Item 1.01
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Entry into a Material Definitive Agreement.
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On August 8, 2019, Aquinox Pharmaceuticals, Inc. (
Aquinox
) completed its transaction with Neoleukin Therapeutics, Inc., a Delaware
corporation (
Neoleukin
), and Apollo Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Aquinox (
Merger Sub
) in accordance with the terms of the Agreement and Plan of Merger, dated as of
August 5, 2019 (the
Merger Agreement
). Pursuant to the Merger Agreement, the Merger Sub merged with and into Neoleukin (the
Merger
), with Neoleukin surviving the Merger as a wholly-owned subsidiary of
Aquinox.
As a result of the Merger, the following agreement and arrangement effectively became the agreement and arrangement of Aquinox.
Exclusive
Start-up
License Agreement with the University of Washington
On July 8, 2019, Neoleukin entered into an Exclusive License Agreement with the University of Washington (
UW
), under which UW (on
behalf of itself and Stanford University) granted Neoleukin an exclusive worldwide license under certain patent rights, to make, have made, use, offer to sell, sell, offer to lease or lease, import, export or otherwise offer to dispose of licensed
products in all fields of use, and a nonexclusive worldwide license to use certain
know-how.
The foregoing licenses are sublicenseable by Neoleukin without UWs consent, subject to certain limited
conditions.
As consideration for the licensed rights, Neoleukin issued shares of common stock to UW, representing five percent of the Companys
fully-diluted capitalization on the date on which the Exclusive License Agreement was executed. In addition, Neoleukin agreed to issue additional shares of common stock to UW sufficient to ensure UW maintains its ownership percentage of
Neoleukins fully-diluted capitalization, until Neoleukin raised a certain amount of equity capital. Pursuant to the agreement, Neoleukin also granted to UW an assignable right to participate in any future sale of equity securities by
Neoleukin, subject to certain exclusions. Additionally, Neoleukin is required to pay UW: (i) an annual maintenance fee starting in January 2022 (but excluding any year in which minimum annual royalties are paid); (ii) up to $875,000 in combined
development and regulatory milestone payments with respect to each distinct class of licensed product; (iii) up to $10.0 million in combined commercial milestone payments based on cumulative net sales of licensed products within each
distinct class of licensed product; (iv) a low single digit royalty on net sales of licensed products sold by Neoleukin and its sublicensees, which may be subject to reductions, and subject to minimum annual royalty payments following the first
commercial sale of a licensed product; (v) a certain percentage of any sublicense consideration (other than royalties) Neoleukin receives from sublicensees, ranging from 50% to low single digit percentages based on the stage of development at
the time the sublicense is executed; and (vi) a certain percentage of consideration Neoleukin receives from an acquisition of Neoleukin or its assets, ranging from 50% to zero based on the stage of development at the relevant time. Neoleukin is
obligated to pay royalties on a
country-by-country
basis until the expiration of the last valid claim within the licensed patent rights in such country.
The agreement will expire upon the expiration of the last valid claim within the licensed patent rights. Neoleukin may terminate the agreement upon prior
written notice to UW. UW may terminate the agreement by a specified number of days notice if Neoleukin permanently ceases operations, becomes insolvent or similar, or if Neoleukin challenges the validity of the licensed patent rights. In
addition, UW may terminate the agreement for material breach that is not cured within a specified number of days, which cure period is to be at least doubled if Neoleukin is proceeding diligently to cure the default.
The foregoing description of the License Agreement is not complete and is qualified in its entirety by reference to the document attached hereto as
Exhibit
10.1
, which is incorporated herein by reference.