Post by mnholdem on Aug 12, 2014 7:10:10 GMT -5
From 10-Q Page 41
ITEM 5. OTHER INFORMATION
On August 11, 2014, we entered into the Sanofi License Agreement pursuant to which we granted to Sanofi exclusive, worldwide licenses to certain of our patents, trademarks and know-how for the development and commercialization of AFREZZA.
Under the terms of the Sanofi License Agreement, upon effectiveness of the Sanofi License Agreement, Sanofi will have the exclusive right and responsibility to develop AFREZZA worldwide, subject to certain development activities that will be performed by us. Sanofi will also be obligated to use commercially reasonable efforts to file for, obtain and maintain marketing approvals for AFREZZA in certain major markets and countries. In addition, Sanofi will have exclusive, worldwide rights to commercialize AFREZZA and will be obligated to use commercially reasonable efforts to market, promote and commercialize AFREZZA in all countries in the world where regulatory approval for AFREZZA has been received. Pursuant to the terms of a separate supply agreement that we entered into with Sanofi concurrently with the Sanofi License Agreement, we will be responsible for the manufacture and supply to Sanofi of its requirements of AFREZZA.
In consideration for the rights granted to Sanofi by us under the Sanofi License Agreement, upon effectiveness of the Sanofi License Agreement, we will receive an upfront payment of $150.0 million. If certain manufacturing, regulatory and sales milestones are achieved, we will also eligible to receive up to $775.0 million in milestone payments, of which $75.0 million in milestone payments relate to certain development and manufacturing milestone events, $50.0 million in milestone payments relate to the filing and completion of regulatory approvals and $650.0 million in milestone payments relate to the achievement of certain product sales milestones. In addition, worldwide profits and losses be shared 65% by Sanofi and 35% by us.
Under the terms of the Sanofi License Agreement, we granted to Sanofi a right of first negotiation in the event we propose to grant to any third party a license to develop or exploit an inhaled glucagon-like peptide-1 agonist. In addition, if our board of directors determines to pursue a change of control of MannKind, we will be required notify Sanofi of such determination within a certain period of time so that Sanofi may, at is discretion, negotiate with us for a potential acquisition of MannKind by Sanofi.
In addition, we received a commitment letter from an affiliate of Sanofi to provide the Sanofi Loan Facility. The commitment letter provides for a $175.0 million secured revolving loan facility to fund our share of net losses under the Sanofi License Agreement. Pursuant to the commitment letter, loans under the Sanofi Loan Facility would bear interest at a rate of 8.5% per annum, paid-in-kind on a quarterly basis (2.06% per quarter compounded) and would become due and payable in full on the tenth anniversary of the effective date of the Sanofi License Agreement. We would be required to prepay any loans with net profits received under the Sanofi License Agreement. The commitment letter provides that our obligations under the Sanofi Loan Facility would be secured by a first priority mortgage on our facility in Valencia, California, a first priority security interest in certain insulin inventory located at our facility in Danbury, Connecticut and any contractual rights and obligations pursuant to which we purchase or have purchased such insulin, and a second priority security interest in our assets that secure our obligations under the Facility Agreement. The commitment is subject to customary conditions, including the effectiveness of the Sanofi License Agreement, the finalization of loan documentation and the entry into satisfactory intercreditor agreement with Deerfield.
The effectiveness of the Sanofi License Agreement and the Supply Agreement is contingent upon satisfaction of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the entry into the definitive loan documents relating to the Sanofi Loan Facility (unless we terminate the commitment letter for the Sanofi Loan Facility).
The Sanofi License Agreement will remain in effect unless either party terminates the Sanofi License Agreement in accordance with its terms. Either party may terminate the Sanofi License Agreement for a material breach the other party if such breach remains uncured for 90 days, or 45 days in the case of a non-payment breach; provided that if Sanofi breaches the Sanofi License Agreement for failure to comply with its obligation to use commercially reasonable efforts to file for, obtain and maintain regulatory approval for AFREZZA in certain major markets and countries and to market, promote and commercialize AFREZZA in countries where regulatory approval has been received, as set forth in the Sanofi License Agreement, with respect to (i) the United States, we may terminate the Sanofi License Agreement in its entirety, and (ii) certain major markets or countries, we may terminate the Sanofi License Agreement only with respect to such markets or countries and not in its entirety. Either party may also terminate the Sanofi License Agreement upon written notice to the other party in the event of the other party’s insolvency. Sanofi may terminate the Sanofi License Agreement at any time on or after January 1, 2016 (a) upon 90 days’ written notice if Sanofi determines in good faith that the commercialization of AFREZZA is no longer economically viable in the United States, and (b) without cause upon six months’ written notice in its entirety or on a country-by-country basis other than with respect to the United States, subject to certain exceptions. In addition, Sanofi may terminate the Sanofi License Agreement on a country-by-country basis upon 30 days’ written notice for certain safety or regulatory reasons.
On August 11, 2014 we entered into a second amendment to the Facility Agreement to provide for the Sanofi Loan Facility.
The foregoing description is only a summary of the Sanofi License Agreement and the second amendment to the Facility Agreement and is qualified in its entirety by the terms of the Sanofi License Agreement and the second amendment to the Facility Agreement, copies of which will be filed as exhibits to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. [emphasis added]
