Item 1.01 Entry into a Material Definitive Agreement
On January 8, 2017, AMAG Pharmaceuticals, Inc. (the
Company
) entered into a license agreement (the
License Agreement
) with Palatin Technologies, Inc. (
Palatin
). Under the terms of the License Agreement, subject to the conditions set forth therein, Palatin will grant to the Company (i) an exclusive license in all countries of North America (the
Territory
), with the right to grant sub-licenses, to research, develop and commercialize products containing bremelanotide (each a
Product
,
and collectively,
Products
), an investigational product designed to be an on-demand treatment for hypoactive sexual desire disorder (
HSDD
) in pre-menopausal women, (ii) a non-exclusive license in the Territory, with the right to grant sub-licenses, to manufacture Products, and (iii) a non-exclusive license in all countries outside the Territory, with the right to grant sub-licenses, to research, develop and manufacture (but not commercialize) the Products.
Pursuant to the terms of the License Agreement, and subject to the conditions set forth therein, the Company is required to make the following payments to Palatin: (i) $60 million as a one-time initial research payment within five days following the date of the closing of the transactions contemplated by the License Agreement (the
Effective Date
), and (ii) up to an aggregate amount of $25 million to reimburse Palatin for all reasonable, documented, out-of-pocket expenses incurred by Palatin, following the Effective Date, in connection with the development and regulatory activities necessary to file a new drug application (
NDA
) for a Product for HSDD in the United States.
In addition, pursuant to the terms of the License Agreement, Palatin will be eligible to receive from the Company: (i) up to $80 million in specified regulatory payments upon achievement of certain regulatory milestones, and (ii) up to $300 million in sales milestone payments based on achievement of annual net sales amounts for all Products in the Territory.
The Company is also obligated to pay Palatin tiered royalties on annual net sales of Products, on a product-by-product basis, in the Territory ranging from the high-single digits to the low double-digits. The royalties will expire on a product-by-product and country-by-country basis until the latest to occur of (i) the earliest date on which there are no valid claims of Palatin patent rights covering such Product in such country, (ii) the expiration of the regulatory exclusivity period for such Product in
such
country and (iii) ten years following the first commercial sale of such Product in such country. Such royalties are subject to reduction in the event that: (a) the Company must license additional third party intellectual property in order to develop, manufacture or commercialize a Product or (b) generic competition occurs with respect to a Product in a given country, subject to an aggregate cap on such deductions of royalties otherwise payable to Palatin. After the expiration of the applicable royalties for any Product in a given country, the license for such Product in such country would become a fully paid-up, royalty-free, perpetual and irrevocable license.
Closing is subject to customary conditions, as well as, if required,
Palatin
s delivery of financial statements to be filed by the Company with the Securities and Exchange Commission (
SEC
) pursuant to Rule 3-05 of Regulation S-X.
The Company and Palatin have made customary representations and warranties and have agreed to certain customary covenants, including confidentiality and indemnification.
The License Agreement expires on the date of expiration of all royalty obligations due thereunder unless earlier terminated in accordance with the agreement. If any of the closing conditions have not been met within 120 days of the date of signing of the License Agreement, the Company has the right to terminate the License Agreement upon ten days written notice to Palatin. In addition, the Company has the right to terminate the License Agreement without cause, in its entirety or on a product-by-product and country-by-country basis upon at least 180 days prior written notice to Palatin. Either party may terminate the License Agreement for cause if the other party materially breaches or defaults in the performance of its obligations, and, if curable, such material breach remains uncured for 90 days.
The foregoing is only a summary of the material terms of the License Agreement and does not purport to be a complete description of the rights and obligations of the parties under such agreement. The foregoing summary is qualified in its entirety by reference to the available text of the License Agreement, a redacted copy of which the Company expects to file as an exhibit to its Annual Report on Form 10-K for the fiscal year ended December 31, 2016.