue price.
After distribution the preferable amounts, the
Companys assets will be distributed proportionally, all in accordance with the Articles of Association.
Series A preferred shares holders and Series B preferred shares holders are
entitled to convert their Shares to Ordinary Shares in a 1:1 ratio at any time, without an exercise price.
|
4) |
Sale of Shares below Conversion Price (Anti-dilution Protection preferred B Shares and preferred C shares only). |
|
|
Until IPO, upon each issuance of new securities made after the original issue date of the preferred B or C shares, to any person or entity at a price-per-share (the new price) that is less than the
applicable conversion price of any preferred B share in effect immediately prior to the time of such issue or sale (including without limitation, for no consideration), then forthwith upon such issuance (the triggering transaction):
|
|
|
then the applicable conversion price of such preferred C or preferred B share then in effect shall be reduced to an amount (calculated to the nearest one-tenth of a cent with one-twentieth of a cent being rounded up)
determined by multiplying such conversion price by a fraction: (i) the numerator of which is the sum of (A) the total number of preferred C or preferred B shares outstanding immediately prior to the Triggering Transaction, plus
(B) the number of ordinary shares which the total amount of the consideration received by the Company for the new securities so issued would purchase at such conversion price in effect immediately prior to such issuance of such new securities;
and (ii) the denominator of which is the sum of the total number of preferred C or preferred B shares outstanding immediately prior to the Triggering Transaction, plus the number of the new securities so issued. |
24
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 9 - EQUITY (continued):
|
c. |
Share acquisition agreements |
On February 1, 2006, the Company signed a definitive
collaboration agreement with Teva (the agreement). In connection with the agreement, Teva invested an initial $6 million in the Company. According to the agreement, Teva has received an option to invest additional $23 million under
certain milestones and increase its stake in the Company. The funds raised would be used for the development of the Companys flagship product, CT-011 antibody.
On August 14, 2008, the Company and Teva have agreed to expand the scope of their original collaboration agreement from February 2006.
Under the amended agreement the Company will receive up to additional $10.5 million which will be utilized to support the ongoing Phase II study in diffuse large B cell lymphoma as well as a new Phase II study in previously untreated patients with
metastatic colorectal cancer. All other terms and conditions of the original agreement have remained unchanged.
On September 28,
2011, pursuant to certain amendments Teva exercised its option to invest $19 million in the Companys series B-1 preferred shares of NIS 0.01 par value. In addition, Teva was obligated to invest up to $50 million in the Companys research
and development activity. Tevas holding in the Company after the exercise of the option increased from 33% to 75%. Teva had an option to acquire full ownership of the Company.
On January 31, 2013 Teva informed the Company of the discontinuance of its funding of the Companys activities, all in accordance
with agreements which were signed between the Company and Teva. Further to the said notice and in accordance with the collaboration agreements between Teva and the Company, Tevas rights and obligations under the collaboration agreements were
terminated; this includes Tevas obligation to fund the Companys activities as specified in the said agreements, see note 7.
On September 17, 2013, the Company raised $ 4 million by way
of rights issue to some of its shareholders in consideration for allotment of 22,697 preferred C shares. The shareholders which participated in this investment round included the parent company, Clal Venture Capital Fund Limited Partnership and
Technorov Holdings (1993) Ltd.
During 2002, the Companys board of directors and shareholders
approved to grant 31,030 options under the 2002 stock option plan to employees, consultants and directors of the Company. The vesting period of the options is 3 to 4 years from the date of grant. Each option is exercisable to one ordinary share of
NIS 0.01 par value of the Company, in exercise prices range of $ 0.83 to $2.72. The contractual term of these options is 10 years. During 2006 and 2009, 6,000 and 2,500 options were forfeited, respectively. In October 2007 and in July 2012, 1,000
and 15,700 options were exercised, respectively.
During 2004 and 2005 the Companys board of directors and shareholders approved to
grant 28,140 and 9,100 options, respectively, under the 2004 stock option plan to employees and consultants of the Company. The vesting period of the options is 4 years from the date of grant. Each option is exercisable to one ordinary share of NIS
0.01 par value of the Company, at an exercise price of $ 3.6. The contractual term of these options is 10 years. During 2006 and 2009, 580 and 1,095 options were forfeited, respectively.
25
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 9 - EQUITY (continued):
During 2008 and 2010 the Companys board of directors and shareholders approved to grant
2,400 and 1,200 options, respectively, under the 2004 stock option plan to employees of the Company. The vesting period of the options is 4 years from the date of grant. Each option is exercisable to one ordinary share of NIS 0.01 par value of the
Company, in exercise price of $ 58. The contractual term of these options is 10 years. During 2013, 800 options were forfeited. In June 2012 the Companys board of directors extended the term of exercise of 6,830 options by 5 years. Following
such extension the exercise period of those options shall end on July 6, 2017.
The fair value of the options at the grant date
computed according to the Black-Scholes option-pricing model. This value is based on the following assumptions: expected dividend yield of 0%; expected volatility of 80%; risk-free interest rate of 2.95%; and expected term until exercise of 6.15
years. Volatility is based on historical volatility of the Companys share price for periods matching the expected term of the option until exercise.
Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
|
|
|
|
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
average |
|
|
|
Number of |
|
|
exercise |
|
|
|
options |
|
|
price (US $) |
|
Outstanding at beginning of year |
|
|
44,785 |
|
|
|
6.87 |
|
|
|
|
|
|
|
|
|
|
Forfeited |
|
|
(800 |
) |
|
|
58 |
|
|
|
|
|
|
|
|
|
|
Outstanding at end of year |
|
|
43,985 |
|
|
|
5.94 |
|
|
|
|
|
|
|
|
|
|
Exercisable at end of year |
|
|
43,885 |
|
|
|
5.82 |
|
|
|
|
|
|
|
|
|
|
26
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 9 - EQUITY (continued):
As of December 31, 2013, the exercise price for 35,155 of the outstanding options was
$3.6, and the exercise price for the remainder 6,830 and 2,000 outstanding options was $ 2.72 and $58, respectively. The average weighted contractual duration was 4 years.
Total effect recognized in the statement of income in respect of share based payment for the years ended December 31, 2013 amounted to NIS
27 thousands. In the year ended December 31, 2013, share based payments in respect to options that were forfeited in the period amounted to NIS 186 thousand were reversed.
NOTE 10 - TAXES ON INCOME:
The income of the Company is taxed at the regular tax rate (25%). The
corporate tax rate will increase to 26.5% in 2014 and thereafter.
The Company incurred carryforward losses amounting on
December 31, 2013 to $ 49 million. The Company did not recognize deferred taxes for those losses since their utilization is not expected in the foreseeable future.
As of the statement of financial position date, the Company has
received a final assessment from the tax authorities, through the year ended December 31, 2008.
NOTE 11 - GOVERNMENT GRANTS
The Company is committed to pay royalties to the Office of the Chief Scientist (OCS) in the government of Israel
in respect to products in the research and development of which the government of Israel participated by way of grants, computed at the rate of 3%-5% of the proceeds from sales of such products, up to the 100% of the amount of the grants received
(linked to the dollar); (commencing January 1, 1999 - plus annual interest at Libor rate). As of December 31, 2013, the Company received a total amount of $11 million. As of December 31, 2013, the Company has not recognized a
liability in the statement of financial position and no royalties have been paid.
NOTE 12 - COMMITMENTS:
Royalties:
|
a. |
In May 2002 the Company signed an assignable, perpetual, exclusive, sub-licensable and worldwide license agreement for the use of the technology and intellectual property owned by one of its shareholders (hereafter
the license agreement). Under the license agreement the Company shall pay royalties at the range of 3% or 1% of the Companys or sub-licensees net sales of products derived from the technology, respectively. In addition,
the Company shall pay royalties at the rate of 20% of all technology sublicensing lump sum payments, up to $10 million, and royalties at the rate of 25% of all technology sublicensing lump sum payments in excess of $10 million. As of
December 31, 2013 no products or sub-licenses were sold, and therefore, no royalties were paid. |
27
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 12 - COMMITMENTS (continued):
|
b. |
In 1998 the Company and a foreign company entered into an agreement in connection with the provision of development services by the foreign company and the grant of a license to use patents of the foreign company. In
consideration for an exclusive worldwide license to use patents of the foreign company, the Company has undertaken to pay the foreign company single digit percentage royalties on sales of Companys products based on valid patents of the foreign
company. As of December 31, 2013 no royalties were paid. |
|
c. |
According to the license agreement the Company signed with Medivation Inc. on October 2014, the company is obligated to pay royalties at the rate of 20% from the license proceeds. See note 15. |
The premises occupied by the Company are rented under various
operating lease agreements, which may be cancelled by giving a two-month notice. Annual lease fees amount to NIS 1,487 thousands (linked to the USD). Commencing in 2012 the Company leases two vehicles for the use of Companys employees. The
annual lease fees amount to NIS 74 thousands.
The projected lease fees in respect of the lease agreement calculated at rate in effect as
of December 31, 2013 are as follows:
|
|
|
|
|
|
|
NIS in |
|
|
|
thousands |
|
2014 |
|
|
1,561 |
|
|
|
|
|
|
2015 |
|
|
1,490 |
|
|
|
|
|
|
2016 and thereafter |
|
|
1,487 |
|
|
|
|
|
|
NOTE 13 - INTERESTED PARTIES AND RELATED PARTIES
Interested party - as defined in the Israeli Securities Regulations (Annual Financial Statements), 2010.
Related party - as defined in IAS 24 Related Party Disclosure (hereafter IAS 24).
As of December 31, 2013, the Company is controlled by Clal Industries Biotechnology Ltd., which is incorporated in Israel and holds 52.96%
of the Companys shares. The remaining shares (47.04%) are held by a large number of investors. The ultimate parent company of the Company is Clal Industries Ltd., which is incorporated in Israel.
|
a. |
Balances with interested parties and related parties: |
|
|
|
|
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in |
|
|
|
thousands |
|
Other payables (receivables) |
|
|
12 |
|
|
|
|
|
|
28
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 13 - INTERESTED PARTIES AND RELATED PARTIES (continued):
|
b. |
Transactions with interested parties and related parties: |
|
|
|
|
|
|
|
Year ended |
|
|
|
December 31, |
|
|
|
2013 |
|
|
|
NIS in |
|
|
|
thousands |
|
Rent expenses |
|
|
1,311 |
|
|
|
|
|
|
Key management personnel salaries |
|
|
*1,459 |
|
|
|
|
|
|
* |
Comprised of 3 key executives |
NOTE 14 - RESEARCH AND DEVELOPMENT EXPENSES, net:
Out of the research and development expenses amount charged in the year ended December 31, 2013, total of NIS 663
thousands were deducted due to participation in expenses in respect of government grants.
NOTE 15 - SUBSEQUENT EVENTS:
|
a. |
In April 2014 the Company and Teva signed an agreement which resolves mutual claims the parties had in connection with the termination (in January 2013) of the collaboration between them (see note 7). As part of the
said agreement, Teva waived its right to receive royalties from future revenues of the Company and the Company waived its financial demands from Teva. As a result, the liability for payment of royalties to Teva in the future amounting to NIS
19.1 million ($5.4 million) was cancelled and carried to the other income item in the statement of income. |
|
1) |
In June 2014 the Company raised $ 2 million by way of rights issue to some of its shareholders in consideration for allotment of 11,348 preferred C shares. The shareholders which participated in this investment
round included the parent company, Clal Capital Funds Risk Limited Partnership and Technorov Holdings (1993) Ltd. |
|
2) |
On December 21, 2014 Company raised $ 3 million by way of rights issue to some of its shareholders in consideration for allotment of 17,023 preferred D shares. The shareholders which participated in this
investment round included the parent company, Clal Capital Funds Risk Limited Partnership and Technorov Holdings (1993) Ltd. |
|
c. |
Employee stock options |
In June 2014 the Companys board of directors extended the
exercise period of 35,280 options by 5 years; following such extension the exercise period of 26,180 options will end on July 29, 2019. The exercise period of the remaining options will end in March and August 2020.
29
CureTech Ltd.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 15 - SUBSEQUENT EVENTS (continued):
|
d. |
Agreement with Medivation Inc.: |
|
1) |
In October 2014, the Company and Medivation Inc. (hereafter Medivation) entered into a licensing agreement and a manufacturing and supply agreement (hereafter jointly the
agreements), under which the Company shall grant Medivation exclusive worldwide rights to develop and commercialize PidilizumabCureTechs immune modulatory anti-PD-1 monoclonal antibody (hereafter respectively the
license and the drug). |
Under the agreements, Medivation will be responsible for all research,
development, regulatory and commercialization activities in connection with the drug. Under the provisions of the manufacturing and supply agreement, the Company will manufacture and supply the drug to Medivation over the next 3 years for clinical
development purposes in accordance with set manufacturing and supply plans and in consideration for the cost of manufacturing.
In
consideration for the license, the Company shall be entitled to the following consideration:
|
a) |
Upfront $5 million payment; |
|
b) |
Future payment upon attainment of certain development and regulatory milestones totaling $85 million. |
|
c) |
Further future sales-based milestone payments of up to $ 245 million upon the achievement of certain annual worldwide net sales thresholds. The minimal sales threshold was set at $ 400 million; and
|
|
d) |
Tiered royalties ranging from 5%-11% of drug sales, based on annual worldwide net sales. |
Upon
the completion of the license agreement, the Company has recognized the upfront $5 million payment in the income statement among Revenue from license grants. According to the Companys accounting policy, all future consideration
payments that will be received based on milestones achievement and royalties that are based on certain sales thresholds will be recognized in the income statement at the date the Company is entitled to those payments.
Under the agreements, the Company shall bear all payments payable to the Chief Scientist Office in connection with the transaction. The
Company shall also bear all payments to third parties from whom it received certain IP rights (including payments to CBI which holds app. 60% of the rights to payments payable to Mor Research Applications Ltd. the owner of the underlying
patents of the drug).
|
2) |
In February 2015 and in accordance with the abovementioned manufacturing and supply agreement, the Company received a total of $ 3.5 million in consideration for supplying the drug to Medivation under the
agreement; the drug will be used by Medivation for clinical development purposes in the first half of 2015. |
|
3) |
In June 2015 the manufacturing and supply agreement was amended; as part of this amendment the parties agreed to change the quantities of the drug to be manufactured and supplied by the Company to Medivation as well as
the dates of supply and payment under the agreement. |
30
Exhibit 99.2
CureTech Ltd.
INTERIM
FINANCIAL INFORMATION
(Unaudited)
AT SEPTEMBER 30, 2014
CureTech Ltd.
INTERIM FINANCIAL INFORMATION
(Unaudited)
AT SEPTEMBER 30, 2014
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page |
|
CONDENSED FINANCIAL STATEMENTS (Unaudited) IN NIS: |
|
|
|
|
Statements of financial position |
|
|
2 |
|
Statements of income |
|
|
3 |
|
Statements of comprehensive income |
|
|
4 |
|
Statements of changes in equity (capital deficiency) |
|
|
5-6 |
|
Statements of cash flows |
|
|
7 |
|
Notes to financial statements |
|
|
8-10 |
|
CureTech Ltd.
CONDENSED STATEMENTS OF FINANCIAL POSITION
AS OF SEPTEMBER 30, 2014
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30 |
|
|
December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2013 |
|
|
|
NIS in thousands |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
986 |
|
|
|
13,130 |
|
|
|
5,564 |
|
Other current assets |
|
|
327 |
|
|
|
322 |
|
|
|
212 |
|
Related parties receivables |
|
|
11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT ASSETS |
|
|
1,324 |
|
|
|
13,452 |
|
|
|
5,776 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term deposit |
|
|
18 |
|
|
|
25 |
|
|
|
17 |
|
Property, plant and equipment - net |
|
|
3,412 |
|
|
|
4,129 |
|
|
|
3,866 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT ASSETS |
|
|
3,430 |
|
|
|
4,154 |
|
|
|
3,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
4,754 |
|
|
|
17,606 |
|
|
|
9,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
|
712 |
|
|
|
1,803 |
|
|
|
918 |
|
Other payables and accruals |
|
|
1,183 |
|
|
|
2,323 |
|
|
|
1,110 |
|
Related parties payables |
|
|
|
|
|
|
423 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL CURRENT LIABILITIES |
|
|
1,895 |
|
|
|
4,549 |
|
|
|
2,040 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
Liability for employee rights upon retirement, net |
|
|
48 |
|
|
|
81 |
|
|
|
15 |
|
Liability for future payment of royalties |
|
|
|
|
|
|
18,039 |
|
|
|
17,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL NON-CURRENT LIABILITIES |
|
|
48 |
|
|
|
18,120 |
|
|
|
17,717 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
1,943 |
|
|
|
22,669 |
|
|
|
19,757 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY (CAPITAL DEFICIENCY): |
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
Premium on shares |
|
|
194,264 |
|
|
|
187,337 |
|
|
|
187,384 |
|
Treasury shares |
|
|
(405,341 |
) |
|
|
(405,341 |
) |
|
|
(405,341 |
) |
Differences from translation of financial statements into the presentation currency |
|
|
(12,394 |
) |
|
|
(12,810 |
) |
|
|
(12,633 |
) |
Capital reserves |
|
|
2,368 |
|
|
|
2,538 |
|
|
|
2,347 |
|
Retained earnings |
|
|
223,910 |
|
|
|
223,209 |
|
|
|
218,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY (CAPITAL DEFICIENCY) |
|
|
2,811 |
|
|
|
(5,063 |
) |
|
|
(10,098 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY |
|
|
4,754 |
|
|
|
17,606 |
|
|
|
9,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman of the Board |
|
Chief Executive Officer |
|
Chief Financial Officer |
Dr. Aharon Schwartz |
|
Dr. Michael Schickler |
|
Mr. Moti Hacham |
Date of approval of the financial statements: November 5, 2015.
The accompanying notes are an integral part of the condensed financial statements.
2
CureTech Ltd.
CONDENSED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2014
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
9 months ended |
|
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
|
NIS in thousands |
|
RESEARCH AND DEVELOPMENT EXPENSES - net |
|
|
10,046 |
|
|
|
12,517 |
|
GENERAL AND ADMINISTRATIVE EXPENSES |
|
|
1,998 |
|
|
|
1,821 |
|
OTHER INCOME |
|
|
(19,140 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME (LOSS) |
|
|
7,096 |
|
|
|
(14,338 |
) |
GAIN FROM CHANGE IN THE FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS - net |
|
|
|
|
|
|
(398,784 |
) |
FINANCIAL INCOME |
|
|
(136 |
) |
|
|
(198 |
) |
FINANCIAL EXPENSES |
|
|
1,463 |
|
|
|
298 |
|
|
|
|
|
|
|
|
|
|
FINANCIAL EXPENSES, net |
|
|
1,327 |
|
|
|
100 |
|
|
|
|
|
|
|
|
|
|
INCOME FOR THE PERIOD |
|
|
5,769 |
|
|
|
384,346 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed financial statements.
3
CureTech Ltd.
CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2014
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
9 months ended |
|
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
|
NIS in thousands |
|
INCOME FOR THE PERIOD |
|
|
5,769 |
|
|
|
384,346 |
|
OTHER COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD - ITEMS THAT WILL NOT BE RECLASSIFIED TO INCOME OR LOSS: |
|
|
|
|
|
|
|
|
Remeasurement of liability for employee rights upon retirement, net |
|
|
(33 |
) |
|
|
|
|
Differences from translation of financial statements |
|
|
239 |
|
|
|
(11,946 |
) |
|
|
|
|
|
|
|
|
|
COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
5,975 |
|
|
|
372,400 |
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed financial statements.
4
(Continued) - 1
CureTech Ltd.
CONDENSED STATEMENTS OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2014
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Differences from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
translation of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
statements into |
|
|
|
|
|
equity |
|
|
|
Share |
|
|
Premium on |
|
|
Treasury |
|
|
Capital |
|
|
the presentation |
|
|
Retained |
|
|
(capital |
|
|
|
capital |
|
|
shares |
|
|
shares |
|
|
reserves |
|
|
currency |
|
|
earnings |
|
|
deficiency) |
|
|
|
NIS in thousands |
|
BALANCE AT JANUARY 1, 2014 |
|
|
4 |
|
|
|
187,384 |
|
|
|
(405,341 |
) |
|
|
2,347 |
|
|
|
(12,633 |
) |
|
|
218,141 |
|
|
|
(10,098 |
) |
CHANGES DURING THE 9 MONTHS ENDED SEPTEMBER 30, 2014: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,769 |
|
|
|
5,769 |
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement of liability for employee rights upon retirement, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33 |
) |
|
|
|
|
|
|
|
|
|
|
(33 |
) |
Differences from translation of financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
239 |
|
|
|
|
|
|
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
, |
|
|
|
, |
|
|
|
, |
|
|
|
(33 |
) |
|
|
239 |
|
|
|
5,769 |
|
|
|
5,975 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share issuance |
|
|
* |
|
|
|
6,880 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,880 |
|
Share based compensation expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
54 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT SEPTEMBER 30, 2014 |
|
|
4 |
|
|
|
194,264 |
|
|
|
(405,341 |
) |
|
|
2,368 |
|
|
|
(12,394 |
) |
|
|
223,910 |
|
|
|
2,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Represents and amount of less than NIS 1 thousand. |
The accompanying notes are an integral
part of the condensed financial statements.
5
(Concluded) - 2
CureTech Ltd.
CONDENSED
STATEMENTS OF CHANGES IN EQUITY (CAPITAL DEFICIENCY)
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2013
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Differences from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
translation of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
financial |
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
statements into |
|
|
|
|
|
equity |
|
|
|
Share |
|
|
Premium on |
|
|
Treasury |
|
|
Capital |
|
|
the presentation |
|
|
Retained |
|
|
(capital |
|
|
|
capital |
|
|
shares |
|
|
shares |
|
|
reserves |
|
|
currency |
|
|
earnings |
|
|
deficiency) |
|
|
|
NIS in thousands |
|
BALANCE AT JANUARY 1, 2013 |
|
|
17 |
|
|
|
173,170 |
|
|
|
, |
|
|
|
2,516 |
|
|
|
(864 |
) |
|
|
(161,137 |
) |
|
|
13,702 |
|
CHANGES DURING THE 9 MONTHS ENDED SEPTEMBER 30, 2013: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income for the period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384,346 |
|
|
|
384,346 |
|
Other comprehensive loss - differences from translation of financial statements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11,946 |
) |
|
|
|
|
|
|
(11,946 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |
|
|
, |
|
|
|
, |
|
|
|
, |
|
|
|
, |
|
|
|
(11,946 |
) |
|
|
384,346 |
|
|
|
372,400 |
|
Share issuance |
|
|
* |
|
|
|
14,167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,167 |
|
Share based compensation expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
|
|
|
|
|
|
|
|
|
|
|
22 |
|
Purchase of treasury shares due to exercise of repurchase option |
|
|
(13 |
) |
|
|
|
|
|
|
(405,314 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(405,354 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT SEPTEMBER 30, 2013 |
|
|
4 |
|
|
|
187,337 |
|
|
|
(405,341 |
) |
|
|
2,538 |
|
|
|
(12,810 |
) |
|
|
223,209 |
|
|
|
(5,063 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Represents and amount of less than NIS 1 thousand. |
The accompanying notes are an integral
part of the condensed financial statements.
6
CureTech Ltd.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2014
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
9 months ended |
|
|
|
September 30 |
|
|
|
2014 |
|
|
2013 |
|
|
|
NIS in thousands |
|
CASH FLOWS PFROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Income for the period |
|
|
5,769 |
|
|
|
384,346 |
|
Adjustments required to reflect the cash flows from operating activities: |
|
|
|
|
|
|
|
|
Income and expenses not involving cash flows: |
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
721 |
|
|
|
887 |
|
Capital gain on sale of property, plant and equipment |
|
|
|
|
|
|
|
|
Share-based compensation expenses |
|
|
54 |
|
|
|
22 |
|
Change in the value of liability for employee rights upon retirement, net |
|
|
|
|
|
|
82 |
|
Revaluation of liability for future payment of royalties |
|
|
1,479 |
|
|
|
|
|
Cancellation of liability for future payment of royalties |
|
|
(19,140 |
) |
|
|
|
|
Amortization of leasing deposit |
|
|
|
|
|
|
|
|
Changes in the fair value of derivative financial instruments, net |
|
|
|
|
|
|
(398,784 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(16,886 |
) |
|
|
(397,793 |
) |
|
|
|
|
|
|
|
|
|
Changes in operating asset and liability items: |
|
|
|
|
|
|
|
|
Decrease (increase) in other current assets |
|
|
(109 |
) |
|
|
215 |
|
Changes in related parties - net |
|
|
(19 |
) |
|
|
469 |
|
Increase (decrease) in trade payables |
|
|
(258 |
) |
|
|
399 |
|
Increase (decrease) in other payables |
|
|
|
|
|
|
(842 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(386 |
) |
|
|
241 |
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(11,503 |
) |
|
|
(13,206 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sale of property, plant and equipment |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
|
(57 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
|
|
(57 |
) |
|
|
(6 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Share issuance (net of issuance expenses) |
|
|
6,880 |
|
|
|
14,167 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
6,880 |
|
|
|
14,167 |
|
|
|
|
|
|
|
|
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
(4,680 |
) |
|
|
955 |
|
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
|
5,564 |
|
|
|
12,618 |
|
EXCHANGE GAINS (LOSSES) ON CASH AND CASH EQUIVALENTS |
|
|
102 |
|
|
|
(443 |
) |
|
|
|
|
|
|
|
|
|
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
|
986 |
|
|
|
13,130 |
|
|
|
|
|
|
|
|
|
|
ADDITIONAL INFORMATION ON INVESTING AND FINANCING OPERATIONS NOT INVOLVING CASH FLOWS - exercise of repurchase
option: |
|
|
|
|
|
|
|
|
Derivative financial instruments |
|
|
|
|
|
|
(386,912 |
) |
|
|
|
|
|
|
|
|
|
Treasury shares |
|
|
|
|
|
|
405,354 |
|
|
|
|
|
|
|
|
|
|
Liability for future payment of royalties |
|
|
|
|
|
|
(18,442 |
) |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of the condensed financial statements.
7
CureTech Ltd.
EXPLANATORY NOTES TO THE CONDENSED FINANCIAL INFORMATION
AS OF SEPTEMBER 30, 2014
(UNAUDITED)
NOTE 1 - GENERAL:
|
a. |
CureTech Ltd. (hereafter the Company) is a private company which was established in 1995 in Israel. It is engaged in the development of novel, broad-spectrum, immune modulating products for the
treatment and control of cancer. At this stage the Company conducts Phase II clinical trials. The Companys offices are located at Yavne. |
|
b. |
The principal shareholders of the Company are Clal Biotechnology Industries Ltd. (hereafter CBI) and Clal Venture Capital Fund Limited Partnership. |
NOTE 2 - BASIS OF PREPARATION OF CONDESED FINANCIAL STATEMENTS:
|
a. |
The interim condensed financial information of the Company as of September 30, 2014 and 2013 and for the 9 months period ended on those date (hereinafter the interim financial information) was
prepared in accordance with International Accounting Standard No. 34 - Interim Financial Reporting (hereafter IAS 34). The interim financial information should be read in conjunction with the 2013 annual financial
statements and with the notes thereto, which were all prepared in accordance with International Financial Reporting Standards (hereafter IFRS), as issued by the International Accounting Standards Board (IASB). |
The interim financial information is reviewed and is not audited.
|
b. |
The preparation of interim financial statements requires Companys management to exercise its judgment; it also requires the use of significant accounting estimates and assumptions that affect the
application of the Companys accounting policy and the amounts of reported assets, liabilities, income and expenses. Actual results may materially differ from those estimates. The judgment exercised by the Companys management is
consistent with those applied in the financial statements for December 31, 2013. |
NOTE 3 - ACCOUNTING POLICIES
The accounting policies and computation methods used in preparation of the interim financial information are consistent with
the 2013 annual financial statements.
8
CureTech Ltd.
EXPLANATORY NOTES TO THE CONDENSED FINANCIAL INFORMATION (continued)
AS OF SEPTEMBER 30 2014
(UNAUDITED)
NOTE 4 - TERMINATION OF COLLABORATION WITH TEVA
Further to note 7 to the annual financial statements as of December 31, 2013, the Company and Teva Pharmaceutical
Industries Ltd. (hereafter Teva) signed an agreement which settles mutual claims the parties had in connection with the termination of the collaboration between them in January 2013. The agreement was signed in April 2014. As part
of the said agreement, Teva waived its right to receive royalties from future revenues of the Company and the Company waived its financial demands from Teva. As a result of the above, the future royalties liability to Teva, in the amount of
NIS 19.1 million ($ 5.1 million), was cancelled and carried to the other income item in the statement of income.
NOTE 5 - SUBSEQUENT EVENTS:
|
a. |
On December 21, 2014 Company raised $ 3 million by way of rights issue to some of its shareholders in consideration for allotment of 17,023 preferred D shares. The shareholders which participated in this
investment round included the parent company, Clal Capital Funds Risk Limited Partnership and Technorov Holdings (1993) Ltd. |
|
b. |
In October 2014, the Company and Medivation Inc. (hereafter Medivation) entered into a licensing agreement and a manufacturing and supply agreement (hereafter jointly the
agreements), under which the Company shall grant Medivation exclusive worldwide rights to develop and commercialize Pidilizumab - CureTechs immune modulatory anti-PD-1 monoclonal antibody (hereafter respectively the
license and the drug). |
Under the agreements, Medivation will be responsible for all research, development,
regulatory and commercialization activities in connection with Pidilizumab. Under the provisions of the manufacturing and supply agreement, the Company will manufacture and supply the Pidilizumab to Medivation over the next 3 years for clinical
development purposes in accordance with set manufacturing and supply plans and in consideration for the cost of manufacturing.
In
consideration for the license, the Company shall be entitled to the following consideration:
|
1) |
Upfront $5 million payment; |
|
2) |
Future payment upon attainment of certain development and regulatory milestones totaling $85 million. |
|
3) |
Further future sales-based milestone payments of up to $ 245 million upon the achievement of certain annual worldwide net sales thresholds. The minimal sales threshold was set at $ 400 million; and
|
|
4) |
Tiered royalties ranging from 5%-11% of Pidilizumab sales, based on annual worldwide net sales. |
9
CureTech Ltd.
EXPLANATORY NOTES TO THE CONDENSED FINANCIAL INFORMATION (continued)
AS OF SEPTEMBER 30 2014
(UNAUDITED)
NOTE 5 - SUBSEQUENT EVENTS (continued):
Upon the completion of the license agreement, the Company has recognized the upfront $5
million payment in the income statement among Revenue from license grants. According to the Companys accounting policy, all future consideration payments that will be received based on milestones achievement and royalties that are
based on certain sales thresholds will be recognized in the income statement at the date the Company is entitled to those payments.
Under
the agreements, the Company shall bear all payments payable to the Chief Scientist Office in connection with the transaction. The Company shall also bear all payments to third parties from whom it received certain IP rights (including payments to
CBI which holds app. 60% of the rights to payments payable to Mor Research Applications Ltd. the owner of the underlying patents of the drug).
|
c. |
In February 2015 and in accordance with the abovementioned manufacturing and supply agreement, the Company received a total of $ 3.5 million in consideration for supplying the drug to Medivation under the
agreement; the drug will be used by Medivation for clinical development purposes in the first half of 2015. |
|
d. |
In June 2015 the manufacturing and supply agreement was amended; as part of this amendment the parties agreed to change the quantities of the drug to be manufactured and supplied by the Company to Medivation as well as
the dates of supply and payment under the agreement. |
10
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introductory Note
Description of
Transaction
On October 23, 2014, Medivation, Inc. (the Company) entered into a License Agreement with CureTech, Ltd.
(CureTech) pursuant to which the Company could acquire an exclusive license to the worldwide rights to CureTechs late-stage clinical molecule, pidilizumab (MDV9300), an immunomodulatory antibody for all potential
indications pursuant to a license from CureTech. On December 19, 2014, the Company delivered to CureTech a continuation notice and, as a result of the delivery of the continuation notice, obtained the exclusive rights to MDV9300. Under the
License Agreement, the Company will be responsible for all development, regulatory, manufacturing, and commercialization activities for MDV9300 for all indications.
In connection with the License Agreement, the Company made upfront cash payments to CureTech totaling $5.0 million during the fourth quarter
of 2014. In addition, CureTech is entitled to contingent payments totaling up to $85.0 million upon attainment of certain development and regulatory milestones, up to $245.0 million upon the achievement of certain annual worldwide net sales
thresholds, and tiered royalties ranging from 5% to 11% on annual worldwide net sales. CureTech is also entitled to a $5.0 million milestone payment upon completion of the Manufacturing Technology Transfer, as defined in the License Agreement.
Basis of Presentation
The determination
of the accounting for the MDV9300 acquisition as a business acquisition was based on a review of all of the pertinent facts and circumstances and was based on a number of factors outlined in Financial Accounting Standards Board Accounting Standards
Codification, or ASC, 805, Business Combinations, which provides guidance in identifying transactions as an asset acquisition or a business acquisition. After consideration of the factors outlined in the prescribed ASC guidance as well
as the stage of development of the late-stage molecule acquired from CureTech pursuant to the License Agreement, it was determined that the MDV9300 acquisition should be accounted for as a business acquisition and accounted for using the
acquisition method of accounting.
The following unaudited pro forma condensed combined financial statements combine the
historical financial information of the Company and CureTech. The unaudited pro forma condensed combined balance sheet at September 30, 2014 gives effect to the acquisition as if the acquisition had been consummated at that date. The unaudited
pro forma condensed combined statements of operations for the year ended December 31, 2013 and the nine months ended September 30, 2014 are presented as if the acquisition had been completed on January 1, 2013. The unaudited pro forma
condensed combined financial statements were prepared using the acquisition method of accounting and also in accordance with Article 11 of Regulation S-X.
The unaudited pro forma condensed combined financial information presented below is based on, and should be used in conjunction with
(i) the Companys historical audited consolidated financial statements, and related notes thereto, for the year ended December 31, 2013, included in the Companys Annual Report on Form 10-K for the year ended December 31,
2014, (ii) the Companys historical unaudited consolidated financial statements, and related notes thereto, for the nine months ended September 30, 2014 and 2013, included in the Companys Quarterly Report on Form 10-Q for the
nine months ended September 30, 2014, (iii) the historical audited financial statements, and related notes thereto, of CureTech for the year ended December 31, 2013 included as Exhibit 99.1 to this Form 8-K and (iv) the
historical unaudited financial statements, and related notes thereto, of CureTech for the nine months ended September 30, 2014 and 2013 included as Exhibit 99.2 to this Form 8-K.
The Companys historical consolidated financial information has been adjusted to give effect
to pro forma events that are (1) directly attributable to the transaction, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. CureTechs
historical financial statements were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The Company is not aware of any material differences between the accounting
policies of the Company and CureTech. Accordingly, the accompanying unaudited pro forma condensed combined financial statements do not assume any material differences in accounting policies between the Company and CureTech. The unaudited pro forma
condensed combined financial information should be read in conjunction with the accompanying notes.
The unaudited pro forma condensed
combined financial statements do not reflect the realization of potential cost savings, or any related restructuring, integration costs, or transition costs that may result from the transaction. These unaudited pro forma condensed combined financial
statements are not necessarily indicative of the results of operations that would have been achieved had the transaction actually taken place at the dates indicated and do not purport to be indicative of future financial position or operating
results.
MEDIVATION, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
As of
September 30, 2014
(in thousands of U.S. dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medivation, Inc. (Historical) |
|
|
CureTech (Historical) |
|
|
Pro Forma Adjustments |
|
|
See Note 4 |
|
Pro Forma Combined |
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
321,053 |
|
|
$ |
268 |
|
|
$ |
(5,268 |
) |
|
(a) |
|
$ |
316,053 |
|
Receivable from collaboration partner |
|
|
208,090 |
|
|
|
|
|
|
|
|
|
|
|
|
|
208,090 |
|
Prepaid expenses and other current assets |
|
|
20,918 |
|
|
|
92 |
|
|
|
(92 |
) |
|
(b) |
|
|
20,918 |
|
Restricted cash |
|
|
410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
550,471 |
|
|
|
360 |
|
|
|
(5,360 |
) |
|
|
|
|
545,471 |
|
Property and equipment, net |
|
|
41,075 |
|
|
|
927 |
|
|
|
(927 |
) |
|
(b) |
|
|
41,075 |
|
Intangible assets |
|
|
|
|
|
|
|
|
|
|
101,000 |
|
|
(c) |
|
|
101,000 |
|
Restricted cash, net of current |
|
|
11,562 |
|
|
|
|
|
|
|
|
|
|
|
|
|
11,562 |
|
Goodwill |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
(d) |
|
|
10,000 |
|
Other non-current assets |
|
|
15,076 |
|
|
|
5 |
|
|
|
(5 |
) |
|
(b) |
|
|
15,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
618,184 |
|
|
$ |
1,292 |
|
|
$ |
104,708 |
|
|
|
|
$ |
724,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable, accrued expenses and other current liabilities |
|
$ |
109,060 |
|
|
$ |
515 |
|
|
|
(515 |
) |
|
(b) |
|
$ |
109,060 |
|
Deferred revenue |
|
|
4,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
4,233 |
|
Contingent consideration |
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
(e) |
|
|
10,000 |
|
Current portion of build-to-suit lease obligation |
|
|
781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
781 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
114,074 |
|
|
|
515 |
|
|
|
9,485 |
|
|
|
|
|
124,074 |
|
Contingent consideration |
|
|
|
|
|
|
|
|
|
|
96,000 |
|
|
(e) |
|
|
96,000 |
|
Convertible Notes |
|
|
218,555 |
|
|
|
|
|
|
|
|
|
|
|
|
|
218,555 |
|
Build-to-suit lease obligation, excluding current portion |
|
|
18,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
18,249 |
|
Other non-current liabilities |
|
|
18,060 |
|
|
|
13 |
|
|
|
(13 |
) |
|
(b) |
|
|
18,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
368,938 |
|
|
|
528 |
|
|
|
105,472 |
|
|
|
|
|
474,938 |
|
Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
1,552 |
|
|
|
1 |
|
|
|
(1 |
) |
|
(b) |
|
|
1,552 |
|
Treasury stock |
|
|
|
|
|
|
(110,054 |
) |
|
|
110,054 |
|
|
(b) |
|
|
|
|
Accumulated other comprehensive loss |
|
|
|
|
|
|
(3,365 |
) |
|
|
3,365 |
|
|
(b) |
|
|
|
|
Capital reserves |
|
|
|
|
|
|
643 |
|
|
|
(643 |
) |
|
(b) |
|
|
|
|
Additional paid-in capital |
|
|
469,608 |
|
|
|
52,745 |
|
|
|
(52,745 |
) |
|
(b) |
|
|
469,608 |
|
Accumulated deficit |
|
|
(221,914 |
) |
|
|
60,794 |
|
|
|
(60,794 |
) |
|
(b) |
|
|
(221,914 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
|
249,246 |
|
|
|
764 |
|
|
|
(764 |
) |
|
|
|
|
249,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity |
|
$ |
618,184 |
|
|
$ |
1,292 |
|
|
$ |
104,708 |
|
|
|
|
$ |
724,184 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to unaudited pro forma condensed combined financial statements which are an integral part of these
financial statements.
MEDIVATION, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands of U.S. dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medivation, Inc. (Historical) |
|
|
CureTech (Historical) |
|
|
Pro Forma Adjustments |
|
|
See Note 4 |
|
Pro Forma Combined |
|
Collaboration revenue |
|
$ |
435,757 |
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
435,757 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
131,693 |
|
|
|
2,809 |
|
|
|
|
|
|
|
|
|
134,502 |
|
Selling, general and administrative expenses |
|
|
165,695 |
|
|
|
559 |
|
|
|
(559 |
) |
|
(f) |
|
|
165,695 |
|
Other income, net |
|
|
|
|
|
|
(5,352 |
) |
|
|
5,352 |
|
|
(f) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
297,388 |
|
|
|
(1,984 |
) |
|
|
(559 |
) |
|
|
|
|
300,197 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
138,369 |
|
|
|
1,984 |
|
|
|
559 |
|
|
|
|
|
135,560 |
|
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(16,101 |
) |
|
|
(409 |
) |
|
|
409 |
|
|
(f) |
|
|
(16,101 |
) |
Interest income |
|
|
26 |
|
|
|
38 |
|
|
|
(38 |
) |
|
(f) |
|
|
26 |
|
Other income (expense), net |
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
(f) |
|
|
(76 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net |
|
|
(16,151 |
) |
|
|
(371 |
) |
|
|
371 |
|
|
|
|
|
(16,151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
|
|
122,218 |
|
|
|
1,613 |
|
|
|
930 |
|
|
|
|
|
119,409 |
|
Income tax (expense) benefit |
|
|
(9,971 |
) |
|
|
|
|
|
|
983 |
|
|
(g) |
|
|
(8,988 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
112,247 |
|
|
$ |
1,613 |
|
|
$ |
1,913 |
|
|
|
|
$ |
110,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.73 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.72 |
|
Diluted |
|
$ |
0.70 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.68 |
|
Weighted-average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
153,258 |
|
|
|
|
|
|
|
|
|
|
|
|
|
153,258 |
|
Diluted |
|
|
161,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
161,448 |
|
See notes to unaudited pro forma condensed combined financial statements which are an integral part of these
financial statements.
MEDIVATION, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
(in thousands of U.S. dollars, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medivation, Inc. (Historical) |
|
|
CureTech (Historical) |
|
|
Pro Forma Adjustments |
|
|
See Note 4 |
|
Pro Forma Combined |
|
Collaboration revenue |
|
$ |
272,942 |
|
|
$ |
|
|
|
$ |
|
|
|
|
|
$ |
272,942 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development expenses |
|
|
118,952 |
|
|
|
4,726 |
|
|
|
|
|
|
|
|
|
123,678 |
|
Selling, general and administrative expenses |
|
|
176,231 |
|
|
|
705 |
|
|
|
(705 |
) |
|
(f) |
|
|
176,231 |
|
Other income, net |
|
|
|
|
|
|
(10 |
) |
|
|
10 |
|
|
(f) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
295,183 |
|
|
|
5,421 |
|
|
|
(695 |
) |
|
|
|
|
299,909 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
(22,241 |
) |
|
|
(5,421 |
) |
|
|
695 |
|
|
|
|
|
(26,967 |
) |
Other income (expense), net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(20,249 |
) |
|
|
(112 |
) |
|
|
112 |
|
|
(f) |
|
|
(20,249 |
) |
Interest income |
|
|
193 |
|
|
|
75 |
|
|
|
(75 |
) |
|
(f) |
|
|
193 |
|
Other income (expense), net |
|
|
(201 |
) |
|
|
110,823 |
|
|
|
(110,823 |
) |
|
(f) |
|
|
(201 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other income (expense), net |
|
|
(20,257 |
) |
|
|
110,786 |
|
|
|
(110,786 |
) |
|
|
|
|
(20,257 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax benefit |
|
|
(42,498 |
) |
|
|
105,365 |
|
|
|
(110,091 |
) |
|
|
|
|
(47,224 |
) |
Income tax (expense) benefit |
|
|
(115 |
) |
|
|
|
|
|
|
1,654 |
|
|
(g) |
|
|
1,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(42,613 |
) |
|
$ |
105,365 |
|
|
$ |
(108,437 |
) |
|
|
|
$ |
(45,685 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.30 |
) |
Diluted |
|
$ |
(0.28 |
) |
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.30 |
) |
Weighted-average common shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
150,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
150,330 |
|
Diluted |
|
|
150,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
150,330 |
|
See notes to unaudited pro forma condensed combined financial statements which are an integral part of these
financial statements.
MEDIVATION, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(in
thousands of U.S. dollars)
The historical CureTech balance sheet at September 30, 2014
has been converted from New Israeli Shekels (NIS) to U.S. dollars using the exchange rate of approximately 3.68 NIS to $1 on September 30, 2014. The historical CureTech condensed statement of income for the year ended December 31, 2013 has
been converted from NIS to U.S. dollars using a historical average exchange rate of approximately 3.60 NIS to $1 and the historical CureTech condensed statement of income for the nine months ended September 30, 2014 has been converted from NIS
to U.S. dollars using a historical average exchange rate of approximately 3.58 NIS to $1.
On September 15, 2015, the Company effected a
two-for-one stock split of its common stock in the form of a stock dividend. The information of the Companys common stock (except par value per share), par, and additional paid-in capital as of September 30, 2014, and the information of the
net income (loss) per common share for the year ended December 31, 2013 and the nine months ended September 30, 2014 and 2013 have been retroactively adjusted to reflect the effect of the stock split.
During the preparation of the accompanying unaudited pro forma
condensed combined financial statements, the Company was not aware of any material differences between the accounting policies of the Company and CureTech. Accordingly, the accompanying unaudited pro forma condensed combined financial statements do
not assume any material differences in accounting policies between the Company and CureTech.
3. |
Purchase Price Allocation |
The transaction is accounted for as a business acquisition
using the acquisition method accounting in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic No. 805, Business Combinations, whereby the net assets acquired were recognized based on their
estimated fair values on the acquisition date.
In connection with the closing of the transaction, the Company made upfront cash payments
to CureTech totaling $5.0 million during the fourth quarter of 2014. In addition, CureTech is entitled to contingent payments totaling up to $85.0 million upon attainment of certain development and regulatory milestones, up to $245.0 million upon
the achievement of certain annual worldwide net sales thresholds, and tiered royalties ranging from 5% to 11% on annual worldwide net sales. CureTech is also entitled to a $5.0 million milestone payment upon completion of the Manufacturing
Technology Transfer, as defined in the License Agreement.
The following table presents the final allocation of the purchase
consideration, including the contingent consideration payable, based on fair value:
|
|
|
|
|
Purchase consideration: |
|
|
|
|
Cash |
|
$ |
5,000 |
|
Acquisition-date fair value of contingent consideration |
|
|
106,000 |
|
|
|
|
|
|
Total purchase consideration |
|
$ |
111,000 |
|
|
|
|
|
|
Allocation of the purchase consideration: |
|
|
|
|
Assets: |
|
|
|
|
Identifiable intangible assets- IPR&D |
|
$ |
101,000 |
|
|
|
|
|
|
Net identifiable assets acquired |
|
|
101,000 |
|
Goodwill |
|
|
10,000 |
|
|
|
|
|
|
Net assets acquired |
|
$ |
111,000 |
|
|
|
|
|
|
The acquisition-date fair value of the contingent consideration payments totaled $106.0 million and was
estimated by applying a probability-based income model with key assumptions that included estimated revenues or completion of certain development and sales milestone targets during the earn-out period, volatility, and estimated discount rates
corresponding to the periods of expected payments.
Identifiable intangible assets totaled $101.0 million and consist entirely of
in-process research and development (or IPR&D) for MDV9300. As of the valuation date, the Company determined that MDV9300 was the only R&D project with substance, such that the project had undergone conceptual stages, and
research, development, and preproduction had been started for the project. As such, no other intangible assets were identified in the transaction other than MDV9300 as separate from goodwill. The excess of the total purchase consideration over the
fair values assigned to the net assets acquired was $10.0 million, which represents the amount of goodwill resulting from the acquisition.
The following is a summary of the adjustments included under the
heading Pro Forma Adjustments in the unaudited pro forma condensed financial statements.
a. |
Represents a $5.0 million reduction to the Companys cash and cash equivalents for the upfront cash payment to CureTech upon closing of the transaction. The amount also represents the elimination of approximately
$0.3 million of CureTechs cash and cash equivalents that were not acquired by the Company in connection with the License Agreement. |
b. |
Reflects the elimination of CureTechs historical assets, liabilities, and stockholders equity which were not acquired or assumed by the Company in connection with the License Agreement. |
c. |
Represents the portion of the purchase price allocated to IPR&D for MDV9300. As of the valuation date, the Company determined that MDV9300 was the only R&D project with substance, such that the project had
undergone conceptual stages, and research, development, and preproduction had been started for the project. As such, no other intangible assets were identified in the transaction other than MDV9300 as separate from goodwill. The amount represents
the fair value assigned to the incomplete project acquired from CureTech, which at the time of the acquisition, had not yet reached technological feasibility. The fair value assigned to the IPR&D was determined using the income
approach, which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant
assumptions used in the income approach from the perspective of a market participant include the estimated net cash flows for each year (including revenues, costs of sales, research and development costs, selling, general, and administrative costs,
and working capital/contributory asset charges), the discount rate that measures the risk inherent in each future cash flow stream, the assessment of the assets life cycle, competitive trends impacting the asset and each cash flow stream, as
well as other factors. |
The amounts are capitalized and accounted for as indefinite-long term assets, subject to
impairment testing until completion or abandonment of the projects. Upon successful completion of the project, the Company will make a determination as to the then useful life of the intangible asset and begin amortization over that period. No
amortization of the intangible asset is included in the pro forma financial statements.
d. |
Reflects the goodwill resulting from the difference between the purchase price and the fair value of the net assets acquired as a result of the License Agreement. |
e. |
Represents the fair value estimate of contingent consideration associated with the License Agreement, which was estimated utilizing a model with key assumptions that included estimated revenues or completion of certain
regulatory and sales-based milestones during the earn-out period, volatility, and estimated discount rates corresponding to the periods of expected payments. The contingent consideration has been classified as current or long-term based upon the
Companys estimate of the timing of the potential contingent payments. |
f. |
Represents the elimination of CureTechs historical expenses and income that were not directly attributable to clinical development activities associated with MDV9300. |
g. |
Reflects the estimated income tax impact of CureTechs historical research and development expense, computed at the Federal statutory tax rate of approximately 35%. |
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