Item 1.01. Entry into a Material Definitive Agreement.
Funding Agreement
On December 1,
2019, Kodiak Sciences Inc. and its subsidiary Kodiak Sciences GmbH (the Company) entered into a funding agreement (the Funding Agreement) with Baker Bros. Advisors, LP, on behalf of its affiliate (together, BBA),
pursuant to which BBA purchased the right to receive a capped 4.5% royalty on future net sales of the Companys anti-VEGF antibody biopolymer conjugate therapy known as KSI-301 in exchange for
$225,000,000 in committed development funding payable to the Company (the Funding Amount). Unless earlier terminated or re-purchased by the Company, the royalty terminates upon the date that BBA
has received an aggregate amount equal to 4.5 times the Funding Amount paid to the Company. Under the terms of the agreement, BBA is required to pay to the Company the first $100,000,000 of the Funding Amount at the closing of the Funding
Transaction (expected to occur on January 10, 2020) and the remaining $125,000,000 of the Funding Amount following the achievement of, among other things, 50% enrollment in each of (i) the planned Phase 3 clinical trial of KSI-301 for branch retinal vein occlusion and (ii) the planned Phase 3 clinical trial of KSI-301 for central retinal vein occlusion (estimated to occur in late 2020).
The Company has the option, exercisable at any point during the term of the Funding Agreement, to repurchase from BBA 100% of the
royalties due to BBA under the Funding Agreement for a purchase price equal to the Funding Amount paid to the Company as of such time times 4.5 less amounts paid by the Company to BBA.
Under the Funding Agreement, BBA also received a right to a royalty interest on future net sales of other Company products that employ an
anti-vascular endothelial growth factor A (VEGF-A) biology as a sole molecular or chemical biology (a VEGF-A Product). In the event the Company commercializes related products that contain both an anti-VEGF-A biology together with at
least one additional molecular or chemical biology(ies), BBA would have the right to receive a fractional royalty up to 2.25% for one additional molecular or chemical biology or 1.5% for two additional molecular or chemical biologies provided that
such other products are being progressed in indications for, or patient populations with, retinal vein occlusion, wet AMD or diabetic macular edema, or indications or patient populations in which KSI-301 or a VEGF-A Product has received marketing
approval. Total royalty payments under the Funding Agreement are not to exceed the cap of 4.5 times the Funding Amount paid to the Company.
The Funding Agreement was the result of a competitive process overseen by independent and disinterested members of the board of directors of
Kodiak Sciences Inc. with the assistance of outside counsel.
The Funding Agreement contains various representations and warranties,
covenants, indemnification obligations and other provisions customary for transactions of this nature.
The foregoing description of the
Funding Agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of the Funding Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form
8-K and is incorporated herein by reference.