Item 1.01 Entry Into a Material Definitive Agreement.
On January 12, 2020, Incyte Corporation (the "Company") entered into a
Collaboration and License Agreement (the "Collaboration Agreement") with
MorphoSys AG and MorphoSys US Inc., a wholly-owned subsidiary of MorphoSys AG
(together with MorphoSys AG, "MorphoSys"), covering the worldwide development
and commercialization of MOR208 (tafasitamab). Tafasitimab is an investigational
monoclonal antibody directed against the target molecule CD19 that is currently
in clinical development by MorphoSys. MorphoSys has exclusive worldwide
development and commercialization rights to tafasitamab under a June 2010
collaboration and license agreement with Xencor, Inc. In December 2019,
MorphoSys submitted a Biologics License Application to the U.S. Food and Drug
Administration for tafasitamab for the treatment of relapsed or refractory
diffuse large B cell lymphoma.
Under the terms of the Collaboration Agreement, the Company will receive
exclusive commercialization rights outside of the United States, and MorphoSys
and the Company will have co-commercialization rights in the United States, with
respect to tafasitamab. MorphoSys will be responsible for leading
commercialization strategy and booking all revenue from sales of tafasitamab in
the United States, and the Company and MorphoSys will both be responsible for
commercialization efforts in the United States and will share equally the
profits and losses from the co-commercialization efforts. The Company will lead
the commercialization strategy outside of the United States, and will be
responsible for commercialization efforts and book all revenue from sales of
tafasitamab outside of the United States, subject to the Company's royalty
payment obligations set forth below. The Company and MorphoSys have agreed to
co-develop tafasitamab and to share development costs associated with global and
U.S.-specific clinical trials, with the Company responsible for 55% of such
costs and MorphoSys responsible for 45% of such costs. Each company will be
responsible for funding any independent development activities, and the Company
will be responsible for funding development activities specific to its
territory. All development costs related to the collaboration will be subject to
a joint development plan.
The Company has agreed to pay MorphoSys an upfront non-refundable payment of
$750 million. MorphoSys will be eligible to receive up to $740 million in future
contingent development and regulatory milestones and up to $315 million in
commercialization milestones as well as tiered royalties ranging from the
mid-teens to mid-twenties of net sales outside of the United States. MorphoSys'
right to receive royalties in any particular country will expire upon the last
to occur of (a) the expiration of patent rights in that particular country, (b)
a specified period of time after the first post-marketing authorization sale of
a licensed product comprising tafasitamab in that country, and (c) the
expiration of any regulatory exclusivity for that licensed product in that
country.
The Collaboration Agreement includes various representations, warranties,
covenants, indemnities and other provisions customary for transactions of this
nature. The Collaboration Agreement will continue until the termination of the
Collaboration Agreement in accordance with its terms. The Collaboration
Agreement may be terminated, following a specified time period of multiple
years, by the Company for convenience, subject to a specified notice period. The
Collaboration Agreement may also be terminated by either party under certain
other circumstances, including material breach, as set forth in the Agreement.
The effectiveness of the Collaboration Agreement is conditioned on the early
termination or expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 as well as clearance by the German and
Austrian antitrust authorities; however, certain confidentiality and antitrust
filing provisions became effective upon execution of the Collaboration
Agreement.
In addition, under the Collaboration Agreement and pursuant to a related
purchase agreement (the "Purchase Agreement"), the Company has agreed to
purchase American Depositary Shares ("ADSs"), each representing 0.25 of an
ordinary share of MorphoSys AG, for an aggregate purchase price of $150 million
(such ADSs to be purchased, the "New ADSs"). The actual number of New ADSs to be
purchased will be determined by reference to the market price of the ADSs around
the time of issuance and the price per New ADS will represent a premium to the
market price of the ADSs on the execution date of the Collaboration Agreement.
Under the Purchase Agreement, the Company has agreed, subject to limited
exceptions, not to sell or otherwise transfer any of the New ADSs for an
18-month period. Closing of the purchase of the New ADSs is subject to customary
conditions, as well as the effectiveness of the Collaboration Agreement.
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The foregoing descriptions of the Collaboration Agreement and Purchase Agreement
do not purport to be complete and are qualified in their entirety by reference
to such agreements, copies of which the Company expects to file as exhibits to
the Company's Quarterly Report on Form 10-Q for the quarter ending March 31,
2020.
Item 7.01 Regulation FD Disclosure.
On January 13, 2020, the Company and MorphoSys issued a press release relating
to the Collaboration Agreement. A copy of the press release is furnished
herewith as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release issued by Incyte Corporation and MorphoSys AG
dated January 13, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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