Item 1.01
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Entry into a Material Definitive Agreement.
|
Collaboration
On February 13, 2018, Nektar Therapeutics, a Delaware corporation (Nektar), entered into a Strategic Collaboration Agreement (the
Collaboration Agreement) with Bristol-Myers Squibb Company, a Delaware corporation (BMS). Pursuant to the Collaboration Agreement, Nektar and BMS will jointly develop
NKTR-214,
an
IL-2
based CD122-biased agonist
(NKTR-214),
including, without limitation, in combination with BMSs
Opdivo
®
(nivolumab) and
Opdivo
®
plus
Yervoy
®
(ipilimumab), and other compounds of BMS, Nektar, or any third party. The parties have agreed to jointly commercialize
NKTR-214
on a worldwide basis.
Under the terms of the Collaboration Agreement, BMS will make a
non-refundable
upfront cash payment of
$1 billion to Nektar. Nektar is eligible to receive additional cash payments of a total of up to $1.43 billion upon achievement of certain development and regulatory milestones and a total of up to $350 million upon achievement of
certain sales milestones. Nektar will book all worldwide sales and revenue for
NKTR-214.
Nektar and BMS will share global commercialization profits and losses for
NKTR-214,
with Nektar sharing 65% and BMS sharing 35% of the net profits and losses. For any commercialization losses incurred in any calendar quarter during the 12 calendar quarters after the first commercial
sale of NKTR-214 (the First Commercial Sale), an additional 15% of such loss will be borne by BMS (i.e. the parties will share losses 50/50 basis) and carried over to be set off against Nektars 65% of the net profits in the
subsequent quarters. BMS will lead commercialization for combinations of NKTR-214 with BMS proprietary medicines, and Nektar will lead all other commercialization efforts for NKTR-214. Nektar will have the final decision-making authority regarding
the pricing for
NKTR-214.
NKTR-214
will be sold on a stand-alone basis and there will be no fixed-dose combinations or
co-packaging
without the consent of both parties.
Pursuant to a Share Purchase Agreement entered
into by Nektar and BMS on February 13, 2018 (the Purchase Agreement), BMS has also agreed to purchase $850 million of shares of Nektar common stock (Common Stock) at a purchase price of $102.60 per share
representing a 30% premium to the volume weighted average price of Common Stock over the 20 trading days prior to the date of execution of the Purchase Agreement. The closing of the share purchase under the Purchase Agreement is subject to the
expiration or early termination of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Clearance) and other customary closing conditions. The closings of the Collaboration
Agreement and the Share Purchase Agreement will be simultaneous and are expected to occur during the second quarter of 2018 (the date of the closings, the Closing Date). A summary of the Purchase Agreement and the transactions
contemplated thereby is set forth in the section titled
Equity Placement
below in this Item 1.01.
Nektar and BMS
will collaborate to develop and conduct clinical studies of
NKTR-214
pursuant to a joint development plan, which initially includes a series of registration-enabling trials in more than 20 indications in nine
tumor types and may be updated and expanded only upon mutual agreement of the parties. The parties will share the development costs for
NKTR-214
in combination regimes based on each partys relative
ownership interest in the compounds included in the regimen. For example, the parties will share development costs for
NKTR-214
in combination with
Opdivo
®
, BMS 67.5% and Nektar 32.5%, for
NKTR-214
in a triplet combination with
Opdivo
®
and
Yervoy
®
, BMS 78% and Nektar 22%, and for
NKTR-214
combined with
NKTR-262,
BMS 17.5% and Nektar 82.5%. Nektars share of such development costs are limited to an annual cap of $125 million. If Nektars share of development costs exceeds the annual cap in any given
calendar year, Nektar will reimburse BMS for an amount equal to any such unreimbursed excess (i) in cash payment to BMS in any subsequent year before the First Commercial Sale, during which year the development costs are lower than the annual
cap, but only to the extent of such difference, and (ii) by reducing Nektars share of the net profits of
NKTR-214
sales following the First Commercial Sale, subject to certain annual limitations on
the amount to be reduced, unless Nektar voluntarily chooses to reimburse BMS in advance of the foregoing schedule. In the event that
NKTR-214
does not achieve regulatory approval after completion of all
development efforts, BMS will be responsible for any excess development costs that have not been repaid by Nektar.
During the period from
the Closing Date until the later of (i) the First Commercial Sale or (ii) the third anniversary of the Closing Date (the Limited Indication Exclusivity Term), neither BMS nor Nektar will develop a therapy using an
IL-2
agonist in combination with a small or large molecule that binds to the
PD(L)-1
target (and in certain indications the anti-CTLA4 target), in indications included in the
joint development plan (each, a Competing Combination), whether on its own or in collaboration with any third party. During the three years after the end of the Limited Indication Exclusivity Term, neither Nektar nor BMS may develop a
Competing Combination in collaboration with any third party, but each party may do so
on its own as a stand-alone entity and, if such party is acquired, the acquiring party is free to develop a Competing Combination with its proprietary compounds. If a registration-enabling study
included in the joint development plan does not have the first patient enrolled prior to the date which is 14 months from the effective date of the Collaboration Agreement (subject to allowable delays), the indication covered by that study is no
longer subject to exclusivity. Other than as described in the foregoing, Nektar may independently develop and commercialize
NKTR-214
either alone or in combination with other Nektar proprietary compounds or
third party compounds.
Nektar will be solely responsible for
NKTR-214
manufacturing. BMS has an
option to obtain the right to manufacture
NKTR-214
following a change of control of Nektar and under certain other limited circumstances. Nektar and BMS will be responsible for 65% and 35%, respectively, of
the
NKTR-214
clinical development manufacturing costs. BMS will contribute its proprietary compounds to the joint development plan at no cost to the collaboration and at no cost to Nektar for combination with
NKTR-214
and other Nektar proprietary assets subject to certain quantity limitations.
In the event of a
change of control of either party, the acquiring party is bound by all the terms and conditions of the Collaboration Agreement with no economic or other adjustments. If following a change of control of Nektar, the acquiring entity has a proprietary
medicine that is approved or in registrational clinical trials with the same mechanism of action as a BMS proprietary medicine combined with
NKTR-214
under the Collaboration Agreement, then certain
commercialization information sharing rights will end following the acquisition, provided that the right of the acquiring party to promote
NKTR-214
for all of its approved indications, including with BMS
proprietary medicines, remains unaffected.
Each party will grant to the other party a
non-exclusive,
worldwide,
non-transferable
and royalty-free license under the licensing partys related patent rights, technology and regulatory documentation for
the sole purpose of developing
NKTR-214
under the Collaboration Agreement. For the sole purpose of allowing the parties to exercise their commercialization rights and responsibilities under the Collaboration
Agreement, each party will also grant to the other party a
co-exclusive
(in the case of Nektars license) or
non-exclusive
(in the case of BMSs license),
worldwide,
non-transferable
and royalty-free license under the licensing partys related patent rights, technology and regulatory documentation.
The Collaboration Agreement will become effective on the Closing Date and expire upon the expiration of (i) the last to expire patent
rights covering a Nektar Compound with respect to the parties obligation to collaborate in the development of
NKTR-214
and (ii) all payment obligations under the Collaboration Agreement for all
other matters. The Collaboration Agreement may be terminated upon either partys uncured material breach or bankruptcy, and a clinical trial may be terminated early for a material safety issue or clinical hold. BMS has the right to terminate
the Collaboration Agreement in its entirety (but not in part) without cause at any time (a) upon a
six-month
prior notice after the completion or discontinuation of all of the clinical trials listed in
the joint development plan in the event no regulatory approval is obtained on the basis of the results of any of such trials, (b) upon a
six-month
prior notice after the First Commercial Sale in the event
of a change of control of Nektar or (c) upon a
12-month
prior notice after the first anniversary of the First Commercial Sale.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Collaboration Agreement, a copy of
which, subject to any applicable confidential treatment, will be filed as an exhibit to Nektars Quarterly Report on Form
10-Q
for the fiscal quarter ending March 31, 2018.
Equity Placement
On February 13,
2018, Nektar entered into the Purchase Agreement with BMS, pursuant to which Nektar has agreed to sell to BMS, at the Closing, 8,284,600 shares of Common Stock (the Shares) for total cash consideration of $850 million, or $102.60
per share of Common Stock representing a 30% premium to the volume weighted average price of Common Stock over the 20 trading days prior to the date of execution of the Purchase Agreement. The Purchase Agreement contains customary representations,
warranties and covenants of each party. Prior to the Closing, the Purchase Agreement may be terminated (i) by mutual written consent of both parties, or (ii) by either party if the Closing has not occurred within nine months of the date of
the Purchase Agreement.
Concurrently with the entering into of the Purchase Agreement, Nektar entered into with BMS an Investor Agreement
(the Investor Agreement) on February 13, 2018. Pursuant to the Investor Agreement, BMS will not dispose of any of the Shares for a period commencing on the Closing Date through the fifth anniversary thereof (the
Lock-Up
Period). In addition, BMS will be bound by standstill provisions for a period from the date of the Investor Agreement through the fifth anniversary of the Closing Date (the Standstill
Term), unless earlier terminated pursuant to the Investor Agreement. Subject to certain exceptions, the standstill provisions generally prevent BMS from acquiring beneficial ownership of shares of Common Stock, calling any meeting of
Nektars stockholders or proposing for election a director whose nomination has not been approved by Nektars board of directors (the Board of Directors), supporting a third party tender or other offer, soliciting proxies in
opposition to the recommendation of the Board of Directors, proposing any merger, tender offer, or other extraordinary transactions with respect to Nektar, acting in concert or negotiating with a
third party in taking such actions, or requesting to amend or waive any of these restrictions. The standstill provisions will terminate upon the expiration or termination of the Collaboration Agreement (unless due to an uncured material breach by
BMS), any person becoming the beneficial owner of 35% or more of Nektars outstanding shares and filing a Schedule 13D declaring any control purpose, any person commencing a tender or exchange offer which if consummated, would make such person
the beneficial owner of 35% or more of Nektars outstanding shares and the Board of Directors does not recommend against Nektars stockholders tendering shares into, or Nektar entering into a definitive agreement that would result in a
change of control of Nektar. The standstill provisions do not prohibit BMS from submitting to Nektar at any time a non-public proposal to acquire Nektar or all or substantially all of its assets.
Further, during the Standstill Term, unless earlier terminated upon a change of control of Nektar or certain other transactions, BMS has
agreed to vote all of its shares of Nektar in accordance with the recommendations of the Board of Directors except in connection with certain change of control transactions in which BMS participates in the transaction process.
For five years following the expiration of the
Lock-Up
Period, BMS will have two demand rights to
require Nektar to prepare and file with the Securities and Exchange Commission (the SEC) a registration statement on Form
S-3
or other appropriate form. If Nektar proposes to grant to any other
stockholders the right to include their shares of capital stock of Nektar in a registration statement for the sale by Nektar of its equity securities, BMS will be entitled to participate in such offering on a pro rata basis, subject to customary
exceptions. Nektar has agreed to indemnify BMS under the registration statement for customary liabilities and to pay registration fees and expenses. The registration rights of BMS under the Investor Agreement will terminate if there are no
registrable securities outstanding or BMS and affiliates together own less than 0.5% of the outstanding shares of Common Stock.
The
foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form
8-K,
and the
Investor Agreement, a copy of which, subject to any applicable confidential treatment, will be filed as an exhibit to Nektars Quarterly Report on Form
10-Q
for the fiscal quarter ending March 31,
2018.