Upfront Payment. Subject to the terms and conditions of this Agreement, Licensee will pay Company a non-refundable, non-creditable, and not subject to set-off payment in the amount of [***], which upfront payment will be due and payable to Company upon the earlier to occur of (i) within [***] following the consummation of the [***] preferred equity financing of LianBio after the Effective Date, in a single transaction or series of related transactions, which raises gross proceeds to LianBio of at least [***], and (ii) [***]. Licensee shall promptly notify Company of the occurrence of the consummation of [***] such financing.
3. Termination. The Commitment to invest (or cause to be invested) the Upfront Payment Commitment Amount and the Contingent Payment Commitment Amount shall terminate automatically and immediately upon the earliest to occur of (a) the payment of the Upfront Payment and the Contingent Payment in accordance with the Purchase Agreement, respectively, (b) the termination of the Purchase Agreement in accordance with its terms prior to the Closing, (c) the date that Roivant ceases to, directly or indirectly through its Affiliates, hold at least thirty percent (30%) of the outstanding voting securities of DSL and (d) if (i) DSL or any acquiring or surviving parent entity pursuant to a merger, consolidation, amalgamation, reorganization or similar transaction of DSL (“Change of Control”) is then publicly traded on the New York Stock Exchange, Nasdaq or another stock exchange mutually agreed between Roivant, DSL and the Seller Parties, (ii) the outstanding voting securities owned by Roivant, directly or indirectly through its Affiliates, do not constitute the largest ownership stake owned by any shareholder of DSL (measured in terms of aggregate voting power), (iii) the failure of Roivant to own the largest ownership stake in DSL under clause (ii) above did not result directly or indirectly from a sale or other disposition by Roivant or any of its Affiliates of voting securities of DSL (except in connection with a Change of Control, if, prior to such Change of Control, Roivant, directly or indirectly through its Affiliates, owned less than a majority of the outstanding voting power of DSL) and (iv) Seller Parties consent to the termination of the Commitment (such consent solely for purposes of this clause (d) not to be unreasonably withheld, delayed or conditioned). Sections 4 and 6 through 10 hereof shall survive any such termination.
(a) The Commitment shall be subject to (a) the terms and conditions of this letter agreement, (b) the execution and delivery of the Purchase Agreement by each party thereto, (c) with respect to the Upfront Payment Commitment Amount only, all conditions set forth in Section 10.1 and Section 10.2 of the Purchase Agreement being and remaining satisfied (or, if permitted by applicable law, waived by the party for whose benefit such condition exists), other than conditions that by their nature are to be satisfied at the Closing (but subject to such conditions being satisfied), and (d) with respect to the Contingent Payment Commitment Amount only, the consummation of the Closing in accordance with the terms and conditions of the Purchase Agreement (without any amendment, modification or waiver with respect thereto that would be materially adverse to Roivant).
1. Commitment. Roivant Sciences Ltd. (“Roivant”) hereby commits (the “Commitment”), on the terms and subject to the conditions and the other limitations set forth in this letter agreement, to invest (or cause to be invested) in Dermavant Sciences Ltd. (“DSL”), the sole shareholder of Buyer, directly or indirectly, whether by way of equity, debt or any combination thereof, an aggregate amount in cash equal to no less than (i) one hundred fifty million Pounds Sterling (£150,000,000) (the “Upfront Payment Commitment Amount”) for the purpose of funding Buyer’s obligation, pursuant to Section 4.1 of the Purchase Agreement, to pay the Upfront Fee and (ii) one hundred million Pounds Sterling (£100,000,000) minus (x) the aggregate amount of cash, cash equivalents and marketable investment securities having maturities of thirty (30) days or less (excluding any restricted cash) plus (y) the aggregate amount of short-term liabilities of DSL on the consolidated balance sheet of DSL, in each case as determined from the books and records of DSL prepared in accordance with generally accepted accounting principles as of the close of business at the end of the last month ending prior to the Contingent Payment Measurement Date (as defined below), as adjusted for management of DSL’s reasonable estimates of the changes to such amounts (based, in the case of clause (x), on updated account balances plus the proceeds from any financings) from such date to the Contingent Payment Measurement
Date (the “Contingent Payment Commitment Amount” and, together with the Upfront Payment Commitment Amount, the “Commitment Amounts”), for the purpose of funding Buyer’s obligation, pursuant to Section 4.2 of the Purchase Agreement, to pay the Contingent Payment. If Roivant elects to invest (or cause to be invested) the Commitment Amounts by purchasing DSL’s common shares (“Dermavant Shares”), the purchase price therefor will be, as of the applicable Measurement Date, a 20% discount to the lower of (a) the closing price of Dermavant Shares on the trading day immediately prior to the applicable Measurement Date and (b) the trailing 30-day volume-weighted average price per Dermavant Share as of the trading day immediately prior to the applicable Measurement Date, calculated on the basis of trades executed on the principal stock exchange or market between regular trading hours, as reported by Bloomberg L.P. or, if not reported thereby, another alternative source as reasonably agreed to by DSL and Roivant. DSL, Buyer and Roivant hereby agree that Roivant is required to invest (or cause to be invested) (i) the Upfront Payment Commitment Amount only to the extent that Buyer has not paid, or caused to be paid, the Upfront Payment to the Seller Parties on or prior to the date that is the third (3rd) Business Day following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated by the Purchase Agreement (the “Upfront Payment Measurement Date”) and (ii) the Contingent Payment Commitment Amount only to the extent that Buyer has not paid, or caused to be paid, the Contingent Payment to the Seller Parties on or prior to the date that is 60 days after the achievement of NDA Approval (the “Contingent Payment Measurement Date”, and together with the Upfront Payment Measurement Date, the “Measurement Dates”). Upon receipt by DSL of any of the Commitment Amounts, DSL shall promptly contribute such amounts to Buyer to the extent necessary to pay the Upfront Payment or the Contingent Payment, as applicable, and Buyer shall promptly thereafter remit payment to Seller Parties in respect of the Upfront Payment or the Contingent Payment, as applicable, pursuant to the terms of the Purchase Agreement. DSL and Buyer shall provide Seller Parties with such information as is reasonably requested for the purpose of confirming the calculation of the Contingent Payment Commitment Amount and the adequacy of the amounts contributed by Roivant to allow Buyer to pay the Upfront Payment or the Contingent Payment, as applicable.
Revenue from the collaboration agreement was $38.4 million for the first quarter of 2018, compared to none for the first quarter of 2017. This represents $42.9 million in revenue recognized from the $400 million upfront payment from the Bayer collaboration offset by $4.4 million, Loxo Oncology’s share of the joint larotrectinib co-promotion costs. Loxo Oncology recognizes revenue from the upfront payment on a proportional performance basis utilizing a calculation based on quarterly research and development spending associated with larotrectinib and LOXO-195, relative to cumulative and forecasted research and development spending on larotrectinib and LOXO-195 over the course of the collaboration agreement. As a result, the quarterly revenue recognized for the upfront payment varies from quarter to quarter. A supporting schedule that shows the different components of revenue from the collaboration agreement is included with the attached financial statements.
Non-GAAP net loss was $36.8 million for the first quarter of 2018, compared to $20.6 million for the first quarter of 2017. This non-GAAP net loss measure, more fully described below under “Non-GAAP Financial Measures,” excludes the recognition of collaboration revenue related to the Bayer upfront payment and share-based compensation expenses. A reconciliation of the GAAP financial results to non-GAAP financial results is included with the attached financial statements.
2. Section 8.1.2. of the Licensing Agreement shall be deleted and the following inserted in its place: "Similarly, the License may be terminated and all rights shall revert to Licensor if any of the following events do not occur within the timeframe set forth in this Agreement provided that Licensor gives Licensee thirty (30) days' notice prior to the effective date of termination and Licensee fails to cure the following events during the thirty (30) day period: (i) if Licensee fails to pay in full the Upfront Payment by December 31, 2015; (ii) if Licensee does not enter into a research program involving the Scope of the Agreement within three (3) years of the Effective Date; or (iii) if Licensee does not enter clinical trials or their equivalent for a Product within seven (7) years from the Effective Date."
1. Section 2.2 of the Licensing Agreement shall be deleted and the following inserted in its place: "Subject to the terms of this Agreement , Licensee shall pay Licensor an initial payment ("Upfront Payment") of Two Million Dollars US (USD $2,000,000.00). Licensee shall make periodic monthly partial payments of the Upfront Payment in amounts to be agreed upon between the Parties prior to each such payment being made: provided, however, the Upfront Payment shall be paid in full by no later than December 31, 2015."
“Subject to your Continuous Service (as such term is defined in Section 2(j) of the Plan) the shares shall vest in full on the first to occur of the following: (1) the closing of a strategic alliance or partnership between the Company and another entity that results in either (A) an upfront payment in cash of at least $100 million to the Company or (B) an upfront payment in cash that, together with the upfront payments in cash from each other strategic alliance or partnership between the Company and another entity that closed within the 12 months prior to such closing, aggregates to at least $100 million to the Company; provided in each case that such strategic alliance or partnership is approved by the Board of Directors of the Company (the “Board”); provided, further, that the upfront payment of any such strategic alliance or partnership may include an equity component consisting of no more than fifty percent (50%) of the total value of the upfront payment
“In the event the Company enters into one or more definitive agreements for strategic alliances or partnerships that individually or together would constitute an Alliance Milestone but for the fact that the upfront payments to the Company are less than $100 million but greater than $50 million (a “Missed Alliance Milestone”), then (a) immediately prior to the closing of the first strategic alliance or partnership that is or together with other strategic alliances or partnerships within the prior 12 months constitute a Missed Alliance Milestone, the shares subject to this option shall vest in an amount equal to the number of shares underlying this option multiplied by a fraction equal to the aggregate value of any upfront payment(s) divided by $100 million, and (b) the remaining unvested portion of the shares subject to this option shall be tolled, and shall vest if and only if the Company closes, by the 12-month anniversary of the Missed
for such strategic alliance or partnership, which equity component must be at a share price that is greater than or equal to one hundred ten percent (110%) of the greater of the current or the then-current Company preferred stock price) (an “Alliance Milestone”); and (2) an acquisition of the Company (by merger, acquisition of voting control or acquisition of assets) for either (A) an upfront payment of at least $500 million or (B) an upfront payment of at least $200 million and aggregate contingent, milestone or earn-out payments (without risk adjustment or applying any discount rate) that together with the upfront payment total at least $500 million (an “Acquisition Milestone”).”
As indicated above, the Company initially evaluated the significant deliverables of the arrangement memorialized in the Agreement and considered the appropriate revenue treatment for each of those deliverables. Although the Company performed its initial evaluation at inception of the arrangement, applied subsequently with respect to the upfront payment of $30 million received in January 2012 and $15 million milestone received in May 2012, the Company acknowledges that the disclosures contained in the above referenced filings did not clearly describe this fact. As the Staff is aware, the use of milestone revenue recognition is fairly new and, as a result, and based on discussions with the Staff, the Company believes that, although its revenue recognition policies and related accounting treatments for this arrangement are correct, additional disclosure is required to clearly describe the Company’s initial evaluation of the Agreement as a multi-deliverable arrangement as well as the Company’s consideration of the appropriate revenue recognition considerations to determine with respect to each significant deliverable the manner and timing of revenue associated with such deliverables.
If, on or prior to July 1, 2012, we reach a successful settlement of the Audit, and the Upfront Payment, plus applicable interest, is repaid to Purchaser or to the Company by the CRA and the Ministry, the proceeds received shall be for the account of Purchaser or the Company, and the Loan shall be treated as settled. If the Upfront Payment is not repaid by the CRA on or prior to June 1, 2014, and we have repaid the Loan in full, plus interest, in accordance with the schedule listed in Annex A, then any proceeds of the Upfront Payment repaid by the CRA, including any interest, shall be for our account. To the extent that the matter is resolved and the Upfront Payment, plus applicable interest, is repaid to Purchaser or to the Company by the CRA and the Ministry at any time between July 1, 2012 and June 1, 2014, the proceeds shall be first applied to the outstanding Loan principal balance plus interest accruing from the previous monthly payment date, with the remainder flowing to the Seller.
We hereby acknowledge that you have already made a Tax payment of C$948,473.40, and request that you make the balance of the Upfront Payment (or cause the Company to make the balance of the Upfront Payment) in an amount equal to approximately C$217,632.73 to the CRA. Notwithstanding the fact that the Upfront Payment, once fully paid, will constitute a Loss subject to immediate indemnification under Section 8.1(a)(vi)(A) of the Purchase Agreement, we hereby request that you not seek immediate indemnification. Instead, we ask that you advance the Upfront Payment as a loan to us (the “Loan”). We agree to repay the amount of the Upfront Payment, plus interest accruing at the rate of five percent per annum, compounded monthly. The schedule of payments is listed below in Annex A.
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