SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 4, 2019
Infinity Pharmaceuticals, Inc.
(Exact name of registrant as specified in charter)
(State or other jurisdiction
|784 Memorial Drive, Cambridge, MA||02139|
|(Address of principal executive offices)||(Zip Code)|
Registrants telephone number, including area code: (617) 453-1000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|Item 1.01|| |
Entry into a Material Definitive Agreement
Transaction with Healthcare Royalty Partners
Purchase and Sale Agreement
On March 5, 2019, Infinity Pharmaceuticals, Inc. (the Company) entered into a purchase and sale agreement (the Purchase Agreement) with HealthCare Royalty Partners III, L.P. (the Purchaser) providing for the acquisition by the Purchaser of the Companys interest in certain royalty payments (the Purchased Assets) based on worldwide annual net sales of products containing IPI-145 (such products, collectively, the Licensed Product and such acquisition, the Transaction) pursuant to that certain Amended and Restated License Agreement, dated as of November 1, 2016 (the License Agreement), by and between the Company and Verastem, Inc. (Verastem). Following satisfaction of customary closing conditions (the date of such satisfaction, the Closing Date), the Company will receive $30.0 million (the Closing Date Payment), less certain transaction expenses. The Company will also be entitled to receive up to $15.0 million in milestone payments based on the achievement of certain pre-specified net sales levels of the Licensed Product in the United States in the calendar year 2019 and up to an additional $5.0 million milestone payment based on the achievement of a certain pre-specified net sales level of the Licensed Product in the United States in the calendar year 2020 (the milestone payments collectively referred to as the Sales Milestone Payments). The Sales Milestone Payments, if paid, together with the Closing Date Payment are collectively referred to herein as the Investment Amount.
Pursuant to the Purchase Agreement, the Companys sale of the Purchased Assets shall be subject to an increasing cap amount equal to, for each applicable time period specified below, a multiple, as set forth below, of (a) the Investment Amount plus (b) 100% of the reasonably incurred Applicable Purchaser Expenditures (as defined below) (the Cap Amount):
|Time Period||Cap Amount|
From the Closing Date until June 30, 2022
From July 1, 2022 through June 30, 2023
From July 1, 2023 through June 30, 2024
From July 1, 2024 through June 30, 2025
On any date that aggregate payments made to the Purchaser with respect to the Purchased Assets based on worldwide, annual net sales of the Licensed Product equal the Cap Amount applicable to such date (the Cap Date), the Purchase Agreement will automatically terminate and all rights to the royalty stream with respect to the Licensed Product will revert to the Company (the Reversion); provided, however, that if the Cap Date has not been achieved by June 30, 2025, there shall be no Cap Date, and the term of the Purchase Agreement shall continue through the term of the License Agreement. Prior to June 30, 2025, the Company shall have the right, but not the obligation, at any time prior to the Cap Date (if applicable), to cause the occurrence of the Cap Date (including for the purpose of determining the termination date of the Purchase Agreement) by paying to the Purchaser an amount equal to (i) the then-applicable Cap Amount less (ii) 100% of all payments made in respect of the Purchased Assets received by the Purchaser pursuant to the License Agreement or the Purchase Agreement through the date of such payment.
The Company will retain in full its obligations to make payments to Intellikine LLC (Intellikine), a subsidiary of Takeda Pharmaceutical Company Limited, pursuant to the Companys agreement with Intellikine, as amended. Verastem will continue to pay the Company royalties with respect to net sales of the Licensed Product that the Company is obligated to pay to Purdue Pharmaceutical Products L.P. and Mundipharma International Corporation Limited and the Company will retain in full its obligations to make the royalty payments to those entities pursuant to the Companys separate agreements with those entities.
If the License Agreement is terminated prior to the Cap Date, the Company shall use commercially reasonable efforts, at the Purchasers request, in consultation and cooperation with the Purchaser, for a prespecified time period (the Initial Search Period), to locate, negotiate and secure a license of the intellectual property rights with respect to the Licensed Product (any such license, a New Arrangement); provided, that the Purchaser shall have the right to consent in writing to any New Arrangement, which approval shall not be unreasonably withheld or delayed. Following the expiration or termination of the Initial Search Period, the Company shall use commercially reasonable efforts to provide cooperation and assistance to the Purchaser in connection with the Purchasers efforts to locate, negotiate and secure a New Arrangement; provided, that the Company shall have the right to consent in writing to any New Arrangement, which approval shall not be unreasonably withheld or delayed.
The Purchaser shall bear all expenses in connection with any obligations set forth in the Purchase Agreement regarding protection and enforcement of certain intellectual property underlying the Licensed Product and efforts in connection with the location, negotiation and securing of a New Arrangement, including the reimbursement of the Company for all out-of-pocket third-party expenses of the Company (including reasonable attorneys fees) incurred by the Company in connection with such activities (collectively, the Applicable Purchaser Expenditures).
The Purchase Agreement contains other customary terms and conditions, including representations and warranties, conditions precedent, indemnities and covenants, including covenants that, among other things, require the Company to provide certain information to the Purchaser with respect to the License Agreement and the Licensed Product and to cooperate with the Purchaser, at the Purchasers expense, to take certain actions under the License Agreement and otherwise with respect to the Licensed Product to protect the Purchasers rights to receive the royalty payments. These covenants are subject to a number of important exceptions and qualifications.
In addition to the Cap Date, the Purchase Agreement (a) may be terminated (i) by mutual agreement of the Company and the Purchaser and (ii) by either of the Company or the Purchaser, if the Transaction does not close within 30 days of the date of the Purchase Agreement, and (b) shall automatically terminate upon the expiration of the Companys and Verastems obligations to each other under the License Agreement (for a reason other than early termination thereof).
The above description of the Purchase Agreement is qualified in its entirety by reference to the Purchase Agreement, which the Company intends to file as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
Protective Rights Agreement
As part of the Transaction, on the Closing Date, the Company is obligated to enter into a Protective Rights Agreement (the PRA) with HCR Collateral Management, LLC, as agent for the Purchaser (the Agent). Under the PRA, the Company is obligated to grant to the Agent, among other things, a security interest in all of the Companys right, title and interest in, to and under the Purchased Assets, certain patents owned by the Company and underlying the Licensed Product, and certain related rights and proceeds thereof. The PRA will not give a security interest in any other Company assets and terminates upon termination of the Purchase Agreement, at which time all rights will revert to the Company.
The rights of the Agent under the PRA are exercisable (a) in the event that the Transaction is characterized by a court of competent jurisdiction as a loan, rather than a sale; (b) upon the occurrence of certain insolvency events with respect to, or breaches of the Purchase Agreement by, the Company that have caused or would reasonably be expected to cause: (i) the invalidity of the security interest pursuant to the PRA or the Purchase Agreement, (ii) impairment of a material portion of the collateral or (iii) termination of the License Agreement; and (c) upon any breach by the Company of its obligations to locate, negotiate and secure a New Arrangement or to provide cooperation and assistance to the Purchaser in connection therewith.
The above description of the PRA is qualified in its entirety by reference to the PRA, which the Company intends to file as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
On March 4, 2019 (the INK Amendment Effective Date), the Company entered into Amendment No. 4 to Amended and Restated Development and License Agreement (the INK Amendment) with Intellikine. The INK Amendment amends the Companys Amended and Restated Development and License Agreement, effective as of December 24, 2012 (as amended on July 29, 2014, on September 27, 2016, and on July 26, 2017 and by the INK Amendment, the Existing INK Agreement) with Intellikine (as successor to Intellikine, Inc.).
Under the Existing INK Agreement, the Company is obligated to pay Intellikine 50% of the royalties otherwise payable to the Company pursuant to the License Agreement, subject to certain exceptions. Pursuant to the INK Amendment, Intellikine has consented to the sale of the Purchased Assets, has agreed to forego its rights to 50% of the royalties during the period prior to the Reversion and has agreed not to seek any payment from the Purchaser with respect to the royalties owed to Intellikine in exchange for payments equal to (a) 25% of the Investment Amount, net of 25% of the expenses incurred by the Company in connection with the Transaction (the aggregate amount of such expenses shall be capped at $4.0 million), within 15 days of receipt of any portion of the Investment Amount by the Company and (b) 25% of the royalties that would have been payable to the Company but for the consummation of the Transaction, no later than the date such payments would have been received by the Company under the License Agreement (the Interim Obligation). The Company also has the right to extinguish the Interim Obligation by payment to Intellikine of an amount equal to (i) the amount paid to Intellikine under clause (a) of the foregoing sentence multiplied by the multiple set forth in the table below corresponding to the time period in which such extinguishing payment is made, minus (ii) all payments made to Intellikine pursuant to the Interim Obligation:
From the INK Amendment Effective Date until June 30, 2022
From July 1, 2022 through June 30, 2023
From July 1, 2023 through June 30, 2024
From July 1, 2024 through June 30, 2025
The Interim Obligation shall expire upon the occurrence of the Reversion, at which time the Companys obligations under the Existing INK Agreement to pay to Intellikine 50% of the royalties payable under the License Agreement shall be reinstated.
The above description of the INK Amendment is qualified in its entirety by reference to the INK Amendment, which the Company intends to file as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ending March 31, 2019.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information provided in Item 1.01 relating to the Transaction is hereby incorporated by reference into this Item 2.03.
Item 8.01 Other Events
On March 6, 2019, the Company issued a press release announcing the Transaction. The full text of this press release is filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The information contained on the websites referenced in the press release is not incorporated herein.
Item 9.01 Exhibits and Financial Statements
|99.1||Press Release dated March 6, 2019.|
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|INFINITY PHARMACEUTICALS, INC.|
|Date: March 6, 2019||By:||/s/ Seth A. Tasker|
|Seth A. Tasker|
|Vice President and General Counsel|
Infinity Pharmaceuticals Announces Royalty Monetization of COPIKTRA
for $30 Million Gross Proceeds
Infinity Retains $22.5 Million in Gross Proceeds After Sharing with Takeda
Cambridge, MA March 6, 2019 Infinity Pharmaceuticals, Inc. (NASDAQ: INFI) announced today a royalty monetization with HealthCare Royalty Partners (HCR) for the right to receive certain royalty payments based on worldwide annual net sales of COPIKTRA (duvelisib), payable by Verastem. Under the agreement, HCR has agreed to pay Infinity a $30 million upfront payment and up to $20 million in potential milestone payments. The transaction is expected to close by March 11, 2019.
This non-dilutive financing provides Infinity with immediate and substantial capital to support our expansion of the breadth and depth of IPI-549 development, said Adelene Perkins, Chief Executive Officer of Infinity. We continue to be focused on creating value for patients and shareholders as we continue to progress the development of IPI-549 into additional combinations, indications, lines of therapy and later-stage trials.
The right to receive royalty payments will revert to Infinity if HCR receives a multiple of its total investment amount and certain reasonably incurred expenses paid by HCR, up to a prespecified cap amount which increases over time. If the cap amount is met, Infinity will continue to receive COPIKTRA royalty revenue until the revenue stream ends and if the cap amount is not met prior to June 30, 2025, the COPIKTRA royalty revenue will not revert to Infinity and will instead be paid to HCR until the revenue stream ends.
In connection with Infinitys monetization of its interest in the royalty stream, Infinity has granted to HCR Collateral Management, LLC a security interest in all of the Companys interest in the royalty stream and other specified collateral, including certain patents owned by Infinity underlying duvelisib and other related rights. HCR Collateral Management may exercise its rights with respect to the collateral under specified limited circumstances.
Under Infinitys license agreement with Intellikine, LLC, a subsidiary of Takeda Pharmaceuticals Company Limited, Infinity and Takeda would share equally in the royalties due from Verastem. In connection with the royalty monetization, Infinity entered into an amendment of its license agreement with Takeda pursuant to which Takeda has instead agreed to receive a
portion of the total investment amount and Infinity will continue to pay Takeda a percentage of the royalties that would have been payable to Infinity but for the consummation of the transaction. If the right to receive royalty payments from Verastem reverts to Infinity, Infinity will thereafter go back to the original terms of its license agreement.
Verastem will continue to pay directly to Infinity royalties that Infinity is obligated to pay to Purdue Pharmaceutical Products L.P. and Mundipharma International Corporation Limited and Infinity will retain in full its obligations to make the royalty payments to those entities pursuant to its separate agreements with those entities.
For a further description of the foregoing transactions, please refer to Infinitys Current Report on Form 8-K which was filed with the Securities and Exchange Commission on March 6, 2019.
Morgan Stanley & Co. LLC acted as sole structuring agent on the monetization.
About COPIKTRA (duvelisib) Royalties
COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K), indicated for the treatment of adult patients with relapsed or refractory chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL) after at least two prior therapies and relapsed or refractory follicular lymphoma (FL) after at least two prior systemic therapies. Infinity licensed worldwide development and commercialization rights to COPIKTRA to Verastem, Inc. COPIKTRA is also being developed by Verastem Oncology for the treatment of peripheral T-cell lymphoma (PTCL), for which it has received Fast Track status, and is being investigated in combination with other agents through investigator-sponsored studies.
About Healthcare Royalty Partners HealthCare Royalty Partners (HCR) is a private investment firm that purchases royalties and uses debt-like structures to invest in commercial or near-commercial stage life science assets. HCR has $4.4 billion in cumulative capital commitments with offices in Stamford (CT), San Francisco, Boston and London. For more information, visit www.healthcareroyalty.com.
Infinity is an innovative biopharmaceutical company dedicated to advancing novel medicines for people with cancer. Infinity is advancing IPI-549, an oral immuno-oncology development candidate that selectively inhibits PI3K-gamma. A Phase 1/1b study in approximately 225 patients with advanced solid tumors is ongoing and Infinity intends to initiate MARIO-275, a combination study of IPI-549 with Opdivo® in I/O naïve urothelial cancer (UC) patients, as well as initiate the first IPI-549 combination study in front-line advanced cancer patients, in 2019. For more information on Infinity, please refer to Infinitys website at www.infi.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements include those regarding: the expected financial and other benefits of Infinitys royalty monetization of COPIKTRA; Infinitys plans to expand of the breadth and depth of IPI-549 development through additional combinations, indications, lines of therapy and later-stage trials, its projected timing for initiating additional trials of IPI-549, and its expectations regarding the potential clinical benefits of IPI-549; and Infinitys ability to execute on its strategic plans. Managements expectations and such forward-looking statements are subject to numerous important factors, risks and uncertainties that may cause actual events or results to differ materially from Infinitys current expectations, including the risks described under the caption Risk Factors included in Infinitys quarterly report on Form 10-Q filed with the Securities and Exchange Commission (SEC) on November 5, 2018, and other filings filed by Infinity with the SEC. Any forward-looking statements contained in this press release speak only as of the date hereof, and Infinity expressly disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Stephanie Ascher, Stern Investor Relations, Inc.
212-362-1200 or email@example.com