Item 1.01Entry into a Definitive Material Agreement.
On
Under the terms of the Commercial Services Agreement, the Company maintains
ownership of the Gimoti New Drug Application ("NDA"), as well as legal,
regulatory, and manufacturing responsibilities for Gimoti. Eversana will utilize
its internal sales organization along with other commercial functions for market
access, marketing, distribution and patient support services. The Company will
record sales for Gimoti to Eversana's third party logistics division and retain
more than 80% of product profits. Eversana will receive reimbursement of its
commercialization costs pursuant to an agreed upon budget and a percentage of
product profits in the mid-to-high teens. Product profits are the net sales (as
defined in the agreement) of Gimoti, less (i) reimbursed commercialization
costs, (ii) manufacturing and administrative costs set at a fixed percentage of
net sales, and (iii) third party royalties. During the term of the agreement,
Eversana agreed to not market, promote, or sell a competing product in
In addition, in connection with the Commercial Services Agreement, Eversana and
the Company have entered into a loan agreement, dated
The Company may prepay any amounts borrowed under the Credit Facility at any time without penalty or premium. The maturity date of all amounts, including interest, borrowed under the Credit Facility will be 90 days after the expiration or earlier termination of the Commercial Services Agreement. The Credit Facility also includes events of default, the occurrence and continuation of which provide Eversana with the right to exercise remedies against the Company and the collateral securing the loans under the Credit Facility, including our cash. These events of default include, among other things, the Company's failure to pay any amounts due under the Credit Facility, an uncured material breach of the representations, warranties and other obligations under the Credit Facility, the occurrence of insolvency events and the occurrence of a change in control.
The term of the Commercial Services Agreement is from
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approval, if any, or the net profit is negative for any two consecutive calendar
quarters beginning with the first full calendar quarter 24 months following
commercial launch; or if there is a change in applicable laws that makes
operation of the services as contemplated under the agreement illegal or
commercially impractical. Either party may also terminate the Commercial
Services Agreement upon a change of control of the Company, subject, in the
event that the Company initiates such termination, to a one-time payment equal
to between two times and one times annualized service fees paid by the Company
under the Commercial Services Agreement, with such amount based on which year
after commercial launch the change of control occurs. In addition, Eversana may
terminate the Commercial Services Agreement if Gimoti is not approved by FDA by
The foregoing descriptions of the terms of the Commercial Services Agreement and
loan agreement governing the Credit Facility do not purport to be complete, and
are qualified in their entirety by reference to the complete copy of such
agreements which the Company expects to file as exhibits to its Quarterly Report
on Form 10-Q for the period ending
Item 1.02Termination of a Definitive Material Agreement.
On
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information with respect to the Credit Facility set forth under Item 1.01 above is incorporated herein by reference.
Safe Harbor Statement
The Company cautions you that statements included in this report that are not a
description of historical facts are forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as "may," "will,"
"should," "expect," "plan," "anticipate," "could," "intend," "target,"
"project," "contemplates," "believes," "estimates," "predicts," "potential" or
"continue" or the negatives of these terms or other similar expressions. These
statements are based on the Company's current beliefs and expectations. These
forward-looking statements include statements regarding: the potential FDA
approval of the Gimoti NDA and the expected commercialization activities to be
conducted by Eversana and product profits following any such approval; and the
expected availability of the Credit Facility following any approval of the
Gimoti NDA. The inclusion of forward-looking statements should not be regarded
as a representation by the Company that any of its plans will be achieved.
Actual results may differ from those set forth in this report due to the risks
and uncertainties inherent in the Company's business, including, without
limitation: the potential for FDA to delay the PDUFA target goal date due to
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timeframe the Company expects, or at all, including as a result of an event of
default under the terms of the loan agreement; the Company's dependence on third
parties for the manufacture of Gimoti and analysis of the manufacturing data;
the Company's dependence on Eversana to successfully commercialize Gimoti; the
Company is entirely dependent on the success of Gimoti; the Company will require
substantial additional funding to continue its operations into the second
quarter of 2020, and may be unable to raise capital or obtain funds when needed,
including to fund ongoing operations; the Company could face significant
additional costs due to litigation or other events; and other risks detailed in
the Company's periodic reports it files with the
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