(Amendment No. 1)
| ¨ | Preliminary Proxy Statement | |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| Definitive Proxy Statement | ||
| ¨ | Definitive Additional Materials | |
| ¨ | Soliciting Material under §240.14a-12 | |
| No fee required. | |||||
| ¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
| ) | Title of each class of securities to which transaction applies: | ||||
| ) | Aggregate number of securities to which transaction applies: | ||||
| ) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||||
| ) | Proposed maximum aggregate value of transaction: | ||||
| ) | Total fee paid: | ||||
| ¨ | |||||
| Fee paid previously with preliminary materials. | |||||
| ¨ | |||||
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||
| ) | Amount Previously Paid: | ||||
| ) | Form, Schedule or Registration Statement No.: | ||||
| ) | Filing Party: | ||||
| ) | Date Filed: | ||||
PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION
DATED JULY 8, 2016
[ ], 2016
After careful consideration, ourenclosed proxy statement. Our board of directors has unanimously approved the License Transaction and recommends that you vote “FOR” Proposals 1 and 2, as set forth in the License Transaction Proposal and vote “FOR” the proposalproxy statement.
The enclosed Notice of Special Meeting and Proxy Statement explain in further detail the License Transaction Proposal and the proposal to adjourn the Special Meeting, if necessary or appropriate, and provide specific information regarding the Special Meeting.
On behalf of our board of directors, thankseeing you for your continued support.
there.
Daniel S. Lynch
Chairman of the Board of Directors
Abbie C. Celniker, Ph.D.
PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION
DATED JULY 8, 2016
215
1800
STOCKHOLDERS
A specialTuesday, June 12, 2018
Logan Airport, One Hotel Drive, Boston, MA 02128, or the 2018 Annual Meeting, to consider and act upon the following matters:
qualified;
After careful consideration, our board of directors has unanimously approved the License Transaction Proposal and is recommending that stockholders vote “FOR” the License Transaction Proposal and vote “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to approve the License Transaction Proposal.
Please reviewreceive proxy materials in detail the attached Proxy Statement for a more complete statement regarding the License Transaction Proposal, including a description of the License Agreement, the background of the decision to enter into the License Agreement, the reasons that our board of directors has decided to recommend that you approve the License Transaction Proposal and the section beginningprinted form by mail, or electronically by email, on page 11 titled “Risk Factors,” describing certain risk factors relating to the License Transaction. Because of the significance of the License Transaction, your participation in the Special Meeting, in person or by proxy, is especially important. We hope that you will be able to attend the Special Meeting.
an ongoing basis.
Abbie C. Celniker, Ph.D.
[ ], 2016
| Page | |||||
| Votes Required | |||||
| Corporate Governance | |||||
| Board of Directors | |||||
| How Our Board Is Organized | |||||
| Board Committees | |||||
| Compensation Committee Interlocks and Insider Participation | |||||
| Board Meetings and Attendance | |||||
| Board Processes | |||||
| Board Policies | |||||
| Executive Officers | |||||
| Executive Compensation | |||||
| Summary Compensation Table | |||||
| Director Compensation | |||||
| |||||
| Audit-Related Matters | |||||
| Audit Committee Report | |||||
| Audit Fees and Services | |||||
| Matters to Be Voted On | |||||
| Proposal 1: Election of Class I Directors | |||||
| |||||
| Proposal 2: To Ratify the Selection of Ernst & Young LLP as Eleven Biotherapeutics, Inc.’s Independent Registered Public Accounting Firm for the Fiscal Year Ending December 31, 2018 | |||||
| Ownership of Common Stock | |||||
| Section 16(a) Beneficial Ownership Reporting Compliance | |||||
| Other Matters | |||||
| Householding of Annual Meeting Materials | |||||
| Deadline for Submission of Stockholder Proposals for 2019 Annual Meeting of Stockholders | |||||
i
At the Special Meeting, our stockholders will consider and vote upon the following proposals:
After careful consideration, our board of directors (the “Board”) unanimously approved the License Transaction and recommends that you vote “FOR” the License Transaction Proposal and vote “FOR” the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to approve the License Transaction Proposal.
The License Transaction may constitute the sale of all or substantially all of the property and assets of the Company within the meaning of Section 271 of the Delaware General Corporation Law (the “DGCL”). While the Delaware statute does not define the term “sale” or the phrase “all or substantially all,” we believe the License Transaction Proposal requires approval by the affirmative vote of holders of a majority of our outstanding shares of common stock entitled to vote thereon pursuant to the DGCL. Stockholders of record at the close of business on June 27, 2016 (the “Record Date”) will be entitled to notice of and to vote at the Special2018 Annual Meeting, or any adjournment or postponement thereof. On the Record Date, there were outstanding and entitled to vote an aggregate of 19,961,59247,664,313 shares of our common stock, par value $0.001 per share, (“or common stock”).stock. Each share of common stock entitles the record holder thereof to one vote on each of the matters to be voted on at the Special2018 Annual Meeting.
The costs of preparing, assembling and mailing this Proxy Statement and the other material enclosed and all clerical and other expenses of solicitation will be paid by the Company. In addition to the solicitation of proxies by mail, directors, officers and employees of the Company, without receiving additional compensation, may solicit proxies by personal interview, e-mail, telephone, facsimile or other means of communication. The Company also will request brokerage houses and other custodians, nominees and fiduciaries to forward soliciting material to the beneficial owners of common stock held of record by such custodians and will reimburse such custodians for their expenses in forwarding soliciting materials.
These transactions have not been approved or disapproved by the Securities and Exchange Commission (the “SEC”), and the SEC has not passed upon the fairness or merits of these transactions nor upon the accuracy or adequacy of the information contained in this Proxy Statement. Any representation to the contrary is unlawful.
This summary highlights information included elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider before voting on the proposals presented in this Proxy Statement. You should read the entire Proxy Statement carefully, including the appendices attached hereto.
Key Terms of the License Agreement
Below is a summary of certain key terms contained in the License Agreement.
ELEVEN BIOTHERAPEUTICS, INC.
215 First Street, Suite 400
Cambridge, MA 02142
PROXY STATEMENT FOR THE SPECIAL MEETING OF
STOCKHOLDERS TO BE HELD ON [ ], [ ], 2016
Information About the Special Meeting and Voting
This Proxy Statement is furnished in connection with the solicitation of proxies by the board of directors (the “board of directors” or the “Board”) of Eleven for use at a Special Meeting of Stockholders (the “Special Meeting”) on [ ], [ ], 2016, beginning at [ ] a.m., Eastern time, at WilmerHale LLP, 60 State Street, Boston, Massachusetts 02109. On the Record Date, there were outstanding and entitled to vote an aggregate of 19,961,592 shares of our common stock, par value $0.001 per share (“common stock”). Each share of common stock entitles the record holder thereof to one vote on each of the matters to be voted on at the Special Meeting.
Your vote is important no matter how many shares you own.Please take the time to vote. Take a moment to read the instructions below. Choose the way to vote that is easiest and most convenient for you, and cast your vote as soon as possible.
card or by voting in person at the 2018 Annual Meeting.
card or by voting in person at the 2018 Annual Meeting.
voting in person at the 2018 Annual Meeting.
Any vote cast at the 2018 Annual Meeting will serve to revoke any prior vote made by Internet, telephone or mail.
proxy statement.
plurality.
This Proxy Statement andproxy statement, the enclosed proxy card were first made available to stockholdersand our Annual Report on Form 10-K for the year ended December 31, 2017, or the 2017 Annual Report, on or about [ ], 2016.
Q: When and where will the Special Meeting take place?
A: The Special Meeting will be held on [ ], 2016 at [ ] a.m. Eastern time at WilmerHale LLP, 60 State Street, Boston, Massachusetts 02109.
Q: What is the purposeAvailability of the Special Meeting?
A: At the Special Meeting, you will be asked to vote upon: (i) the License Transaction Proposal, (ii) the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to approve the License Transaction Proposal and (iii) such other business as may properly come before the Special Meeting.
Q: What is the Record Date Proxy Materials
A:Annual Meeting of Stockholders to Be Held on Tuesday, June 12, 2018:
Q: What is the quorum requiredForm 10-K for the Special Meeting?
A: The representation in person or by proxy of holders of at least a majority of the issued and outstanding shares of our common stock entitled to vote at the Special Meeting is necessary to constitute a quorum for the transaction of business at the Special Meeting. The Special Meeting may be adjourned whether or not a quorum is present.
Q: What vote is required to approve the License Transaction Proposal to be voted upon at the Special Meeting?
A: The License Transaction Proposal requires the affirmative vote of holders of a majority of our outstanding shares of common stock entitled to vote thereon pursuant to the DGCL.
Q: What vote is required to approve the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to be voted upon at the Special Meeting?
A: This proposal requires the affirmative vote of a majority of the votes cast by the holders of all of the shares present or represented at the Special Meeting and voting on such proposal.
Q: What are the effects of not voting or abstaining? What are the effects of broker non-votes?
A: If you do not vote by virtue of not being present in person or by proxy at the Special Meeting, your shares will not be counted for purposes of determining the existence of a quorum. Abstentions, but not broker non-votes, will be counted for the purpose of determining the existence of a quorum.
Failures to vote, abstentions and broker non-votes will have the effect of a vote “AGAINST” the License Transaction Proposal. Failures to vote, abstentions and broker non-votes will not have any effect on the vote on the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies.
Q: What is the License Transaction?
A: Under the License Agreement, Roche will obtain an exclusive, worldwide license, including the right to sublicense, to our Licensed Intellectual Property, in exchange for an up-front license fee of $7.5 million and up to an additional $262.5 million of milestone payments, as well as royalty payments on Net Sales of certain Licensed Products made with the Licensed Intellectual Property in accordance with a tiered royalty rate scale, subject to the exercise of certain buy-out rights of Roche as further described in “Proposal 1: The License Transaction Proposal—The License Agreement.”
Q: Why did the Company enter into the License Agreement?
A: In the course of reaching its decision to recommend the approval of the License Transaction Proposal by the Company’s stockholders, the Board, in consultation with senior management and its legal advisors, considered a number of factors that the Board believed supported its decision, including, but not limited to, strategic and financial considerations. See “Proposal No. 1: The License Transaction Proposal—Reasons for the License Transaction.”
Q: Why is the License Transaction Proposal being submitted for approval by stockholders?
A: We are organized under the corporate laws of the State of Delaware. The License Transaction may constitute the sale of all or substantially all of the property and assets of the Company within the meaning of Section 271 of the DGCL. While the Delaware statute does not define the term “sale” or the phrase “all or substantially all,” we believe the License Transaction Proposal requires approval by the affirmative vote of holders of a majority of our outstanding shares of common stock entitled to vote thereon pursuant to the DGCL.
Q: Are there any risks to the License Transaction?
A: Yes. You should carefully read the section entitled “Risk Factors.”
Q: Do I have dissenters’ rights in connection with the License Transaction Proposal?
A: Stockholders may vote against the approval of the License Transaction Proposal, but under Delaware law dissenters’ rights are not provided to stockholders in connection with the License Transaction because it does not constitute a merger or consolidation.
Q: When will the License Agreement become effective?
A: If the License Transaction Proposal is approved by our stockholders, the License Agreement will automatically become effective on the following business day, provided that no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order, stay, decree, judgment or injunction or statute, rule or regulation which has the effect of prohibiting the consummation of the transactions contemplated by the License Agreement.
Q: What activities does Eleven intend to engage in following the effectiveness of the License Transaction?
A: Although the License Transaction may be deemed to constitute the “sale” of “all or substantially all” of our assets and property under the DGCL, following effectiveness of the License Transaction we will retain rights to our intellectual property and assets other than the Licensed Intellectual Property relating to Compounds, Products and Companion Diagnostics, including the retention of rights to the other early stage product candidates in our pipeline. We will also retain rights to our AMP-Rx proprietary protein engineering platform that we have used to discover and develop innovative protein therapeutics to treat diseases of the eye. However, we continue to engage in a process to review a range of strategic alternatives with a goal to maximize stockholder value. Further, most of our research and development activities, other than with respect to EBI-031, are on hold pending the outcome of this strategic review process as we seek to manage our cash position. As such, our business efforts are currently devoted primarily to our review of strategic alternatives. Potential strategic alternatives that we may continue to explore and evaluate during the ongoing review process include, among others, the sale of the Company, a strategic partnership or a business combination with one or more parties or the licensing, sale or divestiture of some of our assets or proprietary technologies that are not related to the License Agreement. We cannot provide any commitment regarding precisely when or if this strategic review process will result in any type of additional transaction and no assurance can be given that we will determine to pursue a potential sale, strategic partnership, business combination or other arrangement.
As part of the strategic review process, or if the strategic review process does not result in any additional transaction, we may also consider a distribution to our stockholders of all or a portion of the payments from Roche under the License Agreement. We expect to consider a variety of factors in making any decision to distribute to our stockholders all or a portion of the payments from Roche under the License Agreement as part of another strategic transaction, with the continued goal of maximizing stockholder value. In particular, we may be more likely to consider a distribution to our stockholders of some or all of the cash proceeds under the License Agreement, some or all of the rights to receive future payments under the License Agreement or a combination thereof if the third parties with whom we may negotiate potential transactions, such as a sale of the Company or a business combination, ascribe less value to potential future payments under the License Agreement than does our board of directors, including if the proposed ownership percentage of our stockholders following a proposed business combination does not reflect what our board of directors believes is appropriate value when compared with such a distribution to our stockholders. Conversely, if we believe that a proposed ownership percentage of our stockholders following a business combination reflects appropriate value with respect to the potential future payments under the License Agreement, including because of the relative value such ownership percentage would represent following such business combination, we may consummate the business combination without distributing to our stockholders any of the payments or rights to receive future payments under the License Agreement. In addition, a third party may require as a condition to the consummation of a transaction that we retain a minimum amount of cash resources upon the closing of such transaction, which would limit our ability to distribute cash or the right to receive future payments under the License Agreement to our stockholders if our board of directors otherwise determines such a transaction is favorable to our stockholders. If our strategic review process does not result in any additional transaction before the end of 2016 (or such earlier time as our board of directors determines to end the strategic review process), we may be inclined to distribute a significant portion of amounts received from Roche and the right to receive future payments from Roche under the License Agreement to our stockholders via a dividend in the form of a contractual right to a pro rata share of such payments. Any such distribution to our stockholders would reduce funds potentially available to contribute to our future business operations and likely result in a decrease in the value of the Company immediately following the payment of any such distribution. Any such distribution via dividend could be followed by a potential dissolution of the Company, subject to approval by our stockholders. We may also consider additional arrangements to return capital to our stockholders if our strategic review process does not result in any additional transaction.
Q: What are the U.S. federal income tax consequences of the License Transaction to stockholders?
A: The proposed License Transaction by us is entirely a corporate action. Our stockholders will not realize any gain or loss for U.S. federal income tax purposes as a result of the License Transaction. See “Proposal No. 1: The License Transaction Proposal—U.S. Federal Income Tax Consequences.”
Q: What do I need to do now?
A: Please vote your shares as soon as possible so that your shares may be represented at the Special Meeting. You may vote by signing and dating your proxy card and mailing it in the enclosed return envelope, or you may vote in person at the Special Meeting. Alternatively, you may vote by telephone or over the Internet in accordance with the instructions on your proxy card.
Q: Who should I call if I have any questions?
A: If you have questions about the proposals on which you are voting, you may call Leah Monteiro, our Corporate Communications Manager, at(617) 714-0619.
This Proxy Statement contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Proxy Statement, including statements regarding the potential effectiveness of the License Agreement or receipt of payments thereunder, the future rights and obligations of the parties under the License Agreement, our strategy, future operations, future product research or development, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “goals,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and our stockholders should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make as a result of various important factors, including: the occurrence of any event, change or other circumstances that could give rise to the termination of the License Agreement, the outcome of any legal proceedings that could be instituted against the Company or its directors related to the License Agreement, the inability to consummate the transactions contemplated by the License Agreement due to the failure to obtain the requisite approval of the Company’s stockholders, the uncertainties inherent in the initiation and conduct of clinical trials, availability and timing of data from clinical trials, whether results of early clinical trials or preclinical studies will be indicative of the results of future trials, the adequacy of any clinical models, uncertainties associated with regulatory review of clinical trials and applications for marketing approvals and other factors discussed in the “Risk Factors” section of the Company’s quarterly report on Form 10-Q for the quarteryear ended MarchDecember 31, 20162017 as filed with the Securities and Exchange Commission, or SEC, and other reports on file with the SEC. In addition, the forward-looking statements included in this Proxy Statement represent the Company’s views as of the date hereof. In addition, we have included important factors in the cautionary statements included in this Proxy Statement, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, investments or other strategic or business combination transactions we may make or otherwise engage in.
You should read this Proxy Statement carefully and completely and with the understanding that our actual future results mayexcept for exhibits, will be materially different from what we expect. The forward-looking statements contained in this Proxy Statement are made as of the date of this Proxy Statement, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
In addition to the other information contained in this Proxy Statement, you should carefully consider the following risk factors when deciding whether to vote to approve the proposals described in this Proxy Statement. You should also consider the information in our other reports on file with the SEC that are incorporated by reference into this Proxy Statement. See “Available Information.”
The announcement and pendency of the License Transaction, whether or not consummated, may adversely affect the trading price of our common stock and our business prospects.
The announcement and pendency of the License Transaction, whether or not consummated, may adversely affect the trading price of our common stock and our business prospects. In the event that the License Transaction is not completed, the announcement of the termination of the License Agreement may also adversely affect the trading price of our common stock and our business prospects.
We cannot be sure if or when the License Transaction will become effective and, even if it becomes effective in accordance with its terms, whether we will receive any future payments pursuant to the License Agreement, each of which may adversely affect the trading price of our common stock and our business prospects.
The effectiveness of the license under the License Agreement is subject to the approval of the License Transaction Proposal by our stockholders, provided that, in addition, no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order, stay, decree, judgment or injunction or statute, rule or regulation which has the effect of prohibiting the consummation of the transactions contemplated by the License Agreement. We cannot guarantee that the License Agreement will become effective. If the License Agreement does not become effective, Roche will not be obligated to consummate the transactions contemplated by the License Agreement, which may adversely affect the trading price of our common stock and our business prospects.
In addition, the right to potential future payments under the License Agreement represents a significant portion of the value of the License Transaction to the Company. Even if the License Transaction Proposal is approved by our stockholders and the license under the License Agreement becomes effective in accordance with its terms, we cannot be certain that we will receive any future milestone or royalty payments under the License Agreement. Failure to receive the milestone and royalty payments under the License Agreement may adversely affect the trading price of our common stock and our business prospects.
We have not made any determination whether to distribute or pay any dividends to stockholders, including with respectfurnished without charge to any of the proceeds of the License Agreement.
We have not made any determination whetherstockholder upon written or oral request to distribute or pay any dividends to our stockholders with respect to the up-front, milestone, royalty or any other payments we may receive pursuant to the License Agreement. However, we continue to engage in a process to review a range of strategic alternatives with a goal to maximize stockholder value. As part of the strategic review process, or if the strategic review process does not result in any additional transaction, we may also consider a distribution to our stockholders of all or a portion of the payments from Roche under the License Agreement. We expect to consider a variety of factors in making any decision to distribute to our stockholders all or a portion of the payments from Roche under the License Agreement as part of another strategic transaction, with the continued goal of maximizing stockholder value. In particular, we may be more likely to consider a distribution to our stockholders of some or all of the cash proceeds under the License Agreement, some or all of the rights to receive future payments under the License Agreement or a combination thereof if the third parties with whom we may negotiate potential transactions, such as a sale of the Company or a business combination, ascribe less value to potential future payments under the License Agreement than does our board of directors, including if the proposed ownership percentage of our stockholders following a proposed business combination does not reflect what our board of directors believes is
appropriate value when compared with such a distribution to our stockholders. Conversely, if we believe that a proposed ownership percentage of our stockholders following a business combination reflects appropriate value with respect to the potential future payments under the License Agreement, including because of the relative value such ownership percentage would represent following such business combination, we may consummate the business combination without distributing to our stockholders any of the payments or rights to receive future payments under the License Agreement. In addition, a third party may require as a condition to the consummation of a transaction that we retain a minimum amount of cash resources upon the closing of such transaction, which would limit our ability to distribute cash or the right to receive future payments under the License Agreement to our stockholders if our board of directors otherwise determines such a transaction is favorable to our stockholders. If our strategic review process does not result in any additional transaction before the end of 2016 (or such earlier time as our board of directors determines to end the strategic review process), we may be inclined to distribute a significant portion of amounts received from Roche and the right to receive future payments from Roche under the License Agreement to our stockholders via a dividend in the form of a contractual right to a pro rata share of such payments. Any such distribution to our stockholders would reduce funds potentially available to contribute to our future business operations and likely result in a decrease in the value of the Company immediately following the payment of any such distribution. Any such distribution via dividend could be followed by a potential dissolution of the Company, subject to approval by our stockholders. We may also consider additional arrangements to return capital to our stockholders if our strategic review process does not result in any additional transaction.
The License Agreement limits our ability to pursue alternatives to the License Transaction.
Except as specifically set forth therein, the License Agreement restricts our ability and the ability of our directors, officers, employees and other agents or advisors to: solicit, initiate or knowingly facilitate or knowingly encourage the submission of any proposal or offer from any third party with respect to an alternative strategic transaction involving the Licensed Intellectual Property; enter into or participate in any discussions or negotiations with, furnish any non-public information relating to our IL-6 program to, or afford access to the business, properties, assets, books or records of our IL-6 program to, any third party that, to our knowledge, is seeking to make, or has made, any proposal or offer for such an alternative strategic transaction; or enter into any agreement with respect to any such alternative strategic transaction. These limitations could make it less likely that a third party would have an interest in acquiring the Company or the Licensed Intellectual Property or to consider or propose to us an alternative transaction.
If the License Transaction is not consummated for any reason, we may not have any comparable offers or alternatives.
If the License Transaction is not consummated for any reason, our Board, in discharging its fiduciary obligations to our stockholders, may evaluate other strategic alternatives, which alternatives may not be as favorable to our stockholders as the License Transaction. These may include retaining and developing the Licensed Intellectual Property on a stand-alone basis or pursuing an alternative transaction that would yield reduced consideration or involve significant delays. Any future sale or disposition of substantially all of the assets of the Company or other potential strategic or business combination transactions may be subject to further stockholder approval.
Our common stock may be delisted from The Nasdaq Global Market if we fail to satisfy the continued listing standards of that market.
Our common stock is listed on The Nasdaq Global Market. In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements. On March 3, 2016, we received the following notifications from the Nasdaq Listing Qualifications Department:
On May 3, 2016, we received notification from the Nasdaq Listing Qualifications Department that we had regained compliance with the Minimum Market Value Rule, and on May 31, 2016, we received notification from the Nasdaq Listing Qualifications Department that we had regained compliance with the Minimum Bid Price Rule. However, we may in the future fail to satisfy these or other continued listing standards of the Nasdaq Global Market. In the event that we are unable to satisfy the continued listing standards of the Nasdaq Global Market, our common stock may be delisted from that market. Any delisting of our common stock from the Nasdaq Global Market could adversely affect our ability to attract new investors, decrease the liquidity of our outstanding shares of common stock, reduce our flexibility to raise additional capital, reduce the price at which our common stock trades and increase the transaction costs inherent in trading such shares with overall negative effects for our stockholders. In addition, delisting of our common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in our common stock, and might deter certain institutions and persons from investing in our securities at all. For these reasons and others, delisting could adversely affect the price of our common stock and financial condition and business prospects.
We will continue to incur the expenses of complying with public company reporting requirements following the effectiveness of the License Transaction.
After the effectiveness of the License Transaction, we will continue to be required to comply with the applicable reporting requirements of the Exchange Act, even though compliance with such reporting requirements may be economically burdensome.
PROPOSAL 1—LICENSE TRANSACTION PROPOSAL
The following discussion is a summary of the material terms of the License Transaction. We encourage you to read the License Agreement, which is attached to this Proxy Statement as Appendix A, carefully and in its entirety as it is the legal document that governs the License Transaction.
Under the License Agreement, Roche will obtain an exclusive, worldwide license, including the right to sublicense, to our Licensed Intellectual Property, in exchange for an up-front license fee of $7.5 million and up to an additional $262.5 million of milestone payments, as well as royalty payments on Net Sales of certain Licensed Products made with the Licensed Intellectual Property in accordance with a tiered royalty rate scale, subject to the exercise of certain buy-out rights of Roche as further described below. The License Transaction may constitute the sale of all or substantially all of our assets under Delaware law.
Eleven Biotherapeutics, Inc.
We are a preclinical stage biopharmaceutical company with a proprietary protein engineering platform, called AMP-Rx, that we apply to the discovery and development of protein therapeutics to treat diseases of the eye. Our therapeutic approach is based on the role of cytokines in diseases of the eye, our understanding of the structural biology of cytokines and our ability to rationally design and engineer proteins to modulate the effects of cytokines. Cytokines are cell signaling molecules found in the body that can have important inflammatory effects. Our most advanced product candidate, which is still in preclinical development, is EBI-031, which we designed, engineered and generated using our AMP-Rx platform and are developing as an intravitreal injection for diabetic macular edema and uveitis. On June 13, 2016, we submitted an Investigational New Drug application (“IND”) to the FDA to initiate a Phase 1 clinical trial of EBI-031, and the FDA granted clearance of this IND on July 7, 2016.
We were incorporated under the laws of the State of Delaware in 2008, and we completed our initial public offering in 2014. Our principal executive offices are located at 215, 245 First Street, Suite 400,1800 Cambridge, MassachusettsMA 02142, Attention: Corporate Secretary, Telephone: (617) 444-8550.
Roche
Roche is a pharmaceutical company focused on developing innovative medicines and diagnostic tests. The principal office of F. Hoffmann-La Roche Ltd is Grenzacherstrasse 124, 4070 Basel, Switzerland. The principal office of Hoffmann-La Roche Inc. is 150 Clove Road, Suite 8, Little Falls, New Jersey 07424.
Background of the License Transaction
As part of their ongoing oversight and management of the Company’s business, the Board has periodically reviewed and assessed with the Company’s senior management strategic options available to enhance value to the Company’s stockholders. This has included consideration of collaboration and license transactions, as well as other strategic transactions such as potential acquisitions by, and of, the Company. In particular, prior to obtaining data from the Phase III clinical trial of its product candidate isunakinra for the treatment of allergic conjunctivitis in January 2016, the Company evaluated a variety of opportunities to in-license or acquire the rights to other products, product candidates or technologies for the treatment of eye diseases to augment the Company’s discovery and development platform, product candidates and overall business.
Following the announcement on January 15, 2016 of the results of the Phase III clinical trial of isunakinra for the treatment of allergic conjunctivitis in which there were no statistically significant differences between the isunakinra treated group and the vehicle control group on the primary endpoint of ocular itching or on any
secondary endpoints, the Board further considered strategic options for the Company, in particular given the likely difficulty of continuing to operate on a stand-alone basis without engaging in one or more strategic transactions, including as a result of potential challenges in obtaining additional outside financing. On March 24, 2016, the Company publicly announced that it was in the process of reviewing a range of strategic alternatives, with a goal of maximizing stockholder value, that could result in potential changes to its current business strategy and future operations. As part of this process, the Company engaged an investment bank (the “Investment Bank”) to provide related advice, in particular in relation to a possible sale of the Company. The engagement of the Investment Bank specifically excluded, among other things, (i) any transaction involving Roche for all or any part of the assets, rights or business of the Company and (ii) an asset sale or collaboration or license transaction whereby the rights of the Company to products, technology or other intellectual property were to be out-licensed or sold in exchange for up-front proceeds in cash, stock or other consideration, clinical, regulatory, commercial or other milestone payments, royalties on sales of products and/or profit-sharing or co-promotion arrangements with respect to sales of products. The Board discussed the possibility of the Company engaging in one or more potential transactions to maximize stockholder value, such as the sale of the Company, a strategic partnership with one or more parties or the licensing, sale or divestiture of some of the Company’s assets or proprietary technologies. The Company also evaluated the possibility of continuing to operate its business in accordance with its then existing business strategy.
Roche and the Company have, from time to time, discussed various potential business relationships between the parties. In June 2015, the Company and Roche signed a customary mutual nondisclosure agreement relating to Roche’s evaluation of its potential interest in the Company’s IL-6 program, including EBI-031, and a potential business relationship between the companies. The parties then began initial discussions regarding such a potential business relationship, and Roche initiated its due diligence review of the Company’s IL-6 program.
In August 2015, representatives of Roche and the Company held a telephonic meeting to discuss the Company’s IL-6 program, focusing on EBI-031. At this meeting, the Company reviewed with Roche detailed, confidential aspects of the IL-6 program of interest to Roche. Subsequently, in September 2015, the Company provided Roche access to an electronic dataroom containing further information from preclinical studies and other scientific data from the IL-6 program.
Following Roche’s review of the information in the electronic dataroom, an in-person meeting was held on October 7, 2015, at the Company’s offices in Cambridge, Massachusetts between representatives of Roche and the Company. At a regularly scheduled in-person meeting of the Board on October 15, 2015, Dr. directors.
| Name | Age | Position | ||
| Stephen A. Hurly | 50 | President and Chief Executive Officer and Director | ||
| Wendy Dixon Ph.D.(1)(2) | 62 | Chair of the Board of Directors | ||
| Abbie C. Celniker, Ph.D.(3) | 59 | Director | ||
| Paul G. Chaney(2) | 60 | Director | ||
| Leslie L. Dan, B.Sc., Phm., M.B.A., C.M | 88 | Director | ||
| Jay S. Duker, M.D. | 59 | Director | ||
| Barry J. Gertz, M.D., Ph.D. | 66 | Director | ||
| Jane V. Henderson(1)(3) | 52 | Director | ||
| Daniel S. Lynch(1)(2)(3) | 60 | Director | ||
| (1) | Member of the Audit Committee. |
| (2) | Member of the Compensation Committee. |
| (3) | Member of the Nominating and Corporate Governance Committee. |
At a regularly scheduled in-person meetingreduce the size of the Board, on December 10, 2015, managementeffective as of the Company updated2018 Annual Meeting, to eight (8) members with class I thereafter consisting of only two (2) members. Accordingly, our Board has chosen not to nominate a third director to stand for election as a class I director at the 2018 Annual Meeting.
On January 12, 2016, representatives from the Company and Roche met in person in San Francisco, California, as well as telephonically, to discuss scientific and business matters related to the IL-6 program. On February 11, 2016, Roche delivered to the Company an initial term sheet with respect to a license transaction for the IL-6 program. Later that same day, representatives of Roche and representatives of the Company discussed via teleconference the anticipated process for finalizing a transaction between the parties and the terms of such a transaction proposed by Roche. The basis of the proposed term sheet was that the Company would provide Roche the rights to assets ready for Phase I clinical development and that Roche would assume clinical and development responsibility from that point. Because of the Company’s cash position and business prospects, the payment terms were intended to be moderately weighted towards milestones that could be achieved in the near-
term, including a milestone payment upon FDA clearance of an IND for EBI-031, as well as an up-front payment. Specifically, the proposed payment terms consisted of an up-front payment of $15.0 million, milestone payments totaling up to $235.0 million, royalty rates of between 7.0% and 15.0% of net sales and buy-out options of Roche exercisable in connection with payments of between $125.0 million and $250.0 million.our subsidiaries. In addition, in connection with delivering an initial term sheet, Roche suggestedRule 10C-1 under the possibility of implementing an exclusivity agreement with respect to negotiations relating to the IL-6 program.
At a regularly scheduled in person meeting of the Board on February 25, 2016, Dr. Celniker updated the Board regarding the status of various strategic alternatives with a goal of maximizing stockholder value, includingExchange Act requires that, with respect to the potential saleindependence of the Company,each member of our compensation committee, our Board consider all factors specifically relevant to determining whether a strategic partnershipdirector has a relationship with one or more parties or the licensing, sale or divestiture of some or substantially all of the Company’s assets or proprietary technologies. During this presentation, representativesus which is material to that director’s ability to be independent from the Investment Bank joined the meeting by telephone and updated the Board regarding their interactions with potential counterparties for transactions complementary to a licensing transaction with Roche and recommendations for next steps to further evaluate opportunities. Dr. Celniker, Mr. McCabe and Dr. Sternberg also updated the Board regarding discussions with Roche regarding the potential exclusive licensing transaction for the IL-6 program and the potential for exclusivity with respect to negotiation of such a transaction. In light of the favorable economic terms of the proposed Roche transaction and the absence of any reasonable alternatives, the Board was supportive of a potential exclusivity agreement if it was entered into in conjunction with finalizing a term sheet for a transaction, allowed for disclosure of key financial terms of the term sheet to parties interested in a transaction for the Company that excluded the Company’s development and commercialization rights with respect to the IL-6 program and there was a commitment to proceeding expeditiously with negotiating a definitive agreement. In particular, although management of the Company, at the direction of the Board, entered into confidentiality agreements and engaged in discussions with approximately twenty potential counterparties in respect of possible business transactions involving the Company as a whole over the preceding months, there were no resulting proposals from third parties for the Company as a whole that ascribed value to the IL-6 program assets that approached the range of values proposed by Roche. As part of this general discussion, a representative of the Company’s outside legal counsel, Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”), reviewed for the Board the fiduciary duties of the Board in connection with a variety of scenarios with respect to the Board’s consideration of such strategic alternatives.
From September 2015 to March 2016, management of the Company, at the direction of the Board, contacted and engaged in discussions regarding a licensehis or acquisition of, or other strategic transaction involving, the IL-6 program assets with more than ten other potential counterparties. Although there was initial interest in a licensing transaction from several third parties other than Roche, none of these discussions resulted in formal due diligence or in term sheets being submitted to the Company.
Representatives of the Company and Roche negotiated the term sheet and continued to discuss a possible exclusivity arrangement over the next several weeks, and agreed to a non-binding term sheet on March 11, 2016. This term sheet formed the basis for the initial draft of a license agreement to be entered into between the parties. During the course of negotiating the term sheet, the Company inquired whether Roche would consider an asset purchase transaction for the IL-6 program or an acquisition of the entire Company through an acquisition transaction or other business combination. Roche informed the Company that it did not wish to pursue these alternatives. The term sheet agreed to by Roche provided for a license of the IL-6 program assets with payment terms consisting of an up-front amount of $15.0 million, milestone payments totaling up to $255.0 million and royalties and buy-out options consistent with the terms ultimately reflected in the definitive License Agreement entered into between the parties, representing terms that were more favorable to the Company than the initial Roche term sheet of February 11, 2016. During this time, the material transfer agreement was amended to include additional testing on the characteristics of the EBI-031 antibody.
At a special telephonic meeting of the Board on March 14, 2016, management of the Company updated the Board regarding the status of the term sheet with Roche and the proposed exclusivity agreement relating to the IL-6 program. As part of this update, Dr. Celniker summarized the material terms and conditions of the proposed
exclusivity agreement. A representative of WilmerHale also reviewed for the Board the fiduciaryher duties of the Board in connection with entering into such an exclusivity agreement. After a discussion, the Board authorized the Company to enter into the exclusivity agreement and proceed to negotiate a definitive agreement based on the term sheet. The exclusivity agreement provided for a term of two months and related solely to the license, sale or disposition of the Company’s IL-6 program assets. The exclusivity agreement did not preclude the Company from actively pursuing a strategic transaction pursuant to which the overall business or assets of the Company would be combined with that of a third party and that excluded the Company’s development and commercialization rights with respect to the IL-6 program, including disclosure to such a third party of the key financial terms of the proposed transaction with Roche. The exclusivity agreement also permitted the Company to engage in discussions and negotiations and enter into an agreement with respect to the IL-6 program with a third party making an unsolicited inquiry, proposal or offer that the Board determined in good faith did or could reasonably be expected to lead to a transaction that was more favorable than the proposed transaction with Roche. The Company and Roche entered into the exclusivity agreement effective as of March 15, 2016.
Following the signing of the exclusivity agreement, the Company did not engage in any discussions regarding transactions with respect to the IL-6 program assets with any parties other than Roche and all of the references to other strategic alternatives discussed below relate solely to transactions that assumed the exclusion of the Company’s development and commercialization rights with respect to the IL-6 program. As such, each of these other strategic alternatives would have been complementary to rather than in lieu of the Roche transaction.
On March 30, 2016, Roche delivered to the Company an initial draft of a definitive license agreement. On April 7, 2016, the Company provided to Roche a revised draft license agreement reflecting the Company’s comments to Roche’s draft. Between April 7, 2016 and June 3, 2016, representatives of both companies and their respective legal advisors conducted numerous discussions regarding terms of the definitive license agreement. In particular, on April 13 and 14, 2016, representatives of the Company and Roche met in person in the WilmerHale offices in Boston, Massachusetts to negotiate specific aspects of the license agreement. Areas of focus for these negotiations between the parties included, among other things, key definitions relating to payment terms, such as what would constitute a Phase II study and a Phase III study in order to trigger milestone payments, as well as the calculation of net sales relating to a combination product for purposes of determining future royalty payments, ongoing obligations and responsibilities of the Company following effectiveness of the license under the license agreement, responsibility for development activities before and after clearance of the IND for EBI-031, responsibility for prosecution of patents and other intellectual property, and termination provisions. Throughout this time, Roche continued to conduct due diligence regarding scientific and preclinical matters related to the IL-6 program, including the study reports and documents prepared by the Company to support the submission of an IND for EBI-031. Also during this time, management of the Company participated in numerous informal telephonic update calls with the Board.
At a regularly scheduled in-person meeting of the Board on May 12, 2016, Company management updated the Board regarding the status of discussions with Roche regarding the license agreement relating to the IL-6 program. As part of this update, Dr. Sternberg summarized the key terms of the license agreement and reviewed the remaining open issues, and management of the Company provided to the Board its base case estimate of the probability-adjusted net present value of the payments to the Company under the proposed terms of the license agreement of $60.2 million. For the purpose of evaluating the base case estimate of the net present value of the payments under the proposed terms of the license agreement, management of the Company provided the Board with estimates of the probability and timing of achieving the milestones under the license agreement and receiving royalty payments based on net sales. These estimates reflected management’s assessments of relevant regulatory, commercial and competitive risks, including an assumption that the Company would achieve the IND clearance milestone, that the probability of approval of EBI-031 for an indication in the United States was 9.0%, and an estimate of worldwide sales following approval. Management calculated its base case estimate of the probability-adjusted net present value of the license transaction by applying a discount rate of 12.0%, reflecting an estimate of the Company’s weighted average cost of capital based on an analysis by management of the capital structure and costs of equity and debt of the Company.
At the May 12 meeting, a representative of WilmerHale also reviewed for the Board the fiduciary duties of the Board in connection with a variety of scenarios with respect to different strategic alternatives being considered by the Company, including the proposed license agreement with Roche. Representatives from the Investment Bank also joined the meeting and updated the Board regarding their interactions with potential counterparties for transactions complementary to a licensing transaction with Roche, as well as recommendations for next steps to further evaluate opportunities. At this meeting, the Board also determined that it would proceed without retaining a financial advisor specifically with respect to the Roche license transaction and without obtaining a fairness opinion from a financial advisor, in particular in light of the favorable economic terms of the proposed Roche transaction, including management’s base case estimate of the expected net present value of the Roche transaction, the absence of any reasonable alternatives, and the cost of obtaining such an opinion. In addition, after discussion, the Board was of the view that finalizing a transaction with Roche as expeditiously as possible was the highest priority for the Company. Although the exclusivity period with Roche would be ending within the following few days, the Board instructed management to proceed with Roche without reinitiating contact with the potential alternative licensing counterparties that had been contacted prior to the exclusivity period. This approach was based on the Board’s view of the high priority and strategic importance of finalizing a transaction with Roche, including because of the favorable terms thereof and the likely timing for executing a definitive license agreement and effectiveness of the license thereunder, the Company’s diminishing cash position and business prospects, the expected low probability (based on prior contacts and the Board’s and management’s experienced judgment) of any other party proposing or accepting such favorable terms, the lengthy time that would be required for a new counterparty to perform adequate due diligence and to negotiate and finalize the terms of an alternative transaction, the risk that Roche would withdraw its proposal and terminate negotiations with the Company as a result of any resulting delay, and the ability of the Company under the proposed terms with Roche to furnish non-public information to, engage in discussions or negotiations with, and terminate the license agreement and enter into an agreement from, a third party that makes an unsolicited proposal that is or could reasonably be expected to lead to an alternative transaction in respect of the IL-6 assets that is more favorable than the license agreement with Roche, in each case without the payment of any termination fee to Roche.
As the due diligence process was concluding, representatives of Roche informed the Company on May 20, 2016 that, in Roche’s view, there was a possibility that FDA clearance of the IND for EBI-031 might be later than initially contemplated and Roche needed to take this into account in whether and how it would proceed with a potential transaction. On May 22, 2016, Company management and the Board met telephonically to discuss the status of discussions with Roche. After giving consideration to any impact to the estimated value of the transaction, the anticipated likelihood that Roche would not proceed without an adjustment to the proposed terms and the absence of any reasonable or near term alternatives, the Board directed Company management to negotiate with Roche adjustments to the timing of certain economic and other deal terms in order to proceed with the transaction. On May 24, 2016, Roche expressed to the Company its desire to limit its risk by shifting a portion of the contemplated up-front payment to the IND clearance milestone and to further reduce such milestone by $2.5 million if the IND for EBI-031 was not in effect by August 31, 2016. Additionally, Roche proposed that it would be responsible for any new good laboratory practice toxicology studies required by the FDA. These updated terms, including some proposed Company modifications to the magnitude of the reduction to the up-front payment and the timing of IND clearance for purposes of determining the reduction of the IND clearance milestone, were then incorporated into a revised draft of the license agreement that the Company provided to Roche on May 25, 2016. Other key economic deal terms were substantially similar to those reflected in the final term sheet from March 2016.
Between May 25, 2016 and June 3, 2016, representatives of the Company, in consultation with the Board, WilmerHale and Roche negotiated the remaining terms of the license agreement via exchange of draft agreements and telephonic discussions. During this time, the license agreement terms were adjusted such that the up-front amount was $7.5 million and the date for reduction of $2.5 million from the IND clearance milestone was September 15, 2016. In addition, Roche would be permitted to assume responsibility for other preclinical activities beyond the good laboratory practice toxicology study if mutually agreed to or upon request if the IND was not cleared by September 15, 2016.
At a special telephonic meeting of the Board convened at 5:00 p.m. Eastern time on June 10, 2016, Company management and representatives of WilmerHale reviewed for the Board the final terms of the license agreement and the proposed transaction, including the up-front, milestone and royalty payment provisions, the buy-out options, key definitions relating to payment terms, ongoing obligations and responsibilities of the Company following effectiveness of the license, responsibility for development activities before and after clearance of the IND for EBI-031, responsibility for prosecution of intellectual property and patents, termination provisions, the requirement for approval by the Company’s stockholders and conditions to effectiveness of the license, and non-solicitation provisions. Company management reviewed with the Board the specific revised terms that had been incorporated into the license agreement since the meeting of the Board on May 12, 2016 and management’s view that the revised terms did not meaningfully impact its estimate of the net present value of the transaction, in particular given management’s view of the high probability of achieving the IND clearance milestone. In addition, the Board discussed the potential impact of the license transaction on its ongoing strategic review process with a goal of maximizing stockholder value, particularly the complementary nature of the license transaction with other potential transactions the Board would continue to explore, including the sale of the Company or other strategic or business combination transactions. The Board also considered the effect of the license transaction on employee arrangements, including under employment agreements with the Company’s management. Following the review of the final terms of the License Agreement and the proposed transaction, representatives of WilmerHale provided an overview of the fiduciary duties of directors in connection with the review and approval of the proposed transaction. After discussing the final terms of the License Agreement and the proposed transaction, the Board unanimously authorized and approved the License Agreement and the proposed transaction and recommended that the stockholders of the Company vote in favor of and approve the License Transaction at a special meeting of stockholders.
Following the Board meeting, the Company and Roche executed and delivered the License Agreement. On June 13, 2016, the Company issued a press release announcing the transaction and filed a Form 8-K with the SEC describing the material terms of the License Agreement and filing the License Agreement as an exhibit thereto.
Reasons for the License Transaction
After careful consideration, the Board, at a meeting held on June 10, 2016, approved the License Agreement and the transactions contemplated thereby by a unanimous vote of the directors. In the course of reaching its decision to approve the License Agreement and recommend approval by the Company’s stockholders of the License Transaction, the Board consulted with senior management of the Company and the Company’s legal advisors and considered a number of factors that the Board believed supported its decision,compensation committee member, including, but not limited to: (1) the source of his or her compensation as a director, including any consulting, advisory or other compensatory fee paid by us to him or her; and (2) whether he or she is affiliated with us or any of our subsidiaries or affiliates.
Strategicindependence standards for those committees established by the applicable rules and Financial Considerations. The Board’s viewregulations under the Exchange Act and the Nasdaq Stock Market Rules. In addition, with the exception of Dr. Celniker, each member of our nominating and corporate governance committee is independent as defined under the Nasdaq Stock Market Rules. In making such determination, our Board considered the relationships that the License Transaction will provideeach such non-employee director has with us and all other facts and circumstances our Board deemed relevant in determining independence.
Scope of Strategic Process. The fact that the Company conducted a diligent process with respect to various strategic alternatives, including communicating with potential counterparties regarding a variety of potential strategic transactions, including with respect to the sale of the entire Company including the Licensed Intellectual Property. In addition, the Board’s view that Roche’s proposal, as compared to the other proposals received with respect to the Company and its assets, was more favorable than the alternatives available to the Company, including the alternative of retaining the Licensed Intellectual Property.
Terms and Conditions of the License Agreement. The Board’s view that the following terms and conditions of the License Agreementwhom were favorable to the Company:
The Board also considered a variety of risks and other potentially negative factors concerning the License Agreement and the transactions contemplated thereby, including, among others, the following:
After considering the foregoing potentially negative and potentially positive factors, the Board concluded that the potentially positive factors relating to the License Agreement and the License Transaction substantially outweighed the potentially negative factors.
The foregoing discussion of the information and factors considered by the Board is not exhaustive, but is intended to reflect the material factors considered by the Board in its consideration of the License Transaction. In view of the complexity, and the large number, of the factors considered, the Board, both individually and collectively, did not quantify or assign any relative or specific weight to the various factors. Rather, the Board based its recommendation on the totality of the information presented to and considered by it. In addition, individual members of the Board may have given different weights to different factors.
Recommendation of the Board of Directors
The Board has unanimously determined that the terms and conditions of the License Agreement and the License Transaction are desirable and in the best interests of the Company and its stockholders. The Board recommends that our stockholders vote “FOR” the approval of the License Transaction Proposal.
Activities of Eleven Following the License Transaction
Although the License Transaction may be deemed to constitute the “sale” of “all or substantially all” of our assets and property under the DGCL, following effectiveness of the License Transaction we will retain rightsoriginally appointed to our intellectual property and assets other than the Licensed Intellectual Property relating to Compounds, Products and Companion Diagnostics, including the retention of rights to the other early stage product candidates in our pipeline. We will also retain rights to our AMP-Rx proprietary protein engineering platform that we have used to discover and develop innovative protein therapeutics to treat diseases of the eye. However, we continue to engage in a process to review a range of strategic alternatives with a goal to maximize stockholder value. Further, most of our research and development activities, other than with respect to EBI-031, are on hold pending the outcome of this strategic review process as we seek to manage our cash position. As such, our business efforts are currently devoted primarily to our review of strategic alternatives. Potential strategic alternatives that may continue to be explored and evaluated during the ongoing review process include, among others, the sale of the Company, a strategic partnership or a business combination with one or more parties or the licensing, sale or divestiture of some of our assets or proprietary technologies that are not related to the License Agreement. We cannot provide any commitment precisely regarding when or if this strategic review process will result in any type of additional transaction and no assurance can be given that we will determine to pursue a potential sale, strategic partnership, business combination or other arrangement.
As part of the strategic review process, or if the strategic review process does not result in any additional transaction, we may also consider a distribution to our stockholders of all or a portion of the payments from Roche under the License Agreement. We expect to consider a variety of factors in making any decision to distribute to our stockholders all or a portion of the payments from Roche under the License Agreement as part of another strategic transaction, with the continued goal of maximizing stockholder value. In particular, we may be more likely to consider a distribution to our stockholders of some or all of the cash proceeds under the License Agreement, some or all of the rights to receive future payments under the License Agreement or a combination thereof if the third parties with whom we may negotiate potential transactions, such as a sale of the Company or a business combination, ascribe less value to potential future payments under the License Agreement than does our
board of directors, including if the proposed ownership percentage of our stockholders following a proposed business combination does not reflect what our board of directors believes is appropriate value when compared with such a distribution to our stockholders. Conversely, if we believe that a proposed ownership percentage of our stockholders following a business combination reflects appropriate value with respect to the potential future payments under the License Agreement, including because of the relative value such ownership percentage would represent following such business combination, we may consummate the business combination without distributing to our stockholders any of the payments or rights to receive future payments under the License Agreement. In addition, a third party may requireBoard as a condition to the consummationclosing of our acquisition of Viventia in 2016. Each of Mr. Dan and Mr. Hurly are standing for re-election at this 2018 Annual Meeting.
U.S. Federal Income Tax Consequencesus of, the License Transaction
Thetransaction; and
The proposed License Transaction by us is entirely a corporate action. Our stockholders will not realize any gain or loss for U.S. federal income tax purposesspecial benefits as a result of the License Transaction.
transaction and the amount involved in the transaction is less than $120,000; and
We believe we are not required to make any material filings or obtain any material governmental consents or approvals before the consummation of the License Transaction. If any approvals, consents or filings are required to consummate the License Transaction, we will seek or make such consents, approvals or filings as promptly as possible.
There can be no assurance that Roche or the Company will obtain the regulatory approvals, if any, necessary to consummate the License Transaction or that the granting of these approvals will not involve the imposition of
conditions to the consummation of the License Transaction or require changes to the terms of the License Transaction. These conditions or changes could result in the conditions to the License Transaction not being satisfied prior to August 24, 2016, which would result in the automatic termination of the License Agreement. See “Proposal No. 1: The Asset Sale—The License Agreement—Termination of the License Agreement.”
Stockholders may vote against the approval of the License Transaction Proposal, but under Delaware law dissenters’ rights are not provided to stockholders inchief executive officer. In connection with the License Transaction because it does not constitute a merger or consolidation.
Stockholder Approvalclosing of the Acquisition, we issued 4,013,431 shares of our common stock to the Selling Shareholders according to their pro rata share of Viventia’s then-outstanding common shares, which represented approximately 19.9% of our voting power as of immediately prior to the issuance of such shares of our common stock.
| Name | Age | Position | |||
| Stephen A. Hurly | 50 | President and Chief Executive Officer and Director | |||
| Richard F. Fitzgerald | 54 | Chief Financial Officer, Secretary and Treasurer | |||
Bucknell University Business Advisory Board. Mr. Fitzgerald received his B.S. in Business Administration and Accounting from Bucknell University.
In considering the recommendation of the Board that Eleven’s stockholders vote to approve the License Transaction Proposal, stockholders of Eleven should be aware that Eleven’s directors and
Arrangements with Eleven Executive Officers
As described below, our Chief Executive Officer, and a member of our Board, Abbie C. Celniker, our Chief Development Officer, Karen Tubridy, andRichard Fitzgerald, our Chief Financial Officer, John J. McCabe, areC.P.A., our former Chief Financial Officer and Arthur DeCillis, M.D., our former Chief Medical Officer.
| Name and Principal Position | Year | Salary ($) | Bonus ($)(5) | Option awards ($)(6) | All other compensation ($)(7) | Total ($) | |||||||||||
| Stephen A. Hurly(1) | 2017 | 425,000 | 116,802 | 521,527 | 4,000 | 1,067,329 | |||||||||||
| President and Chief Executive Officer | 2016 | 119,093 | — | 755,511 | — | 874,604 | |||||||||||
| Richard F. Fitzgerald (2) | 2017 | — | — | — | 67,693 | 67,693 | |||||||||||
| Chief Financial Officer, Secretary and Treasurer | |||||||||||||||||
| John J. McCabe, C.P.A.(3) | 2017 | 259,424 | 75,000 | 156,165 | 11,161 | 501,750 | |||||||||||
| Former Chief Financial Officer | 2016 | 305,000 | 75,000 | 227,846 | — | 607,846 | |||||||||||
| Arthur DeCillis, M.D.(4) | 2017 | 324,018 | 100,000 | 29,085 | 4,459 | 457,562 | |||||||||||
| Former Chief Medical Officer | 2016 | 116,855 | — | 215,860 | — | 332,715 | |||||||||||
| (1) | Mr. Hurly has served as our President and Chief Executive Officer since September 20, 2016. |
| (2) | Mr. Fitzgerald served as our Interim Chief Financial Officer from October 20, 2017 to January 23, 2018, when he was appointed our Chief Financial Officer. During the period that Mr. Fitzgerald served as our Interim Chief Financial Officer, Mr. Fitzgerald served as a consultant to the Company pursuant to a consulting agreement dated October 13, 2017. Pursuant to such consulting agreement, we paid Mr. Fitzgerald a consulting fee at an agreed upon monthly consulting rate of $26,667 for such services and reimbursed Mr. Fitzgerald for business related expenses. Mr. Fitzgerald became an employee on January 23, 2018 when he was appointed our Chief Financial Officer, Secretary and Treasurer. |
| (3) | Mr. McCabe resigned as our Chief Financial Officer effective October 20, 2017. All compensation reported for Mr. McCabe, except for amounts reported in the "All other compensation" column, reflects amounts awarded to, earned by, or paid to him prior to October 20, 2017. |
| (4) | Dr. DeCillis resigned as our Chief Medical Officer effective October 3, 2017. All compensation reported for Dr. DeCillis, except for amounts reported in the "All other compensation" column, reflects amounts awarded to, earned by, or paid to him prior to October 3, 2017. |
| (5) | The amounts reported in the "Bonus" column reflect discretionary cash bonuses payable to our named executive officers in a given year in recognition of their performance. |
| (6) | The amounts reported in the "Options awards" column reflect the aggregate grant date fair value of stock options awarded during the year computed in accordance with the provisions of Financial Accounting Standards Board Accounting Standard Codification, or ASC, Topic 718. See Note 12 to our financial statements appearing at the end of our Annual Report on Form 10-K for the year ended December 31, 2017 regarding assumptions underlying the valuation of equity awards. |
| (7) | The amounts reported in the "All other compensation" column reflect amounts paid to our named executive officers for consulting services rendered in a given year, any unused vacation wages paid to our named executive officers upon their termination of employment and discretionary 401(k) matching contributions paid to our named executive officers as approved by the Board. |
| Option Awards | ||||||||||
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | ||||||
| Stephen A. Hurly | 109,375 | 240,625 | (1) | 3.37 | 9/19/2026 | |||||
| 16,346 | 16,346 | (2) | 2.28 | 4/2/2027 | ||||||
| — | 420,000 | (3) | 1.59 | 10/3/2027 | ||||||
| Richard F. Fitzgerald | — | — | — | |||||||
| John J. McCabe | 21,496 | — | 0.76 | 1/18/2018 | ||||||
| 3,937 | — | 0.83 | 1/18/2018 | |||||||
| 10,236 | — | 7.37 | 1/18/2018 | |||||||
| 16,844 | (4) | — | 10.40 | 6/30/2018 | ||||||
| 24,500 | (4) | — | 3.10 | 6/30/2018 | ||||||
| 10,000 | (4) | — | 4.09 | 6/30/2018 | ||||||
| 12,387 | (4) | — | 0.28 | 6/30/2018 | ||||||
| 20,000 | (4) | — | 0.28 | 6/30/2018 | ||||||
| 15,833 | (4) | — | 0.28 | 6/30/2018 | ||||||
| 25,000 | (4) | — | 3.37 | 6/30/2018 | ||||||
| 7,039 | (4) | — | 2.28 | 6/30/2018 | ||||||
| Arthur DeCillis | 25,000 | (5) | — | 3.37 | 1/3/2018 | |||||
| 9,623 | (5) | — | 2.28 | 1/3/2018 | ||||||
| (1) | Vests over four years, with 25% of the shares underlying the option vesting on September 20, 2017, the first anniversary of the grant date, and 6.25% of the shares underlying the option vesting quarterly thereafter until the fourth anniversary of the grant date. |
| (2) | Vests 50% on the grant date (April 3, 2017) with the remaining 50% vesting on the first anniversary of the grant date. |
| (3) | This option vests in installments based on the achievement of certain strategic and clinical milestones. On January 18, 2018 and March 14, 2018, the Compensation Committee of the Board of Directors of the Company determined that certain performance milestones were met, resulting in vesting of the option with respect to 80,430 and 105,000 shares, respectively. |
| (4) | Pursuant to the consulting agreement we entered into with Mr. McCabe on October 20, 2017, the services provided by Mr. McCabe under the consulting agreement constitute 'continuous service' for purposes of the vested portion of any stock option awards granted to Mr. McCabe under the 2014 Stock Incentive Plan. We terminated this consulting agreement effective as of March 30, 2018. Accordingly, the vested portion of such stock option awards will remain exercisable pursuant to its terms until June 30, 2018, after which date they will, to the extent unexercised, be forfeited. The unvested portion of any of Mr. McCabe's stock option awards or restricted stock awards were forfeited as of October 20, 2017, the effective date of Mr. McCabe's resignation. |
| (5) | Pursuant to Dr. DeCillis' resignation, effective as of October 3, 2017, all unvested stock option awards were forfeited at the time of his resignation, and all vested stock option awards expired on January 3, 2018. |
if his employment is terminated under specified circumstances.
advance to Mr. Hurly such expenses upon request.
her his dependents with group health and dental insurance for a period of up to 12 months. The License Transaction will constitute a change in control transaction under the terms of Ms. Tubridy’s employment agreement. As a result, if we consummate the License Transaction, and Ms. Tubridy’s employment is terminated without cause or for good reason within 12 months following the consummation of the License Transaction, she will be entitled to the benefits described above.
If we terminate Mr. McCabe’sFitzgerald’s employment without cause or if Mr. McCabeFitzgerald terminates his employment with us for good reason, in each case within 12 months following a change in control transaction, we are obligated toto: (i) pay Mr. McCabe an amount equal to hisFitzgerald’s base salary for a period of 12 months, paid in accordance with our then-current payroll practices, to accelerate in full the vesting of all of Mr. McCabe’s outstanding equity awards and,(ii) continue, to the extent allowed by applicable law and the applicable plan documents, to continue to provide Mr. McCabeFitzgerald and certain of his dependents with group health and dental insurance for a period of 12 months. The License Transaction will constitute a changemonths, and (iii) accelerate in control transaction underfull the termsvesting of all of Mr. McCabe’sFitzgerald’s outstanding equity awards.
The severance payments described above are subject to each such executive officer’s execution of, and the effectiveness of, a release of claims and compliance with confidentiality, nonsolicitation and noncompetition covenants. The definitions of “cause,” “good reason” and “change of control” applicable to each such Eleven executive officer are those under such executive officer’sDr. DeCillis’ employment agreement.
Quantification of Certain Potential Compensation Payments in Connection with the License Agreement
This section describes the estimated amounts of compensation that may be payable to each of Dr. Celniker, Ms. Tubridy and Eric Furfine, our former Chief Scientific Officer, (collectively, our “named executive officers”), as well as the estimated amounts of compensation that may be payable to Mr. McCabe, that are based on or otherwise relate to the transactions contemplated by the License Agreement in accordance with Item 402(t) of Regulation S-K.
The amounts for each individual set forth below have been calculated assuming the License Agreement is consummated on June 17, 2016, and, where applicable, such individual’s employment with us was terminated by us without cause, as defined in the applicabletheir respective employment agreement,agreements, or by such individualif Mr. McCabe or Dr. DeCillis terminated his employment with us for good reason, as defined in their respective employment agreements, absent a change in control transaction, as defined in their respective employment agreements, we were obligated to (i) pay Mr. McCabe’s or Dr. DeCillis’, as the case may be, base salary for a period of 12 months, payable in accordance with our then-current payroll practices and, (ii) continue, to the extent allowed by applicable law and the applicable plan documents, to
Name | Cash | Equity(1) | Perquisites / Benefits(2) | Total(3) | ||||||||||||
Abbie C. Celniker | $ | 675,000 | (4) | $ | 670,434 | (5) | $ | 14,457 | $ | 1,359,891 | ||||||
Karen Tubridy | $ | 323,710 | (6) | $ | 304,866 | (7) | $ | 18,860 | $ | 647,436 | ||||||
Eric Furfine(8) | — | — | — | — | ||||||||||||
John J. McCabe | $ | 305,000 | (9) | $ | 136,197 | (10) | $ | 18,860 | $ | 460,057 | ||||||
The following summary of the terms of this consulting agreement, the License Agreement is qualified in its entiretyservices provided by reference to the License Agreement, a copy of which is attached to this Proxy Statement as Appendix A.
Intellectual Property Rights to be Licensed
The License Agreement grants to Roche an exclusive, worldwide license, including the right to sublicense, under the Licensed Intellectual Property to make, have made, use, have used, register, have registered, sell, have sold, offerMr. McCabe constitute ‘continuous service’ for sale, import and export Compounds, Products and Companion Diagnostics.
For purposes of the License Agreement, “Compound” meansvested portion of any IL-6 antagonist anti-IL-6 monoclonal antibody, either whole or an active fragment thereof, including EBI-031.
For purposesstock option awards granted to Mr. McCabe under the 2014 Stock Incentive Plan. On March 30, 2018, we terminated the consulting agreement with Mr. McCabe. Accordingly, the vested portions of the License Agreement, “Product” means any product containing a Compound as a pharmaceutically active agent, regardless of their finished forms, delivery methods, formulations or dosages.
Development and Regulatory Responsibility
Under the License Agreement, if the FDA required any activities in order for the investigational new drug application (an “IND”) for EBI-031, which we submitted to the FDAMr. McCabe's stock option awards will expire on June 10, 2016,30, 2018 unless otherwise exercised pursuant to go into effect (“IND Clearance”; such activities, “IND Clearance Activities”), Roche would have been responsible, at its cost,their terms prior to use commercially reasonable efforts to conduct any new good laboratory practice (“GLP”) toxicology studies required by the FDA (such study, an “FDA-Required GLP Tox Study”), any IND Clearance Activities that we
and Roche mutually agreed should be conducted by Roche and, on or after September 16, 2016, any IND Clearance Activities that Roche requests to either conduct or take over from us (collectively, “Roche IND Clearance Activities”). We were responsible, at our cost, to use commercially reasonable efforts to conduct all other IND Clearance Activities (“Eleven IND Clearance Activities”). We and Roche were each required to notify the other of the resultsdate. The unvested portion of any IND Clearance Activity promptly after its completion, which, in the case of Roche IND Clearance Activities, consistedMr. McCabe's stock options awards or restricted stock awards were forfeited as of a status update regarding Roche’s assessment of the progress towards IND Clearance. We received IND Clearance on July 7, 2016.
As necessary for Roche to continue development of EBI-031, the License Agreement requires us to cooperate with Roche and disclose and make available to Roche all data and information in our possession and control regarding EBI-031 for three months after the later ofOctober 20, 2017, the effective date of Mr. McCabe’s resignation.
| Compensation | ||
| Annual Board Cash Retainer | $35,000 | |
| Additional Retainer for Non-Executive Chair of the Board | $47,500 | |
| Additional Retainers for Committee Chairs | ||
| • Audit | $15,000 | |
| • Compensation | $10,000 | |
| • Nominating and Corporate Governance | $7,500 | |
| Additional Retainers for Committee Members | ||
| • Audit | $7,500 | |
| • Compensation | $6,000 | |
| • Nominating and Corporate Governance | $3,750 | |
| Annual Equity Award | 8,072 shares of common stock | |
| Initial Equity Award | 16,143 shares of common stock | |
Other than any IND Clearance Activities, Roche is responsible for continuing development of EBI-031 and other Licensed Products at its cost, except that we were responsible for certain costs related to executing any tissue cross-reactivity studies of EBI-031 had they been initiated before the achievement of IND Clearance.
For purposes of the License Agreement, “Licensed Product” means a Product containing a Licensed Compound (as defined below).
Manufacture and Supply
The License Agreement requires us to maintain in effect certain of our manufacturing agreements for up to 15 months after the effective date of the license under the License Agreement and transfer certain manufacturing activities to Roche within three months after the later of the effective date of the license under the License Agreementhe or the Responsibility Transfer Date. For purposes of the License Agreement, “Responsibility Transfer Date” means the earlier of IND Clearance for a Licensed Product containing EBI-031 or, in the case of ongoing Roche IND Clearance Activities, the conclusion of Eleven IND Clearance Activities (which date we and Roche would have agreed upon in good faith).
We maintained responsibility for payment under our third party manufacturing agreements for Eleven IND Clearance Activities, while Roche or its designated affiliate will assume responsibility for payment under those agreements for (i) Roche IND Clearance Activities, (ii) after the Responsibility Transfer Date, such services as we are required to maintain under the License Agreement (unless waived in writing by Roche), and (iii) such additional services as Roche requests.
In addition, at Roche’s reasonable request and expense, we will, within three months after the later of the effective date or theResponsibility Transfer Date, support the transfer of manufacturing activities and related know-how in our possession and control to Roche or Roche’s designee, including making available to answer Roche questions our representatives with historical knowledge of such manufacturing activities and contracts.
License Fees, Milestones and Royalties
Under the License Agreement, Roche will pay us an up-front license fee of $7.5 million (paid within 30 days after the effective date of the license under the License Agreement and receipt of an invoice from us), up to an additional $262.5 million of milestone payments (paid within 30 days after milestone achievement and receipt of an invoice from us) and royalty payments (paid within 90 days after the end of each quarter) on Net Sales of certain licensed products made with the Licensed Intellectual Property in accordance with a tiered royalty rate scale, subject to certain buy-out options of Roche as further described below.
Milestones.
she serves.
Event | U.S. Dollars (in millions) | |||
IND Clearance (if achieved on or before September 15, 2016)*** | $ | 22.5 | ||
IND Clearance (if achieved after September 15, 2016 and no Extended Roche GLP Tox Study) | $ | 20.0 | ||
Initiation of the first Extended Roche GLP Tox Study** | $ | 5.0 | ||
IND Clearance (if achieved after September 15, 2016 and after completion of an Extended Roche GLP Tox Study) | $ | 15.0 | ||
Initiation of the first Phase II Study | $ | 20.0 | ||
Initiation of the first Phase III Study | $ | 30.0 | ||
BLA Filing in the United States | $ | 25.0 | ||
BLA Filing anywhere in France, Germany, Italy, Spain, the United Kingdom or anywhere in the European Union (all such countries collectively, the “European Union”)* | $ | 15.0 | ||
BLA Filing in Japan | $ | 10.0 | ||
First Commercial Sale in the United States | $ | 40.0 | ||
First Commercial Sale anywhere in the European Union* | $ | 25.0 | ||
First Commercial Sale in Japan | $ | 10.0 | ||
BLA Filing for a second Indication in the United States | $ | 10.0 | ||
BLA Filing for a second Indication anywhere in the European Union* | $ | 5.0 | ||
Regulatory Approval in a second Indication in the United States | $ | 30.0 | ||
Regulatory Approval in a second Indication anywhere in the European Union* | $ | 20.0 | ||
| Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Total ($) | ||||||
| Wendy L. Dixon(2) | 99,433 | 7,899 | 107,332 | ||||||
| Abbie C. Celniker, Ph.D.(2) | 38,219 | 7,899 | 46,118 | ||||||
| Paul G. Chaney(2) | 41,000 | 7,899 | 48,899 | ||||||
| Leslie L. Dan(2) | 35,000 | 7,899 | 42,899 | ||||||
| Jay Duker, M.D.(2) | 35,000 | 7,899 | 42,899 | ||||||
| Barry Gertz, M.D.(2) | 35,000 | 7,899 | 42,899 | ||||||
| Jane V. Henderson(2) | 53,750 | 7,899 | 61,649 | ||||||
| Daniel S. Lynch(2) | 56,567 | 7,899 | 64,466 | ||||||
| (1) | The amounts reported in the |
| (2) | Immediately following the annual meeting of stockholders held on May 19, 2017, Dr. Dixon, Dr. Celniker, Mr. Chaney, Mr. Dan, Dr. Duker, Dr. Gertz, Ms. Henderson and Mr. Lynch each received an option to purchase 8,072 shares of common stock at an exercise price of $1.48 per share. These stock options vest over twelve months, with |
For any events first achieved by a Licensed Product containing a Licensed Compound other than EBI-031, we will receive 50.0% of the amounts in the above table with no further amount owed for any such event; provided, however, that if the event first achieved with such Licensed Compound other than EBI-031 involves a non-ophthalmology Indication and the event subsequently-achieved with a Licensed Product containing EBI-031 involves an ophthalmology Indication, then Eleven shall receive the remaining 50.0% of such amounts.
Roche shall pay to Eleven royalties on Net Sales of Licensed Products during the applicable Royalty Terms (as defined below). Thereafter, the licenses granted to Roche shall be fully paid up, irrevocable and royalty-free.
For purposes of the License Agreement, an “Extended Roche GLP Tox Study” means, in the case where the FDA requires an FDA-Required GLP Tox Study, a GLP toxicity study conducted by or on behalf of Roche that is designed such that the last dose is administered to subjects more than fifteen weeks after the first dose and is either (i) an FDA-Required GLP Tox Study or (ii) a GLP toxicity study that is not required by the FDA for IND Clearance but still satisfies the FDA’s requirements for IND Clearance, and is not run in parallel with or after an FDA-Required GLP Tox Study designed such that the last dose is administered to subjects fifteen or fewer weeks after the administration of the first dose.
Royalty Rates.
The following royalty rates apply under the License Agreement to the respective tiers of aggregate calendar year Net Sales of a Licensed Product, on an incremental basis, as follows:
| ||||||
| Stock Options Outstanding (#) | |||||
| ||||||
| ||||||
| ||||||
| Leslie L. Dan | 24,215 | |||||
| Jay Duker, M.D. | 32,287 | |||||
| Barry Gertz, M.D. | 32,287 | |||||
| Jane V. Henderson | 53,349 | |||||
| Daniel S. Lynch | 114,767 | |||||
| Fee Category | Fiscal Year 2017 | Fiscal Year 2016 | ||||||
| Audit Fees(1) | $ | 450,000 | $ | 453,200 | ||||
| Audit-Related Fees(2) | 246,390 | 157,500 | ||||||
| Tax Fees(3) | 10,500 | 87,500 | ||||||
| All Other Fees(4) | — | — | ||||||
| Total Fees | $ | 706,890 | $ | 698,200 | ||||
| (1) | Audit fees consist of fees for the audit of our annual financial statements. |
| (2) | Audit-related fees for fiscal year 2017 were incurred in connection with the Registration Statement on Form S-1 filed in November 2017 as well the acquisition of Viventia. Audit-related fees for fiscal year 2016 were incurred in connection with the License Agreement |
If Roche or its affiliates intend
| (3) | Tax fees for fiscal years 2017 and 2016 consist of fees for tax compliance services. In addition, in 2016 we incurred tax fees in connection with a Section 382 study and the acquisition of Viventia. Tax compliance services relate primarily to the preparation of our U.S. and Massachusetts tax returns. |
| (4) | There were no other fees for fiscal years 2017 and 2016. |
With respect to a given Licensed Product, if in a given country there is2018 Annual Meeting. Accordingly, Dr. Gertz will no composition of matter claim that offers protection for the composition of matter of a Compound in such Licensed Product in such country, then the royalty payments due to us under the License Agreement for such Licensed Product in such country shall be reduced by 50.0%, and if, during the Royalty Term but after the ten year anniversary of the First Commercial Sale of such Licensed Product in such country, there is no such composition of matter claim in such country but a Biosimilar Product (as defined below) has entered the market in such country, no royalty payments shall be due to us for such Licensed Product in such country.
If a Product that is a Biosimilar Product to a given Licensed Product enters the market in a given country prior to the end of the Royalty Term and Net Sales of such Licensed Product in such country subsequently decrease for two consecutive calendar quarters by more than 25.0% of the level of the Net Sales of such Licensed Product in such country achieved in the calendar year immediately prior to such entry divided by four, then the royalty rate owed to us under the License Agreement for such Licensed Product shall be reduced by 50.0% in such country. If subsequent to such a Biosimilar Product entry, the Net Sales of such Licensed Product in such country decrease by more than 50.0% of the level of the Net Sales of such Licensed Product in such country achieved in the calendar year immediately prior to such entry divided by four, then the royalty rate owed to us under the License Agreement in such country for such Licensed Product shall be reduced by 75.0% in such country.
For all third party patent rights (other than those that claim (i) any pharmaceutically-active compound other than a Licensed Compound, (ii) any use claims (except those claiming one or more approved Indications for the Licensed Product in the given country) or (iii) any manufacturing claims) that Roche, any of its affiliates or sublicensees (collectively, the “Roche Group”) otherwise would have infringed by selling the relevant Licensed Product in the relevant country, the Roche Group shall have the right to deduct from royalties otherwise due and payable by the Roche Group to us for such Licensed Product in such country under the License Agreement (i) a maximum of 50.0% of the royalties actually paid by the Roche Group to a third party with respect to such arrangement except for patent rights that claim any delivery device and (ii) a maximum of 25.0% of the royalties actually paid by the Roche Group to a third party with respect to such arrangement for patent rights that claim any delivery device.
In no event may the reductions resulting from lack of patent rights, biosimilar entry or offsets for licenses to third party patents, in the aggregate, reduce the royalty payments to us for any Licensed Product below 50.0% of the
payments that would otherwise be due for such Licensed Product (after any adjustment to Net Sales to reflect the relative commercial value contributed by the components of such License Product if it is Combination Product) or, if following a Biosimilar Product’s entry, the Net Sales of such Licensed Product in such country decreased by more than 50.0%longer serve as described above, below 25.0% of the payments that would be otherwise due for such Licensed Product.
Sales (as defined below) by a third party to which a member of the Roche Group is required throughBoard as of the order, decree or grant2018 Annual Meeting and the size of a governmental authority to grant a sublicense to manufacture, use, sell, offer for sale, import or export a Licensed Product in a country or region (a “Compulsory Sublicensee”)the Board will be excluded from Net Sales and Roche will pay us the compensation received by a memberreduced, effective as of the Roche Group from2018 Annual Meeting, to eight (8) members and class I will consist of only two (2) members. Biographical information and the Compulsory Sublicensee forattributes, skills and experience of each nominee that led our Nominating and Corporate Governance Committee and Board to determine that such sublicense, multiplied by:
| ||
For purposesnominee should serve as a director are discussed in the
For purposes of the License Agreement, “Combination Product” means (i) a single pharmaceutical formulation containing as its active ingredients both a Compound and one or more other therapeutically or prophylactically active ingredients that are not Compounds (each such therapeutically or prophylactically active ingredients, a “Non-Compound Active Agent”), or (ii) a combination therapy comprised of a Compound and one or more other therapeutically or prophylactically active products containing at least one Non-Compound Active Agent but not containing any Compounds, priced and sold in a single package containing such multiple products or packaged separately but sold together for a single price, in each case, including all dosage forms, formulations, presentations, line extensions and package configurations.
For purposes of the License Agreement, “Indication” means a disease (i) for which the given Licensed Product is indicated for treatment (or for which a BLA for such Licensed Product is filed) and (ii) that is described in the Licensed Product label as required by the Regulatory Approval granted by the applicable Regulatory Authority (or whichlaw or Nasdaq rules, our audit committee believes that it is proposed in the BLA). To distinguish one Indication from another Indication, the two Indications haveadvisable and has decided to be (i) listed in two different blocks of the Tenth Revision of the International Classifications of Diseases and Related Health Problems, as may be revised or amended from time to time, or a successor classification (as a way of example, any retinopathy under H35 is in a different block from any retinopathy under block H31, whereas H35.023 and H35.031 belong to the same block) and (ii) developed by Roche under separate pivotal clinical studies.
For purposes of the License Agreement, “First Commercial Sale” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the first invoiced sale of such a Licensed Product to a third party by a member of the Roche Group in such country following the receipt of any Regulatory Approval required for the sale of such Licensed Product, or if no such Regulatory Approval is required, the date of the first invoiced sale of such Licensed Product to a third party by a member of the Roche Group in such country.
For purposes of the License Agreement, “Licensed Compound” means (i) EBI-031, (ii) certain of our other IL-6 antagonist anti-IL-6 monoclonal antibodies or (iii) any other Compound that (x) is covered by certain of our
patent rights in the United States or European Union or (y) was covered by such a patent rights that had expired less than ten years from the applicable date.
For purposes of the License Agreement, “Net Sales” means, for a Licensed Product in a particular period, the amount calculated by subtracting from the Sales of such Licensed Product for such period by Roche or any of its affiliates: (i) a lump sum deduction of 4.0% of such Sales in lieu of those deductions that are not accounted for on a Licensed Product-by-Licensed Product basis (such as freight, postage charges, transportation insurance, packing materials for dispatch of goods and custom duties); (ii) uncollectible amounts accrued during such period with respect to such Sales based on a proportional allocation of the total bad debts accrued during such period and not already taken as a gross-to-net deduction in accordance with the then currently used International Financial Reporting Standards (“IFRS”) in the calculation of such Sales of such Licensed Product for such period; (iii) credit card charges (including processing fees) incurred during such period on such Sales and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Licensed Product for such period; and (iv) government mandated fees and taxes and other government charges accrued during such period with respect to such Sales not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of such Sales of such Licensed Product for such period, including, for example, any fees, taxes or other charges that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body, but excluding any taxes on net income of a member of the Roche Group.
For purposes of the License Agreement, “Regulatory Approval” means any approvals, registrations or authorizations by any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, including the FDA, in each country involved in the granting of Regulatory Approval for the Product, necessary for the sale of a Product.
For purposes of the License Agreement, “Royalty Term” means, unless Roche exercised a buy-out option, on a country-by-country basis, with respect to a Licensed Product, the period of time commencing on the date of First Commercial Sale of such Licensed Product in such country and ending on the later of the date that is (i) ten years after the date of the First Commercial Sale of such Licensed Product in such country, or (ii) the expiration of the last to expire valid claim (other than a claim for manufacturing processes, product-by-process or delivery devices) in Eleven patent rights covering such Licensed Product or any Compound in such Licensed Product in such country.
For purposes of the License Agreement, “Sales” means, for a Licensed Product in a particular period, the sum of:
(i) the amount stated in the Roche Holding AG “Sales” line of its externally published audited consolidated financial statements with respect to such Licensed Product for such period (excluding sales for resale to any sublicensees that are not affiliates of Roche). This amount reflects the gross invoice price at which such Licensed Product was sold or otherwise disposed of (other than for use as clinical supplies or free samples) by Roche and its affiliates to such third parties (excluding sales to any sublicensees that are not affiliates of Roche) in such period reduced by gross-to-net deductions, if not previously deducted from such invoiced amount, taken in accordance with the then currently used IFRS.
(ii) for sublicensees that are not Roche affiliates, the sales amounts reported to Roche and its affiliates in accordance with the sublicensee contractual terms and their then-currently used accounting standards.
Buy-Out Options
There are two “option periods” during which Roche may elect to end its diligence, milestone and royalty payment obligations under the License Agreement. First, Roche may exercise a buy-out option following the Initiation of the first Phase II Study for a Licensed Product up until the day before the Initiation of the first Phase
III Study for a Licensed Product, in which case Roche will pay us $135.0 million within 30 days after Roche exercises the buy-out option and receives an invoice from us. Second, Roche may exercise a buy-out option following the day after the Initiation of the first Phase III Study for a Licensed Product until the day before BLA Filing for a Licensed Product in either the United States or in the European Union, in which case Roche will pay us, within 30 days after Roche exercises the buy-out option and receives an invoice from us, $265.0 million (which would be reduced to $220.0 million if none of our patent rights containing a composition of matter claim covering any Licensed Compound or Licensed Product has issued in the European Union).
For purposes of the License Agreement “Phase II Study” means a human clinical trial that includes a control arm (placebo or standard of care), a minimum of 100 patients per Indication (except (i) if the Indication is an orphan Indication as determined under Applicable Law, in which case there shall be no such minimum, or (ii) if the clinical trial is intended to explore multiple Indications in the same arm or arms of such clinical trial, in which case a minimum of 100 total patients, irrespective of Indication, shall apply), and a minimum duration of dosing for each patient of five months from the initial dose until the last dose, regardless of how frequently any such patients are dosed, and for which the primary endpoints include a determination of dose ranges or a preliminary determination of efficacy in patients being studied, as described in 21 C.F.R. § 312.21(b) of the Federal Food, Drug and Cosmetic Act, as amended from time to time, and the foreign equivalent thereof (“FDCA”).
For purposes of the License Agreement “Phase III Study” means a human clinical trial that is prospectively designed to, if successful, demonstrate statistically whether a product is safe and effective for use in humans in a manner which, if such trial is successful, would be sufficient, alone or with other clinical studies, to seek to obtain regulatory approval to market such product in patients having the disease or condition being studied, as described in 21 C.F.R. § 312.21(c) of the FDCA.
Intellectual Property
Until such time as Roche exercises a buy-out option (or after Roche has failed to timely exercise each of its buy-out options), Roche will use commercially reasonable efforts to control the preparation, prosecution, filing and maintenance of certain of our patent rights in the Licensed Intellectual Property, without Roche taking into account the payment reductions under the License Agreement that would occur if any such patent right or claim in such a patent right were to not exist.
Representations and Warranties
The License Agreement contains certain representations and warranties made by us regarding, among other things:
Limitation of Liability
From and after the effective date of the license under the License Agreement, neither party may recover special, incidental consequential, indirect or punitive damages or lost profits from the other, except for indemnification obligations.
Conditions to Effectiveness
If the License Transaction Proposal is approved bygive our stockholders the License Agreement shall automatically become effective on the following business day;provided that no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order, stay, decree, judgment or injunction or statute, rule or regulation which has the effect of prohibiting the consummation of the transactions contemplated by the License Agreement.
Termination
The License Agreement may be terminated as follows:
If, after the effective date of the license under the License Agreement, the License Agreement is terminated by us for Roche’s material breach or development discontinuance or by Roche at its election (each, a “Roche Activated Termination”), then Roche may provide us with sufficient information to determine whether we wish to continue pursuing development of the Returnable Products (as defined below), other than Combination Products, that were developed by Roche prior to the termination of the License Agreement. If we notify Roche within a certain period of time that we have a bona fide intention to continue ongoing development and commercialization of certain Returnable Products, Roche will use commercially reasonable efforts to transfer to us all regulatory filings and approvals, all final pre-clinical and clinical study reports and clinical study protocols, and all data, including clinical data, in the possession and control of the Roche Group related to such Returnable Products necessary for us to continue to develop and commercialize such Returnable Products, and we will reimburse Roche for the cost of providing us such information and will pay for all of Roche’s transfer activities.
To the extent we are able to recover and subsequently commercialize any such Returnable Products, we will owe Roche a royalty on such Returnable Products, paid on a tiered scale based on the development stage at which the product was returned to us, as set forth below.
| ||||
| ||||
| ||||
| ||||
Such royalties will be paid on a Returnable Product-by-Returnable Product and country-by-country basis commencing on the first commercial sale of the Returnable Product in such country by us, or any of our affiliates, licensees or sublicensees (other than a member of the Roche Group) and ending ten years after the first commercial sale of the Returnable Product in such country by any entity (including a member of the Roche Group). The royalties are also subject to similar reductions as apply to the royalties paid by Roche to us under the License Agreement.
For purposes of the License Agreement, “Returnable Product” means a Licensed Product that has advanced at least into Initiation of a Phase I Study (as defined below) by the effective date of termination of the License Agreement.
For purposes of the License Agreement, “Phase I Study” means a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. § 312.21(a) of the FDCA.
Solicitation
Except as specifically permitted in the License Agreement, the Company shall not, and shall use its reasonable best efforts to cause its officers, directors, employees, investment bankers, attorneys or other agents or advisors not to, directly or directly, (i) solicit, initiate, or knowingly facilitate or knowingly encourage the submission of any proposal or offer from any third party with respect to an Alternative Transaction; (ii) enter into or participate in any discussions or negotiations with, furnish any non-public information relating to the IL-6 program to, or afford access to the business, properties, assets, books or records of the IL-6 program to, any third party that, to Eleven’s knowledge, is seeking to make, or has made, any proposal or offer for a Transaction, in each case relating to or in connection with an Alternative Transaction; or (iii) enter into any agreement with any person or entity (other than Roche) for an Alternative Transaction.
Notwithstanding the above, the Company may: (i) furnish non-public information relating to, and afford access to the business, properties, assets, books or records of, the IL-6 program to any Qualified Person (and the representatives of any such Qualified Person), pursuant to a confidentiality agreement not materially less restrictive of the other party than the confidentiality obligations applicable to Roche pursuant to our non-disclosure agreement with Roche; (ii) engage in discussions or negotiations (including solicitation of revised
proposals with respect to an Alternative Transaction) with any Qualified Person (and the representatives of such Qualified Person) with respect to a potential Alternative Transaction; (iii) amend or grant a waiver or release under any standstill or similar agreement with respect to any capital stock of Eleven with any Qualified Person; and/or (iv) enter into an agreement with a Qualified Person with respect to an Alternative Transaction.
For purposes of the License Agreement, “Alternative Transaction” means any exclusive outbound license of, exclusive collaboration regarding, or sale, transfer or other disposition of, a material portion of Eleven’s assets, rights and know-how in Eleven’s IL-6 program, including EBI-031, whether by agreement, equity purchase, asset purchase, merger, business combination, restructuring or otherwise, it being understood and agreed that the following shall not constitute an “Alternative Transaction”: (i) a Carve-Out Transaction, (ii) a financing transaction solely related to the continued financing of the operations of Eleven or (iii) the transactions contemplated byratify this Agreement.
For purposes of the License Agreement, “Carve-Out Transaction” means a merger, tender offer, consolidation or other business combination pursuant to which the overall business or assets of Eleven are combined with that of a third party in a transaction (i) that, if to be entered into prior to the effectiveness of the license under the License Agreement, will provide for the continued effectiveness of the License Agreement and the rights and obligations of Eleven and Roche and (ii) that specifically contemplates the exclusion of Eleven’s development and commercialization rights with respect to the IL-6 program, including EBI-031.
For purposes of the License Agreement, “Qualified Person” means mean any person or entity making an unsolicited inquiry, proposal or offer with respect to an Alternative Transaction that the Board determines in good faith (after consultation with outside counsel and its financial advisors) is, or could reasonably be expected to lead to an Alternative Transaction that is, more favorable to Eleven or its stockholders than the transactions contemplated by the License Agreement, taking into account all the terms and conditions of such proposal or offer, and that is reasonably capable of being completed on the terms proposed, taking into account all financial, regulatory, legal and other aspects of such proposal or offer.
Change of Control
selection. If we undergo a Change of Control (as defined below), we will provide written notice to Roche within 15 days after completion of such Change of Control, the acquirer or successor will acknowledge in writing to Roche that certain know-how and patent rights licensed to Roche under the License Agreement are subject to the exclusive licenses to Roche for the research, development or commercialization of Compounds or Products, subject to the terms and conditions of the License Agreement. If either Eleven or the acquirer or its affiliates are engaged in the conduct of clinical studies or commercialization of competing ophthalmic products either at the time of the Change of Control or thereafter, then Roche may require Eleven and the acquirer and its affiliates to institute a firewall to limit access of information and reports provided by Roche to certain individuals specified in the License Agreement.
For purposes of the License Agreement, “Change of Control” means (i) the acquisition by any third party of beneficial ownership of 50.0% or more of our then-outstanding common stock or voting power, other than acquisitions by employee benefit plans sponsored or maintained by us; (ii) the consummation of a business combination involving us, unless, following such business combination, our stockholders immediately prior to such business combination beneficially own directly or indirectly more than 50.0% of the then outstanding common shares or voting power of the entity resulting from such business combination; or (iii) the sale of all or substantially all of our assets or business to a third party.
Indemnification
We have agreed to indemnify Roche for any losses, expenses, costs of defense and amounts Roche becomes legally obligated to pay due to claims from a third party to the extent resulting from our breach of the License
Agreement or activities related to Licensed Products conducted by us or on our behalf, except to the extent such losses, expenses, costs and amounts are due to Roche’s breach of the License Agreement or the gross negligence or willful misconduct or failure to act of Roche, its affiliates or sublicensees. Roche has agreed to indemnify us for any losses, expenses, cost of defense and amounts we become legally obligated to pay due to a claim from a third party to the extent resulting from the breach of the License Agreement by Roche or activities related to Licensed Products conducted by or on behalf of Roche or any of its affiliates or sublicensees, except to the extent such losses, expenses, costs and amounts are due to our breach of the License Agreement or our gross negligence or willful misconduct or failure to act.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THE LICENSE AGREEMENT, INCLUDING THE GRANT OF THE EXCLUSIVE LICENSES THEREUNDER.
PROPOSAL 2—AUTHORITY TO ADJOURN THE SPECIAL MEETING
If, at the Special Meeting, the Board determines it is necessary or appropriate to adjourn the Special Meeting to solicit additional proxies to approve the License Transaction Proposal, then we intend to move to vote on this proposal. If the Board determines that it is necessary or appropriate, we will ask our stockholders to vote only on this Proposal 2 and not on the License Transaction Proposal.
In this proposal, we are asking our stockholders to approve a proposal to authorize the Board, in its discretion, to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies to approve the License Transaction Proposal. If our stockholders approve the adjournment of the Special Meeting, we could adjourn the Special Meeting and any adjourned session of the Special Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the License Transaction Proposal. Among other things, approval of this proposal could mean that, even if we had received proxies representing a sufficient number of votes against the License Transaction Proposal such that the License Transaction Proposal would be defeated, we could adjourn the Special Meeting without a vote on the License Transaction Proposal and seek to convince the holders of those shares to change their votes to votes in favor of the License Transaction Proposal.
The vote on this proposal is not approved at the 2018 Annual Meeting, our audit committee may reconsider this selection.
Recommendation of Our Board of Directors
| Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||||
| Equity compensation plans approved by security holders - options | 2,120,796 | (2) | 3.1 | 1,247,630 | |||||
| Equity compensation plans not approved by security holders - options (3) | 575,000 | (4) | 3.37 | ||||||
| Total | 2,695,796 | 1,247,630 | |||||||
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE PROPOSAL TO ADJOURN THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.
end of each successive three-month period following the one-year anniversary of the date of grant of the option, subject to the recipient’s continued service with us through the applicable vesting dates. The unvested portion of Dr. DeCillis’ inducement award was forfeited as of October 3, 2017, which was the effective date of his resignation.
2018.
| Name and Address of Beneficial Owner | Number of shares owned | Percentage of shares beneficially owned | ||||||
5.0% Stockholders: | ||||||||
Boxer Capital, LLC(1) | 1,523,572 | 7.6 | % | |||||
Entities affiliated with Flagship Ventures Management, Inc.(2) | 3,373,425 | 16.8 | % | |||||
JAFCO Super V3 Investment Limited Partnership(3) | 1,449,337 | 7.2 | % | |||||
Sabby Management, LLC(4) | 1,192,775 | 5.9 | % | |||||
Third Rock Ventures, L.P.(5) | 4,841,591 | 24.2 | % | |||||
Directors and Named Executive Officers: | ||||||||
Daniel S. Lynch(6) | 170,847 | * | ||||||
David A. Berry, M.D., Ph.D.(7) | 22,421 | * | ||||||
Paul G. Chaney(8) | 22,869 | * | ||||||
Wendy L. Dixon, Ph.D.(9) | 19,282 | * | ||||||
Jay S. Duker, M.D.(10) | 9,865 | * | ||||||
Barry J. Gertz, M.D., Ph.D.(11) | 9,865 | * | ||||||
Jane V. Henderson(12) | 30,763 | * | ||||||
Cary G. Pfeffer, M.D.(13) | 4,864,012 | 24.3 | % | |||||
Abbie C. Celniker, Ph.D.(14) | 624,112 | 3.1 | % | |||||
John J. McCabe, C.P.A.(15) | 81,854 | * | ||||||
Eric S. Furfine, Ph.D.(16) | 163,698 | * | ||||||
Karen Tubridy, Pharm.D.(17) | 139,185 | * | ||||||
All current executive officers and directors as a group (11 persons)(18) | 5,995,075 | 29.0 | % | |||||
| Name and Address of Beneficial Owner | Number of shares beneficially owned | Percentage of shares beneficially owned | ||||
| 5% Stockholders: | ||||||
| Third Rock Ventures, L.P. (1) | 4,841,591 | 10.1 | % | |||
| Clairmark Investments Ltd. (2) | 3,582,328 | 7.5 | % | |||
| Directors and Named Executive Officers: | ||||||
| Wendy L. Dixon, Ph.D. (3) | 40,359 | * | ||||
| Abbie C. Celniker, Ph.D. (4) | 924,436 | 1.9 | % | |||
| Paul G. Chaney (5) | 40,359 | * | ||||
| Leslie L. Dan (2) (5) | 3,599,817 | 7.5 | % | |||
| Jay S. Duker, M.D. (6) | 32,287 | * | ||||
| Barry J. Gertz, M.D., Ph.D. (6) | 32,287 | * | ||||
| Jane V. Henderson (7) | 53,349 | * | ||||
| Daniel S. Lynch (8) | 185,646 | * | ||||
| Stephen A. Hurly (9) | 769,278 | 1.6 | % | |||
| Richard Fitzgerald (10) | — | * | ||||
| John J. McCabe, C.P.A. (11) | 83,383 | * | ||||
| Arthur DeCillis, M.D. (12) | — | * | ||||
| All current executive officers and directors as a group (10 persons) (13) | 5,677,818 | 11.6 | % | |||
| * | Less than one percent. |
| (1) |
|
| (2) | Based on information reported by Clairmark on Schedule 13D filed with the SEC on September 26, 2016. Clairmark is the beneficial owner of the 3,582,328 shares of common stock issued to Clairmark as consideration for the Acquisition of Viventia. The address of each of the reporting persons is Clairmark Investments Ltd., 305 Milner Avenue, Suite 914, Toronto, Ontario M1B 3V4. |
| (3) | Consists of |
| (4) | Consists of |
| (5) | Consists of |
| (6) | Includes 32,287 shares of common stock issuable upon the exercise of options exercisable within 60 days after |
| (7) | Consists of |
| (8) | Consists of |
| (9) | Consists of |
| (10) | Mr. Fitzgerald was appointed our Interim Chief Financial Officer effective as of |
| (11) | Mr. McCabe resigned as our Chief Financial Officer effective as of October 20, 2017. The share amounts set forth in |
| (12) | Dr. DeCillis resigned as our Chief Medical Officer, effective as of October 3, 2017. At the time of his resignation, he held no shares of our common stock and all vested stock awards owned by him expired three months following the date of his resignation. |
| (13) | Consists of (i) |
the Internet.Section 16(a) Beneficial Ownership Reporting ComplianceBased solely on our review of copies of reports filed by individuals and entities required to make filings pursuant to Section 16(a) of the Exchange Act or written representations from such individuals or entities, we believe that during 2017 all filings required to be made by such individuals or entities were timely made in accordance with the Exchange Act.OTHER MATTERSOur board of directorsBoard does not know of any other matters that may come before the Special2018 Annual Meeting. However, if any other matters are properly presented to the Special2018 Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote, or otherwise act, in accordance with their judgment on such matters.Solicitation of ProxiesThis proxy is solicited on behalf of our board of directors.The CompanyBoard. We will bear the expenses connected with this proxy solicitation. We also will request brokerage housesexpect to pay banks, brokers and other custodians, nominees their reasonable expenses for forwarding proxy materials and fiduciariesannual reports to forward soliciting material to the beneficial owners of common stock held of record by such custodiansprincipals and we will reimburse such custodians forobtaining their expenses in forwarding soliciting materials.voting instructions. In addition to the solicitationuse of proxies by mail,the mails, our directors, officers and employees may, without additional remuneration, may solicit proxies in person or by personal interview, e-mail,use of other communications media. These solicitations may be made personally or by mail, facsimile, telephone, facsimilemessenger, email, or other means of communication.Householding of SpecialAnnual Meeting MaterialsSome banks, brokers and other nominee record holders may be participating in the practice of “householding” notices of internet availability, proxy statements and annual reports. This means that only one copy of our Proxy StatementNotice, or proxy statement, and other soliciting materialannual report may have been sent to multiple stockholders in the same household. We will promptly deliver a separate copy of either document to any stockholder upon request submitted in writing to us at Eleven Biotherapeutics, Inc., 215245 First Street, Suite 4001800 Cambridge, MA 02142, Attention: Corporate Secretary, or by calling (617) 858-8911.444-8550. Any stockholder who wants to receive separate copies of the Notice, proxy statementsstatement or annual report in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact his or her bank, broker or other nominee record holder, or contact us at the above address or phone number.Deadline for Submission of Stockholder Proposals for 20172019 Annual Meeting of StockholdersProposals of stockholders intended to be presented at our annual meeting of stockholders to be held in 2017 (the “20172019, or the 2019 Annual Meeting”)Meeting, pursuant to Rule 14a-8 promulgated under the Exchange Act must be received by us at our principal offices, 215245 First Street, Suite 4001800 Cambridge, MA 02142, Attention: Corporate Secretary, no later than December 30, 2016,31, 2018, the date that is 120 days prior to the first anniversary of the date of thethis proxy statement, delivered in connection with our annual meeting of stockholders held on June 8, 2016, in order to be included in the proxy statement and proxy card relating to that meeting.In addition, our by-laws establish an advance notice procedure for nominations for election to our board of directorsBoard and other matters that stockholders wish to present for action at an annual meeting other than those to be included in our proxy statement. In general, notice must be received at our principal offices at 215245 First Street, Suite 4001800 Cambridge, MA 02142, Attention: Corporate Secretary, not less than 90 calendar days before nor more than 120 calendar days before the one year anniversary of the previous year’s annual meeting of stockholders. Therefore, to be presented at our 20172019 Annual Meeting, such a proposal must be received by us no earlier than February 8, 201712, 2019 and no later than March 10, 2017.14, 2019. However, if the date of the annual meeting is more than 20 days earlier or more than 60 days later than such anniversary date, notice must be received notno earlier than 120 calendar days prior to such annual meeting and no later than the close of business on the later of 90 days prior to such annual meeting and 10 days following the day on which notice of the date of such annual meeting was mailed or public announcement of the date of such annual meeting was first made, whichever first occurs. If the stockholder fails to give notice by these dates, then the persons named as proxies in the proxies solicited by the board of directorsBoard for the 20172019 Annual Meeting may exercise discretionary voting power regarding any such proposal. Stockholders are advised to review our by-laws which also specify requirements as to the form and content of a stockholder’s notice.Available Information
We are subject to the reporting requirements
| Date: | Tuesday, June 12, 2018 | |
| Time: | 8:00 A.M. (Eastern Daylight Time) | |
| Place: | Hilton Boston Logan Airport, One Hotel Drive, Boston, MA 02128. | |
Statements contained in this Proxy Statement, or in any document incorporated by reference in this Proxy Statement regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC. The SEC allows us to “incorporate by reference” into this Proxy Statement documents we file with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this Proxy Statement, and later information that we file with the SEC will update and supersede that information. We incorporate by reference the documents listed below and any documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (in each case, other than those documents or the portions of those documents not deemed to be filed) after the date of this Proxy Statement and before the date of the special meeting.
| 1: | To elect two class I directors of our board of directors to serve until the 2021 Annual Meeting of Stockholders or until their respective successors have been duly elected and qualified. | |
(01) Leslie Dan (02) Stephen Hurly | ||
With the mailing of this Proxy Statement to our stockholders, we are also including our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016.
Any person, including any beneficial owner of shares of Company common stock, to whom this Proxy Statement is delivered may request copies of the Proxy Statement and any of the documents incorporated by reference in this document or other information concerning us by written or telephonic request directed to Eleven Biotherapeutics, Inc., 215 First Street, Suite 400 Cambridge, MA 02142, Attention: Corporate Secretary, or by calling (617) 858-8911; or from the SEC through the SEC website at the address provided above. Documents incorporated by reference are available without charge, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES OF COMPANY COMMON STOCK AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED [ ], 2016. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS SUBSEQUENT TO THAT DATE DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
LICENSE AGREEMENT
License Agreement
This Agreement, dated as of June 10, 2016, is entered into by and between
F. Hoffmann-La Roche Ltd
with an office and place of business at Grenzacherstrasse 124, 4070 Basel, Switzerland (“Roche Basel”)
and
Hoffmann-La Roche Inc.
with an office and place of business at 150 Clove Road, Suite 8, Little Falls, New Jersey 07424, U.S.A. (“Roche US”; Roche Basel and Roche US together referred to as “Roche”)
on the one hand
and
Eleven Biotherapeutics, Inc.
with an office and place of business at 215 First Street, Suite 400, Cambridge, Massachusetts 02142, U.S.A. (“Eleven”)
on the other hand.
A-i
Table of Contents
Vote For All Nominees | Withhold Vote From All Nominees | Vote For All Except | ||
| Â | Â | Â | ||
INSTRUCTIONS: To withhold authority to vote for any nominee, mark the “Vote For All Except” box and write the number(s) in the space provided to the right. | ||
| For | Against | Abstain | ||||||||||
| 2: | To ratify the selection of Ernst & Young LLP as Eleven Biotherapeutics’ independent registered public accounting firm for the fiscal year ending December 31, 2018. | Â | Â | Â | ||||||||
| To attend the meeting and vote your shares in person, please mark this box. | Â | |||
Authorized Signatures - This section must be completed for your Instructions to be executed. | ||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
A-ii
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
A-iii
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
|
| |||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
|
| |||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
A-iv
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
|
| |||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
|
| |||||||
|
| |||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
| ||||||||
A-v
License Agreement
WHEREAS, Eleven has discovered proprietary IL-6 antagonist monoclonal antibodies, including the compound known as EBI-031 (as defined below), and possesses proprietary intellectual property rights relating thereto; and
WHEREAS, Roche has expertise in the research, development, manufacture and commercialization of pharmaceutical and diagnostic products, and wishes to develop and commercialize such IL-6 antagonist monoclonal antibodies; and
WHEREAS, Eleven is willing to grant to Roche rights to use certain of its intellectual property rights to make, use, offer for sale, sell and import and export Licensed Compounds and Licensed Products in the Territory for use in the Field (as such terms are respectively defined below), as contemplated herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, intending to be legally bound, do hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms, whether used in the singular or plural, shall have the following meanings:
1.1 Affiliate
The term “Affiliate” shall mean any individual, corporation, association or other business entity that directly or indirectly controls, is controlled by, or is under common control with the Party or specified entity in question. As used in this definition of “Affiliate,” the term “control” shall mean the direct or indirect ownership of more than fifty percent (>50%) of the stock having the right to vote for directors thereof or the ability to otherwise control the management of the corporation or other business entity whether through the ownership of voting securities, by contract, resolution, regulation or otherwise. Anything to the contrary in this paragraph notwithstanding, neither Chugai Pharmaceutical Co., Ltd, a Japanese corporation (“Chugai”) or its subsidiaries (if any) nor Foundation Medicine, Inc., a Delaware corporation (“FMI”) or its subsidiaries (if any) shall be deemed as Affiliates of Roche unless Roche provides written notice to Eleven of its desire to include Chugai, FMI or their respective subsidiaries (as applicable) as Affiliate(s) of Roche.
1.2 Agreement
The term “Agreement” shall mean this document, including any and all appendices and amendments to it, as may be amended from time to time in accordance with the provisions of this Agreement.
1.3 Agreement Term
The term “Agreement Term” shall mean the period of time commencing on the Signature Date and ending on the earlier of the Expiration Date or the effective date of termination of the Agreement if the Agreement is terminated prior to the Expiration Date as provided in Article 18.
1.4 Alternative Transaction
The term “Alternative Transaction” shall mean any exclusive outbound license of, exclusive collaboration regarding, or sale, transfer or other disposition, of a material portion of Eleven’s assets, rights and know-how in Eleven’s IL-6 program, including EBI-031, whether by agreement, equity purchase, asset purchase, merger, business combination, restructuring or otherwise, it being understood and agreed that the following shall not
constitute an “Alternative Transaction”: (i) a Carve-Out Transaction, (ii) a financing transaction solely related to the continued financing of the operations of Eleven or (iii) the transactions contemplated by this Agreement.
1.5 Applicable Law
The term “Applicable Law” shall mean any law, statute, ordinance, code, rule or regulation that has been enacted by a government authority (including without limitation, any Regulatory Authority) and is in force as of the Signature Date or comes into force during the Agreement Term, in each case to the extent that the same is applicable to the performance by the Parties of their respective obligations under this Agreement.
1.6 Base Returnable Product
The term “Base Returnable Product” shall mean, with respect to a given Returnable Product, the Returnable Product in its then-existing form at the time of a Roche Activated Termination applicable to such Returnable Product.
1.7 Biosimilar Product
The term “Biosimilar Product” shall mean, with reference to a given Licensed Product in a country, a Product that (i) is not produced, licensed or owned by the Roche Group, (ii) is, according to the relevant Regulatory Authority for the given country or jurisdiction, highly similar with respect to the given Licensed Product, notwithstanding minor differences in clinically inactive components, and with no meaningful differences between the Biosimilar Product and the given Licensed Product in terms of the efficacy, safety, purity and potency of the product and (iii) is approved through an abbreviated regulatory pathway. For countries or jurisdictions where no explicit biosimilar regulations exist, a Biosimilar Product includes any Product that (x) has been deemed to be a biosimilar to the given Licensed Product by a Regulatory Authority in another country or jurisdiction or (y) has the same amino acid sequence as the Compound in such Licensed Product.
1.8 BLA
The term “BLA” shall mean a Biologics License Application, or similar application for marketing approval, of a Product for use in the Field submitted to the FDA, or a foreign equivalent of the FDA.
1.9 Business Day
The term “Business Day” shall mean 9.00am to 5.00pm local time on a day other than a Saturday, Sunday or other day on which commercial banking institutions in New York, New York are authorized or permitted by law to be closed.
1.10 Calendar Quarter
The term “Calendar Quarter” shall mean each period of three (3) consecutive calendar months, ending March 31, June 30, September 30, and December 31.
1.11 Calendar Year
The term “Calendar Year” shall mean the period of time beginning on January 1 and ending December 31, except for the first year of the Agreement Term which shall begin on the Effective Date and end on December 31.
1.12 Carve-Out Transaction
The term “Carve-Out Transaction” means a merger, tender offer, consolidation or other business combination pursuant to which the overall business or assets of Eleven is combined with that of a Third-Party in a transaction
(i) that, if to be entered into prior to the Effective Date, will provide for the continued effectiveness of this Agreement and the rights and obligations of the Parties and (ii) that specifically contemplates the exclusion of Eleven’s development and commercialization rights with respect to the IL-6 program, including EBI-031.
1.13 Change of Control
The term “Change of Control” shall mean, with respect to Eleven: (i) the acquisition by any Third Party of beneficial ownership of fifty percent (50%) or more of the then-outstanding common shares or voting power of Eleven, other than acquisitions by employee benefit plans sponsored or maintained by Eleven; (ii) the consummation of a business combination involving Eleven, unless, following such business combination, the stockholders of Eleven immediately prior to such business combination beneficially own directly or indirectly more than fifty percent (50%) of the then outstanding common shares or voting power of the entity resulting from such business combination; or (iii) the sale of all or substantially all of Eleven’s assets or business to a Third Party.
1.14 Change of Control Group
The term “Change of Control Group” shall mean the person or entity, or group of related persons or entities, that is the acquirer of, or the successor to, Eleven in connection with a Change of Control of Eleven, together with Affiliates of such persons or entities that are not Affiliates of Eleven immediately prior to the completion of such Change of Control of Eleven.
1.15 Clinical Study
The term “Clinical Study” shall mean a Phase I Study, a Phase II Study or Phase III Study, as applicable.
1.16 Combination Product
The term “Combination Product” shall mean
in each case, including all dosage forms, formulations, presentations, line extensions, and package configurations. All references to Product in this Agreement shall be deemed to include Combination Product; all references to Licensed Product in this Agreement shall be deemed to include Combination Products containing a Licensed Product.
1.17 Commercially Reasonable Efforts
The term “Commercially Reasonable Efforts” shall mean such level of efforts consistent with
at the same stage of development or commercialization (including, as applicable, to the Handling of Patent Rights), as applicable, for its own internally developed pharmaceutical products in a similar area with similar market potential, at a similar stage of their product life taking into account the existence of other competitive products in the market place or under development, the proprietary position of the product, the regulatory structure involved, the anticipated profitability of the product and other relevant factors. It is understood that such product potential may change from time to time based upon changing scientific, business and marketing and return on investment considerations.
However, Roche (and its Affiliates) does not always seek to market its own products in every country or seek to obtain regulatory approval in every country or for every potential indication. As a result, except as expressly set forth in Article 3, the exercise of diligence by Roche is to be determined by judging Roche’s commercially reasonable efforts, taken as a whole.
1.18 Companion Diagnostic
The term “Companion Diagnostic” shall mean any product that is used for predicting or monitoring the response of a human being to treatment with a Product (e.g., device, compound, kit, biomarker or service that contains a component that is used to detect or quantify the presence or amount of an analyte in body or tissue that affects the pathogens of the disease).
1.19 Composition of Matter Claim
The term “Composition of Matter Claim” shall mean a Primary Composition of Matter Claim or a Secondary Composition of Matter Claim.
1.20 Compound
The term “Compound” shall mean any IL-6 antagonist anti-IL-6 monoclonal antibody, either whole or an active fragment thereof, including EBI-031.
1.21 Compulsory Sublicense Compensation
The term “Compulsory Sublicense Compensation” shall mean, for a given Licensed Product and a given country or region in the Territory, the compensation paid by a Roche Group Third Party (in such context, a “Compulsory Sublicensee”) to any member of the Roche Group (other than such Compulsory Sublicensee) under a sublicense of Eleven Patent Rights granted to the Compulsory Sublicensee by a member of the Roche Group through the order, decree or grant of a governmental authority having competent jurisdiction in such country or region, authorizing such Roche Group Third Party to manufacture, use, sell, offer for sale, import or export such Licensed Product in such country or region (the “Compulsory Sublicense”).
1.22 Confidential Information
The term “Confidential Information” shall mean any and all information, data or know-how (including Know-How), whether technical or non-technical, oral or written, that is disclosed by one Party or any of its Affiliates (each, a “Disclosing Party”) to the other Party or any of its Affiliates (each a “Receiving Party”), including, after the Effective Date, any Eleven NDA Information and any Eleven MTA Information. Confidential Information shall not include any information, data or know-how that:
The terms of this Agreement shall be considered Confidential Information of the Parties, with each Party being considered the Disclosing Party and the Receiving Party with respect thereto.
1.23 Continuation Election Evaluation Process
The term “Continuation Election Evaluation Process” shall mean the procedure described in Section 18.3.2 that may culminate in Eleven providing Roche with a Continuation Election Notice.
1.24 Continuation Election Notice
The term “Continuation Election Notice” shall mean the notice Eleven provides to Roche under Section 18.3.2 describing (i) Eleven’sbona fide intentions to continue ongoing development and commercialization of specified Returnable Product(s) and (ii) to the extent applicable, Eleven’s preliminary request for Roche’s continuation of activities during the termination period or transfer of the data, material and information relating to the Returnable Product(s) in accordance with Section 18.3.2.
1.25 Control
The term “Control” shall mean (as an adjective or as a verb including conjugations and variations such as “Controls” “Controlled” or “Controlling”) (i) with respect to Patent Rights or Know-How, the possession by a Party (or another specified entity) of the ability to grant a license or sublicense of such Patent Rights or Know-How without violating the terms of any agreement or arrangement between such Party (or such other specified entity) and any other party and (ii) with respect to proprietary materials, the possession by a Party (or another specified entity) of the ability to supply such proprietary materials to the other Party (or another specified entity) as provided herein without violating the terms of any agreement or arrangement between such supplying Party (or such other specified supplying entity) and any other party.
1.26 Cover
The term “Cover” shall mean (as an adjective or as a verb including conjugations and variations such as “Covered,” “Coverage” or “Covering”) that the developing, making, using, offering for sale, promoting, selling, exporting or importing of a given compound, formulation or product would Infringe a Valid Claim in the absence of a license under or ownership in the Patent Rights to which such Valid Claim pertains. The determination of whether a compound, formulation, process or product is Covered by a particular Valid Claim shall be made on a country-by-country basis; for clarity, Valid Claims that apply to a given country may be national for such country or may be regional or international where and to the extent applicable to such country.
1.27 Core Compound Patent Rights
The term “Core Compound Patent Rights” shall mean the Core Patent Rights, other than the Patent Right listed in the Appendix 1.30 table headed “IL-6 Antagonist Formulations and Uses Thereof” and patents and patent applications claiming priority from such Patent Right and any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, divisional, continuation or continuation-in-part of any of the foregoing.
1.28 Early Returnable Product
The term “Early Returnable Product” shall mean a Returnable Product that has not yet reached an end-of-Phase-2 meeting with the FDA or EMA or the Initiation of the first Phase III Study by the effective date of the termination.
1.29 Effective Date
The term “Effective Date” shall mean the date that is one (1) Business Day following the date on which the Stockholder Voting Proposal shall have been authorized at the Company Meeting, at which a quorum is present, by the Required Company Stockholder Vote; provided that no governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any order, stay, decree, judgment or injunction or statute, rule or regulation which has the effect of prohibiting the consummation of the transactions contemplated by this Agreement.
1.30 Eleven Base Patent Rights
The term “Eleven Base Patent Rights” shall mean any and all Patent Rights in the Territory that
excluding Excluded Eleven Patent Rights and Third Party Eleven IP. Notwithstanding the foregoing, Eleven Base Patent Rights include the Patent Rights listed or described in Appendix 1.30 (the “Core Patent Rights”).
1.31 Eleven Cell Line Materials
The term “Eleven Cell Line Materials” shall mean the cell lines and cell banks currently used or held for use by or on behalf of Eleven to manufacture or produce Licensed Compounds.
1.32 Eleven Compounds
The term “Eleven Compounds” shall mean the monoclonal antibodies designated as
The sequences of the Eleven Compounds are set forth in Appendix 1.32.
1.33 Eleven Know-How
The term “Eleven Know-How” shall mean Know-How, other than Third Party Eleven IP, that are necessary or reasonably useful for the research, manufacture, development or commercialization of any Licensed Compound or Licensed Product that Eleven Controls
1.34 Eleven Patent Rights
The term “Eleven Patent Rights” shall mean
but for such subpart (b), excluding Excluded Eleven Patent Rights and Third Party Eleven IP.
1.35 EU
The term “EU” shall mean the European Union and all its then-current member countries, but in any event includes each of the Major EU Countries, whether or not then a member of the European Union.
1.36 Excluded Eleven Patent Right
The term “Excluded Eleven Patent Right” means a claim in a Patent Right Controlled by Eleven that claims a Non-Compound Active Agent, alone or in combination with other molecular entities, none of which can be Compounds. For clarity, if a claim in a Patent Right Controlled by Eleven lists a molecular entity that could be a Compound, then such Patent Right is not an Excluded Eleven Patent Right.
1.37 Exclusivity Agreement
The term “Exclusivity Agreement” means the Exclusivity Agreement by and between the Parties effective as of March 15, 2016.
1.38 Expert
The term “Expert” shall mean a person with no less than ten (10) years of pharmaceutical industry experience and expertise having occupied at least one senior position within a large pharmaceutical company relating to product commercialization or licensing but excluding any current or former employee or consultant of either Party, either Party’s Affiliates or a Sublicensee. Such person shall be fluent in the English language.
1.39 Expiration Date
The term “Expiration Date” shall mean
1.40 Extended Roche GLP Tox Study
The term “Extended Roche GLP Tox Study” shall mean, in the case where the FDA requires an FDA-Required GLP Tox Study, a GLP toxicity study conducted by or on behalf of Roche that is designed such that the last dose is administered to subjects more than fifteen (15) weeks after the first dose and is either
1.41 FDA
The term “FDA” shall mean the Food and Drug Administration of the United States of America.
1.42 FDCA
The term “FDCA” shall mean the Food, Drug and Cosmetics Act.
1.43 Field
The term “Field” shall mean all prophylactic, therapeutic and diagnostic use in all indications in humans or animals.
1.44 Filing
The term “Filing” shall mean the acceptance for substantive review of an application submitted to FDA, as provided in the Public Health Services Act and applicable regulations, or the equivalent application to the equivalent agency in any other country or group of countries, the official approval of which is required before any lawful commercial sale or marketing of a given Licensed Product.
1.45 First Commercial Sale
The term “First Commercial Sale” shall mean, on a Licensed Product-by-Licensed Product and country-by-country basis, the first invoiced sale of such a Licensed Product to a Roche Group Third Party by a member of the Roche Group in such country following the receipt of any Regulatory Approval required for the sale of such Licensed Product, or if no such Regulatory Approval is required, the date of the first invoiced sale of such Licensed Product to a Roche Group Third Party by a member of the Roche Group in such country.
1.46 First Option Period
The term “First Option Period” shall mean the period of time commencing on the day after the Initiation of the first Phase II Study for a Licensed Product and ending on the day before the Initiation of the first Phase III Study for a Licensed Product.
1.47 FujiFilm
The term “FujiFilm” or “Fuji” shall mean FujiFilm Diosynth Biotechologies UK Limited, located at Belasis Avenue, Billingham, TS23 1LH, United Kingdom.
1.48 Handle
The term “Handle” shall mean preparing, filing, prosecuting (including interference and opposition proceedings) and maintaining (including interferences, reissue, re-examination, post-grant reviews, inter-parties reviews, derivation proceedings and opposition proceedings).
1.49 ICD-10
The term “ICD-10” shall mean the Tenth Revision of the International Classifications of Diseases and Related Health Problems, as may be revised or amended from time to time, or a successor classification.
1.50 IFRS
The term “IFRS” shall mean International Financial Reporting Standards.
1.51 IND
The term “IND” shall mean, with respect to a Licensed Product, an investigational new drug application as defined in the FDCA and applicable regulations promulgated by the FDA, the filing of which is necessary to commence clinical testing of such Licensed Product in humans.
1.52 IND Clearance
The term “IND Clearance” shall mean the first IND for any Licensed Product going into effect in accordance with 21 C.F.R. 312.40(b).
1.53 IND Clearance Activities
The term “IND Clearance Activities” shall mean any activities required by the FDA (if any), after submission of the IND for EBI-031 by Eleven, to achieve IND Clearance for EBI-031.
IND Clearance Activities to be conducted by or on behalf of Roche (“Roche IND Clearance Activities”) are:
IND Clearance Activities to be conducted by or on behalf of Eleven (“Eleven IND Clearance Activities”) are all IND Clearance Activities other than Roche IND Clearance Activities.
1.54 Indication
The term “Indication” shall mean a disease (i) for which the given Licensed Product is indicated for treatment (or for which a BLA for such Licensed Product is filed) and (ii) that is described in the Licensed Product label as required by the Regulatory Approval granted by the applicable Regulatory Authority (or which is proposed in the BLA).
To distinguish one Indication from another Indication, the two Indications have to be (i) listed in two different blocks of the ICD-10 (as a way of example, any retinopathy under H35 is in a different block from any retinopathy under block H31, whereas H35.023 and H35.031 belong to the same block) and (ii) developed by Roche under separate pivotal Clinical Studies.
1.55 Infringe
The term “Infringe” shall mean (a) with respect to a claim in an issued patent, that such claim would, in the absence of a license under or ownership of such claim, be infringed by the applicable activity, and (b) with respect to a claim in a patent application, that such claim would, in the absence of a license under or ownership of such claim, be infringed by the applicable activity if such claim were to issue.
1.56 Initiation
The term “Initiation” shall mean, as applicable in this Agreement, the date that a human is first dosed with the given Licensed Product in a Clinical Study approved by the respective Regulatory Authority or otherwise permitted under Applicable Law, or the date that the first animal is dosed with a Licensed Product containing EBI-031 in an Extended Roche GLP Tox Study.
1.57 Inventory
The term “Inventory” shall mean all existing clinical and non-clinical grade drug product, active pharmaceutical ingredient, intermediates and raw materials associated with Licensed Compounds in the Control of Eleven, as well as any other existing materials (such as reference standards and retention samples), drug delivery systems and packaging associated with the manufacture or testing of such Licensed Compounds and Licensed Products containing therein.
1.58 Know-How
The term “Know-How” shall mean data, knowledge and information, including materials, samples, chemical manufacturing data, toxicological data, pharmacological data, preclinical data, assays, platforms, formulations, specifications, quality control testing data, that are necessary or reasonably useful for the research, manufacture, development or commercialization of Products.
1.59 Licensed Compound
The term “Licensed Compound” shall mean
1.60 Licensed Product
The term “Licensed Product” shall mean a Product containing a Licensed Compound.
1.61 Major EU Country
The term “Major EU Country” shall mean any of the following: France, Germany, Italy, Spain and the United Kingdom.
1.62 Modified Returnable Product
The term “Modified Returnable Product” shall mean, with respect to a given Returnable Product, a version of the applicable Base Returnable Product modified by or on behalf of Eleven or any of its Affiliates, licensees or sublicensees after the time of the applicable Roche Activated Termination (but before commercialization of the Returnable Product) in a manner consistent with customary progression of the development of such Returnable Product.
1.63 Net Sales
The term “Net Sales” shall mean, for a Licensed Product in a particular period, the amount calculated by subtracting from the Sales of such Licensed Product for such period described in Section 1.87(i): (i) a lump sum deduction of four percent (4%) of such Sales in lieu of those deductions that are not accounted for on a Licensed
Product-by-Licensed Product basis (e.g., freight, postage charges, transportation insurance, packing materials for dispatch of goods, custom duties); (ii) uncollectible amounts accrued during such period with respect to such Sales based on a proportional allocation of the total bad debts accrued during such period and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of such Sales of such Licensed Product for such period; (iii) credit card charges (including processing fees) incurred during such period on such Sales and not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of Sales of such Licensed Product for such period; and (iv) government mandated fees and taxes and other government charges accrued during such period with respect to such Sales not already taken as a gross-to-net deduction in accordance with the then currently used IFRS in the calculation of such Sales of such Licensed Product for such period, including, for example, any fees, taxes or other charges that become due in connection with any healthcare reform, change in government pricing or discounting schemes, or other action of a government or regulatory body, but excluding any taxes on net income of a member of the Roche Group. For clarity, no deductions taken in calculating Sales under Section 1.87 may be taken a second time in calculating Net Sales, and no deductions under this definition of Net Sales may be taken more than once in calculating Net Sales for a given Licensed Product for a given period.
1.64 Non-Prosecution Claim
The term “Non-Prosecution Claim” means a claim in a Patent Right Controlled by Eleven that, (i) in the absence of a license, would not be Infringed by the use or sale of a Compound; (ii) claims a generic class of compounds, a formulation of a generic class of compounds, or a method of making or using a generic class of compounds, which, in the absence of a license, would be Infringed by the use or sale of a Compound and would be Infringed by the use or sale of a compound other than a Compound; or (iii) in the absence of a license, would be Infringed by the use or sale of a Licensed Product and would be Infringed by the use or sale of a corresponding Compound-Free Product. As used in this definition with respect to a given Licensed Product, the term “Compound-Free Product” means a product that includes the same therapeutically or prophylactically active ingredients as the Licensed Product with the sole exception being the absence of Licensed Compound(s)). For clarity, the determination of whether a given claim in a Patent Right is a Non-Prosecution Claim shall be made on a patent claim basis.
1.65 Non-Prosecution Patent Right
The term “Non-Prosecution Patent Right” means a Patent Right that includes a Non-Prosecution Claim.
1.66 Party
The term “Party” shall mean Eleven or Roche, as the case may be, and “Parties” shall mean Eleven and Roche collectively.
1.67 Patent Rights
The term “Patent Rights” shall mean all rights under any patent or patent application, in any country of the Territory, including any patents issuing on such patent application, and further including any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, divisional, continuation or continuation-in-part of any of the foregoing.
1.68 Phase I Study
The term “Phase I Study” shall mean a human clinical trial in any country that would satisfy the requirements of 21 C.F.R. § 312.21(a) (FDCA), as amended from time to time, and the foreign equivalent thereof.
1.69 Phase II Study
The term “Phase II Study” shall mean a human clinical trial that includes
for which the primary endpoints include a determination of dose ranges or a preliminary determination of efficacy in patients being studied, as described in 21 C.F.R. § 312.21(b) (FDCA), as amended from time to time, and the foreign equivalent thereof.
1.70 Phase III Study
The term “Phase III Study” shall mean a human clinical trial that is prospectively designed to, if successful, demonstrate statistically whether a product is safe and effective for use in humans in a manner which, if such trial is successful, would be sufficient, alone or with other Clinical Studies, to seek to obtain regulatory approval to market such product in patients having the disease or condition being studied, as described in 21 C.F.R. § 312.21(c) (FDCA), as amended from time to time, and the foreign equivalent thereof.
1.71 Pre-Commercialized Returnable Product
The term “Pre-Commercialized Returnable Product” shall mean a Returnable Product that has not achieved First Commercial Sale anywhere in the Territory on the effective date of termination.
1.72 Primary Composition of Matter Claim
The term “Primary Composition of Matter Claim” shall mean, for a given Licensed Product in a given country of the Territory, a Valid Claim of an Eleven Patent Right that (i) claims the composition of matter of a Compound included in such Licensed Product and (ii) but for the licenses granted in this Agreement would be Infringed by the use or sale of such Compound as a pharmaceutical agent. For clarity, Valid Claims of an Eleven Patent Right that claim manufacturing processes, product-by-process, formulations or delivery devices shall not be deemed as Primary Composition of Matter Claims, provided that a composition claim from the Core Compound Patent Rights which includes a term such as formulation, preparation, pharmaceutical preparation, or similar terms, such as “a composition of formulation x,...”, which without such term would be considered a composition of matter claim, will be considered a Primary Composition of Matter Claim.
1.73 Product
The term “Product” shall mean any product containing a Compound as a pharmaceutically active agent, regardless of their finished forms, delivery methods, formulations or dosages.
1.74 Proprietary Manufacturing IP
The term “Proprietary Manufacturing IP” shall mean cell lines, growth media, culture media or technical development/manufacturing know-how that is Controlled by Roche and in Roche’s good faith judgment contains valuable trade secrets with broader applicability than solely to the Returnable Products, and Roche Patent Rights that claim thereof.
1.75 Qualified Person
The term “Qualified Person” shall mean any person or entity making an unsolicited inquiry, proposal or offer with respect to an Alternative Transaction that Eleven’s Board of Directors determines in good faith (after consultation with outside counsel and its financial advisors) is, or could reasonably be expected to lead to an Alternative Transaction that is, more favorable to Eleven or its stockholders than the transactions contemplated by this Agreement, taking into account all the terms and conditions of such proposal or offer, and that is reasonably capable of being completed on the terms proposed, taking into account all financial, regulatory, legal and other aspects of such proposal or offer.
1.76 Regulatory Approval
The term “Regulatory Approval” shall mean any approvals, registrations or authorizations by Regulatory Authority, necessary for the sale of a Product in the Field in a regulatory jurisdiction in the Territory.
1.77 Regulatory Authority
The term “Regulatory Authority” shall mean any national, supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity, including the FDA, in each country involved in the granting of Regulatory Approval for the Product.
1.78 Required Company Stockholder Vote
The term “Required Company Stockholder Vote” shall mean the affirmative vote in favor of the Stockholder Voting Proposal by the holders of at least a majority of the outstanding shares of Eleven’s common stock, par value $0.001, on the record date for the meeting of Eleven’s stockholders (the “Company Meeting”) to consider the Stockholder Voting Proposal.
1.79 Responsibility Transfer Date
The term “Responsibility Transfer Date” shall mean the earlier of
1.80 Returnable Product
The term “Returnable Product” shall mean a Licensed Product subject to a Roche Activated Termination that has advanced at least into Initiation of a Phase I Study by the effective date of such Roche Activated Termination.
1.81 Roche Activated Termination
The term “Roche Activated Termination” shall mean a termination by Eleven for Roche’s material breach under Section 18.2.1 or for development discontinuation under Section 18.2.3 (each an “Involuntary Termination”) or by Roche without cause under Section 18.2.2 (a “Voluntary Termination”).
1.82 Roche Group
The term “Roche Group” shall mean collectively Roche, its Affiliates and its Sublicensees.
1.83 Roche Group Third Party
The term “Roche Group Third Party” shall mean a Third Party other than a member of the Roche Group.
1.84 Roche Know-How
The term “Roche Know-How” shall mean all Know-How that (i) Roche and Roche’s Affiliates Control during the Agreement Term and (ii) would be necessary to develop, manufacture or commercialize a given Base Returnable Product; however subject to Sections 18.3.4.2(c) and Section 18.3.4.3.
1.85 Roche Patent Rights
The term “Roche Patent Rights” shall mean all Patent Rights that (i) Roche and Roche’s Affiliates Control during the Agreement Term and (ii) would be necessary to develop, manufacture, import, offer for sale, use or sell a given Base Returnable Product; however subject to Section 18.3.4.3. For purposes of clarity, the Patent Rights identified in Appendix 1.85 (“Excluded Roche Patent Rights”) are specifically excluded from the Roche Patent Rights.
1.86 Royalty Term
Subject to Section 9.4, the term “Royalty Term” shall mean, on a country-by-country basis, with respect to a Licensed Product, the period of time commencing on the date of First Commercial Sale of such Licensed Product in such country and ending on the later of the date that is (i) ten (10) years after the date of the First Commercial Sale of such Licensed Product in such country, or (ii) the expiration of the last to expire Composition of Matter Claim Covering such Licensed Product or any Compound in such Licensed Product in such country.
1.87 Sales
The term “Sales” shall mean, for a Licensed Product in a particular period, the sum of (i) and (ii):
By way of example, the gross-to-net deductions taken in accordance with IFRS as of the Effective Date include the following:
For purposes of clarity, sales by Roche and its Affiliates to any Sublicensee that is not a Roche Affiliate for resale shall be excluded from clause (i) of this definition of “Sales”.
For clarity, no deductions taken in calculating Sales under this Section 1.87 may be taken a second time in calculating Net Sales, and no deductions under this definition of Sales may be taken more than once in calculating Net Sales for a given Licensed Product for a given period.
1.88 Secondary Composition of Matter Claim
The term “Secondary Composition of Matter Claim” shall mean, for a given Licensed Product in a given country of the Territory, a Valid Claim of an Eleven Patent Right that (i) claims such Product, (ii) but for the licenses granted in this Agreement would be Infringed by the use or sale of such Product, and (iii) is not a Primary Composition of Matter Claim. For clarity, Valid Claims of an Eleven Patent Right that claim manufacturing processes, product-by-process or delivery devices shall not be deemed as Secondary Composition of Matter Claims.
1.89 Second Option Period
The term “Second Option Period” shall mean the period of time commencing on the day after the Initiation of the first Phase III Study for a Licensed Product and ending on the day before the first Filing of a BLA for a Licensed Product in either the US or anywhere in the EU.
1.90 Signature Date
The term “Signature Date” shall mean the date set forth on the cover page to this Agreement.
1.91 Stockholder Voting Proposal
The term “Stockholder Voting Proposal” shall mean the authorization by Eleven’s stockholders of the transactions contemplated by this Agreement, including the grant of the exclusive licenses provided for under, and on the terms and conditions set forth in, this Agreement.
1.92 Sublicensee
The term “Sublicensee” shall mean an entity to which Roche has licensed rights (through one or multiple tiers), other than through a Compulsory Sublicense, pursuant to this Agreement.
1.93 Symbiosis
The term “Symbiosis” shall mean Symbiosis Pharmaceutical Services Ltd., located at Scio House, Unit 10, Stirling University Innovation Park, Stirling FK9 4NF, Scotland, United Kingdom.
1.94 Territory
The term “Territory” shall mean the world.
1.95 Third Party
The term “Third Party” shall mean a person or entity other than (i) Eleven or any of its Affiliates or (ii) Roche or any of its Affiliates.
1.96 Third Party Eleven IP
The term “Third Party Eleven IP” shall mean the Know-How and Patent Rights licensed to Eleven pursuant to its agreements with Thrombogenics N.V. and Novozymes Biopharma DK A/S.
1.97 US
The term “US” shall mean the United States of America and its territories and possessions.
1.98 US$
The term “US$” shall mean US dollars.
1.99 Valid Claim
The term “Valid Claim” shall mean, as applicable, a claim in any (i) unexpired and issued Patent Right that has not been disclaimed, revoked or held invalid by a final nonappealable decision of a court of competent jurisdiction or government agency; or (ii) pending patent application in any country of the Territory that (a) in the situation where such pending patent application is being Handled by Eleven, Eleven is using Commercially Reasonable Efforts to Handle such pending patent application and such pending patent application is on file with the applicable patent office and has shown evidence of reasonable progression in such applicable patent office to advance to issuance of a patent, and (b) regardless of whether Eleven or Roche is Handling such pending patent application, has been on file with the applicable patent office for no more than seven (7) years from the earliest date to which the patent application claims its earliest priority, wherein following such date such claim is considered expired until the date (if any) that such a claim is issued or accepted for issuance, upon which it is prospectively reinstated as a Valid Claim.
1.100 Additional Definitions
Each of the following definitions is set forth in the Section of this Agreement indicated below:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
2. Grant of License
2.1 Grant of Rights
Effective on the Signature Date, Eleven hereby agrees to grant Roche the right to receive the rights and licenses set forth in Section 2.2 as of the Effective Date.
2.2 License
Effective on the Effective Date, Eleven hereby grants to Roche an exclusive (even as to Eleven) right and license, including the right to sublicense, under Eleven’s interest in the Eleven Patent Rights and Eleven Know-How to make, have made, use, have used, register, have registered, sell, have sold, offer for sale, import and export Compounds, Products and Companion Diagnostics in the Field in the Territory.
The exclusivity of the above license is subject to the right of Eleven to conduct such pre-clinical development activities, manufacturing and other obligations (if any) in accordance with this Agreement, including Section 4.1.
2.3 Sublicense
2.3.1 Right to Sublicense to its Affiliates
Roche shall have the right to grant sublicenses to its Affiliates (through multiple tiers), and to Chugai or FMI if Chugai or FMI is not an Affiliate under this Agreement, under its rights granted under Section 2.2 without prior approval of Eleven. If a member of the Roche Group grants such a sublicense, Roche shall ensure that all of the applicable terms and conditions of this Agreement shall apply to the Affiliate (or to Chugai or FMI, as applicable) to the same extent as they apply to Roche for all purposes. Roche assumes full responsibility for the performance of all obligations and observance of all terms so imposed on such Affiliate (or on Chugai or FMI, as applicable) and shall itself account to Eleven for all payments due under this Agreement by reason of such sublicense.
2.3.2 Right to Sublicense to Third Parties
Roche and its Affiliates shall have the right to grant written sublicenses to non-Affiliate entities (through multiple tiers) under its rights granted under Section 2.2 without prior approval of Eleven. Roche shall inform Eleven promptly after the signature of an agreement under this Section 2.3.2. Each sublicense shall be consistent in all material respects with the terms and conditions of the Agreement. Roche shall be responsible for the payment of all amounts due hereunder, and for all other obligations of its sublicensees under the Agreement as if such obligations were those of Roche. Eleven shall receive a copy of such agreement with a Third Party which may be redacted to exclude financial terms and confidential information of Roche or the Sublicensee. If Roche grants such a sublicense, Roche shall ensure that all of the applicable terms and conditions of this Agreement shall apply to the Sublicensee to the same extent as they apply to Roche for all purposes. Roche assumes full responsibility for the performance of all obligations and observance of all terms so imposed on such Sublicensee and shall itself account to Eleven for all payments due under this Agreement by reason of such sublicense.
2.3.3 Right to Subcontract
Roche shall have the right to subcontract the work performed under this Agreement without prior approval of Eleven, and Roche is responsible for its subcontractors’ compliance with this Agreement.
2.4 Retained Rights
Each Party shall retain all rights under any information, data or know-how (including Know-How), Patent Rights and other intellectual property rights that are owned by or licensed to such Party, except for those rights that are expressly granted to the other Party under this Agreement.
3. Diligence
Roche and Eleven shall use Commercially Reasonable Efforts to perform their respective activities contemplated by Articles 4, 5, 6, 7, 8, 13 or 18 of this Agreement and, subject to Section 13.1.1(a), nothing in Articles 4, 5, 6, 7, 8, 13 or 18 shall imply a higher obligation of diligence imposed on either Party. Specifically, Roche agrees to use Commercially Reasonable Efforts to pursue further development and commercialization of Licensed Products in the Field in the Territory and specifically in the US and anywhere in the EU; and Roche shall be deemed to have used Commercially Reasonable Efforts with respect to such obligation if it develops and commercializes at least one Licensed Product in at least one Indication in the US and anywhere in the EU.
4. Development
4.1 Development for IND Clearance
If the FDA requires IND Clearance Activities, Eleven shall be responsible for Eleven IND Clearance Activities at Eleven’s cost as necessary to achieve IND Clearance, and Roche shall be responsible at Roche’s cost for Roche
IND Clearance Activities as necessary to achieve IND Clearance. Each Party shall notify the other Party of the results of any IND Clearance Activity it conducts promptly after its completion, which, in the case of Roche IND Clearance Activities, such notification shall consist of a status update to Eleven regarding Roche’s assessment of the progress towards IND Clearance.
As necessary for Roche to continue development of EBI-031, Eleven shall, for three (3) months after the later of the Effective Date and IND Clearance (except as otherwise specifically set forth in this Agreement), cooperate with Roche and disclose and make available to Roche all data and information in Eleven’s possession and Control regarding EBI-031.
4.2 Development Other Than IND Clearance Activities
Roche, at its sole cost and discretion (but subject to Article 3), shall be responsible for all development activities of Licensed Products that are not IND Clearance Activities, except that Eleven shall be responsible at its sole cost for any tissue cross-reactivity studies of EBI-031 that Eleven initiates before IND Clearance if such studies are not IND Clearance Activities.
5. Regulatory
5.1 Responsibility
Eleven shall be responsible at its own expense, in consultation with Roche (which consultation shall not in any way be permitted to adversely affect or delay the achievement of IND Clearance), for all regulatory affairs relating to the EBI-031 Product prior to the Responsibility Transfer Date. Promptly after the Responsibility Transfer Date, Eleven shall transfer sponsorship of such IND to the Roche Affiliate designated by Roche, and the Parties will cooperate to draft and execute the necessary documents required to effect such transfer. If the IND for EBI-031 is transferred to Roche prior to achievement of IND Clearance, Eleven will provide to Roche such assistance as is reasonably required by Roche to achieve IND Clearance.
After the Responsibility Transfer Date, Eleven shall promptly transfer (or cause to be transferred) to Roche or Roche’s designee all preclinical and regulatory documentation in Eleven’s possession and Control regarding the Licensed Product containing EBI-031, to allow Roche to continue development of Products.
Roche shall thereafter be solely responsible at its own expense for all regulatory affairs related to Licensed Products in the Territory, including the preparation and filing of applications for Regulatory Approval, as well as any or all governmental approvals required to develop, have developed, make, have made, use, have used, manufacture, have manufactured, import, have imported, sell and have sold Licensed Products. Roche shall be responsible for pursuing, compiling and submitting all regulatory filing documentation, and for interacting with regulatory agencies, for all Licensed Products in all countries in the Territory. Roche or its Affiliates shall own and file in their sole discretion (but subject to Article 3) all regulatory filings and Regulatory Approvals for all Licensed Products in all countries of the Territory.
5.2 Disclosure Covenant
Eleven will promptly disclose to Roche, to the extent not already provided, the results of all preclinical testing of any Licensed Product in Eleven’s possession and Control as exists on the later of the Effective Date or the date of IND Clearance. Eleven will promptly disclose to Roche during the Agreement Term all information in Eleven’s possession and Control concerning side effects, injury, toxicity or sensitivity reaction and incidents or severity thereof in humans with respect to any Licensed Product.
6. Manufacture and Supply of Product
6.1 Product Inventory
Appendix 6.1 is a complete list of the Inventory (other than intermediates, raw materials and in-process research material) and Eleven Cell Line Materials under the Control of Eleven as of the Signature Date.
6.2 Responsibility and Transfer
Eleven shall maintain in full force and effect the CMO agreements with Third Parties listed on Appendix 6.2 for such time as Roche reasonably requires to transition, but in no event shall Eleven be required to maintain such agreements for longer than fifteen (15) months after the Effective Date. In particular, Eleven shall, at Roche’s expense, ensure during such period (i) the then-existing Inventory and Eleven Cell Line Materials are stored as on the Effective Date unless Roche provides a written notice requesting otherwise and (ii) the continuation of on-going testing of EBI-031 and Licensed Product containing EBI-031 under such agreements.
Eleven shall maintain responsibility for payment under Third Party CMO agreements for Eleven IND Clearance Activities. Roche (or Roche’s designated Affiliate) shall assume responsibility for payment under such Third Party CMO agreements for (i) Roche IND Clearance Activities, (ii) after the Responsibility Transfer Date, such services as Eleven is required to maintain under this Agreement (unless waived in writing by Roche), and (iii) such additional services as Roche requests. At such time as Roche assumes responsibility for payment, Roche (or Roche’s designated Affiliate) shall have authority for directing the activities of the applicable CMOs in Eleven’s stead (or through Eleven, as applicable) in accordance with the applicable CMO agreement, and Eleven shall cooperate with Roche to ensure transfer of such authority with the applicable CMOs.
Eleven shall maintain responsibility for the existing inventory of EBI-031 and Licensed Product containing EBI-031 up to the Responsibility Transfer Date; however if so requested by Roche, all or a portion of the Inventory and Eleven Cell Line Materials may be transferred prior to the Responsibility Transfer Date (with Eleven having the right to retain such Inventory and Eleven Cell Line Materials needed for Eleven to meet its Eleven IND Clearance Activities under Section 4.1). After the Responsibility Transfer Date (but for no longer than fifteen (15) months after the Effective Date), Eleven shall, via the Third Party CMO agreements (as previously described) under the direction of Roche in Eleven’s stead or through Eleven, as applicable, maintain the remaining then-existing Inventory and Eleven Cell Line Materials until such time as (a) Roche requests and Eleven transfers (or causes to be transferred) such Inventory and Eleven Cell Line Materials to Roche or Roche’s designee, or (b) Roche or its Affiliate(s) enters into agreements with the applicable CMOs, or such agreements are assigned to Roche or its Affiliate, so that Roche may, directly or through its Affiliates, through such CMOs or other Third Parties, maintain such Inventory and Eleven Cell Line Materials. For clarity, the maintenance by Eleven of the Inventory and Eleven Cell Line Materials under the CMO agreements after the Responsibility Transfer Date shall be paid for by Roche, however such transfer of the Inventory and Eleven Cell Line Materials to Roche or Roche’s designee shall be at Eleven’s expense. Once Roche or its Affiliate(s) has in place agreements with the applicable CMOs (or such agreements are assigned to Roche or its Affiliate) or Eleven has transferred (or caused to be transferred) the Inventory and Eleven Cell Line Materials to Roche or Roche’s designee in accordance with this Section, but in any event no later than fifteen (15) months after the Effective Date, Eleven shall be free to terminate such Eleven CMO agreements.
In addition, at Roche’s reasonable request and expense, Eleven shall, within three (3) months after the later of the Effective Date or the Responsibility Transfer Date, support the transfer of such manufacturing activities and related know-how in Eleven’s possession and Control to Roche or Roche’s designee, including making available to answer Roche questions Eleven representative(s) with historical knowledge of such CMO activities and contracts.
Roche or Roche’s designee shall in all other events be responsible at its own expense for the manufacture and supply of clinical and commercial supplies of the Product.
6.3 GMP Quality Agreements and Auditing
Upon Roche’s request, the Parties shall execute a separate GMP quality agreement as Roche deems necessary according to US GMP requirements for the sole purpose of allowing Roche to verify Eleven’s ability to perform lot disposition according to US GMP requirements and verifying where applicable that current quality agreements in place with CMOs are acceptable for the existing GMP Inventory and GMP Eleven Cell Line Materials.
To the extent it has not done so, and where necessary according to US GMP requirements, Eleven shall
7. Commercialization
Roche, at its own expense, shall have sole responsibility and, as between the Parties, but subject to Article 3, decision making authority for the marketing, promotion, sale and distribution of Products in the Territory.
8. Information Exchange and Reports
8.1 Alliance Director
Each Party shall appoint one person to be its point of contact with responsibility for facilitating communication and collaboration between the Parties (each, an “Alliance Director”). The Alliance Directors shall attempt to facilitate resolution of potential and pending issues and potential disputes. Each Party may change its Alliance Director on written or email notice to the other Party.
8.2 Updates to Eleven
Prior to the first Licensed Product to achieve First Commercial Sale, Roche shall provide Eleven with an annual summary report of the Roche Group’s development activities with respect to Licensed Products. In addition, prior to the first BLA Filing, the Roche Alliance Director shall be available upon Eleven’s request to answer questions about the status of the Roche Group’s development activities once per each Calendar Quarter (except for such Calendar Quarter that Roche provides Eleven with the annual summary report).
9. Payment
9.1 License Fee
Within thirty (30) days after the Effective Date and receipt of an invoice from Eleven, Roche shall pay to Eleven Seven Million Five Hundred Thousand US Dollars (US$ 7,500,000).
9.2 Event Payments
Roche shall pay up to a total of Two Hundred Sixty-Two Million Five Hundred Thousand US Dollars (US$ 262,500,000) in relation to the achievements of events with respect to Licensed Products. The event payments under this Section 9.2 shall be paid by Roche according to the following schedule of development events.
Event | US Dollars (in millions) | |||||
IND Clearance- Related Events | (a) IND Clearance (if IND Clearance is achieved on or before September 15, 2016) | $ | 22.5 | * | ||
| (b) IND Clearance (if IND Clearance is achieved after September 15, 2016 and no Extended Roche GLP Tox Study) | $ | 20 | * | |||
| (c) Initiation of the first Extended Roche GLP Tox Study (the“Extended Roche GLP Tox Study Event”) | $ | 5 | * | |||
| (d) IND Clearance (if IND Clearance is achieved after September 15, 2016 and subsequent to completion of an Extended Roche GLP Tox Study) | $ | 15 | ||||
Initiation of the first Phase II Study | $ | 20 | ||||
Initiation of the first Phase III Study | $ | 30 | ||||
BLA Filing in US | $ | 25 | ||||
BLA Filing anywhere in the EU** | $ | 15 | ||||
BLA Filing in Japan | $ | 10 | ||||
First Commercial Sale in US | $ | 40 | ||||
First Commercial Sale anywhere in the EU** | $ | 25 | ||||
First Commercial Sale in Japan | $ | 10 | ||||
BLA Filing for a second Indication in US | $ | 10 | ||||
BLA Filing for a second Indication anywhere in the EU** | $ | 5 | ||||
Regulatory Approval in a second Indication in US | $ | 30 | ||||
Regulatory Approval in a second Indication anywhere in the EU** | $ | 20 | ||||
Except as otherwise set forth in this Section 9.2, each event payment shall be paid only once, the first time the first Licensed Product reaches the applicable triggering event, regardless of the number of times such events are reached and by how many Licensed Products. To the extent that any of the above triggering events contemplate precursor events (e.g., the first Phase III Study for a Licensed Product commonly follows the first Phase II Study for a Licensed Product), such triggering event, if achieved, shall result in the payment of the contemplated precursor milestone payment if such payment has not yet otherwise been triggered.
For any events first achieved by a Licensed Product containing a Licensed Compound other than EBI-031, Eleven shall receive fifty percent (50%) of the amounts in the above table with no further amount owed for any such event;provided, however, that if the event first achieved with such Licensed Compound other than EBI-031 involves a non-ophthalmology indication and the event subsequently-achieved with a Licensed Product containing EBI-031 involves an ophthalmology indication, then Eleven shall receive the remaining fifty percent (50%) of such amounts.
* minus the Exclusivity Fee Payment (as such term is defined in the Exclusivity Agreement) previously paid by Roche. For clarity, only one of the IND Clearance payments in clause (a), (b) or (d) above shall be payable under this Agreement, and the Extended Roche GLP Tox Study Event in clause (c) above shall only apply in conjunction with the IND Clearance event payment associated therewith in clause (d) above.
** Event payments shall be reduced by fifty percent (50%) in the event there is no Eleven Patent Right issued anywhere in the EU containing a Primary Composition of Matter Claim Covering the Licensed Compound in such Licensed Product or the Licensed Product at the time the event is achieved.
The applicable IND Clearance event payment shall be made within thirty (30) days after occurrence of the IND Clearance (of which Roche shall timely notify Eleven if the IND Clearance occurs after the Responsibility
Transfer Date) and receipt of an invoice from Eleven. For all other event payments, upon achieving events, Roche shall timely notify Eleven and event payments shall be paid by Roche to Eleven within thirty (30) days from occurrence of the applicable event and receipt of an invoice from Eleven.
9.3 Royalty Payments
9.3.1 Royalty Term
Roche shall pay to Eleven royalties on Net Sales of Licensed Products during the applicable Royalty Terms. Thereafter, the licenses granted to Roche shall be fully paid up, irrevocable and royalty-free.
9.3.2 Royalty Rates
The following royalty rates shall apply to the respective tiers of aggregate Calendar Year Net Sales of a Licensed Product in the Territory, on an incremental basis, as follows:
| ||||
| ||||
| ||||
| ||||
| ||||
For example, if Net Sales of a Licensed Product containing EBI-031, for a given Calendar Year, are US$ 3.5 billion, then royalties owed to Eleven on such Net Sales of such Licensed Product for that Calendar Year shall equal US$ three hundred thirty million (US$ 330,000,000) calculated as follows:
[(0.075*1 billion)+(0.09*1 billion)+(0.11*1.5 billion)] = US$330,000,000 royalty payment
* Royalty rates on Licensed Products that do not contain EBI-031 shall be at fifty percent (50%) of theEBI-031 royalty rates.
For the purpose of calculating royalties of a Licensed Product, Calendar Year Net Sales and the royalty rates shall be subject to the following adjustments, as applicable:
9.3.3 Combination Product
If Roche or its Affiliates intend to sell a Combination Product, then the Parties shall meet approximately one (1) year prior to the anticipated First Commercial Sale of such Combination Product in the Territory to negotiate in good faith and agree to an appropriate adjustment to Net Sales to reflect the relative commercial value contributed by the components of the Combination Product (the “Relative Commercial Value”). If, after such good faith negotiations not to exceed ninety (90) days, the Parties cannot agree to an appropriate adjustment, the dispute shall be initially referred to the executive officers of the Parties in accordance with Section 21.2.
If the Parties are unable to agree on the Relative Commercial Value, then Roche will select one (1) individual who would qualify as an Expert, Eleven will select (1) individual who would qualify as an Expert, and those two (2) individuals shall select one (1) individual who would qualify as an Expert and who shall be chairman of a committee of the three Experts (the “Expert Committee”), each with a single vote. The Expert Committee will promptly hold a meeting to review the issue under review, at which it will consider memoranda submitted by each Party at least fifteen (15) days before the meeting, as well as reasonable presentations that each Party may present at the meeting. The determination of the Expert Committee as to the issue under review will be binding on both Parties. The Parties will share equally in the costs of the Expert Committee. Unless otherwise agreed to by the Parties, the Expert Committee may not decide on issues outside the scope mandated under terms of this Section 9.3.3.
For any Combination Product that includes the active ingredient ranibizumab as its only other active ingredient, the Relative Commercial Value of the Licensed Compound may not be less than fifty percent (50%); however if either Eleven or Roche reasonably believes the Licensed Compound in a Combination Product that includes ranibizumab as its only other active ingredient has a Relative Commercial Value of more than fifty percent (50%) in such Combination Product, then the procedure in this Section 9.3.3 shall apply.
9.3.4 No Primary Composition of Matter Claim
With respect to a given Licensed Product, if in a given country within the Territory there is no Primary Composition of Matter Claim Covering such Licensed Product in such country, then
9.3.5 Biosimilar Product
9.3.6 Third Party Payments
Eleven shall be responsible for satisfying the obligations of all existing licenses entered into by Eleven prior to the Effective Date. The Roche Group shall be responsible for and pay or have paid the entire consideration owed to any Roche Group Third Party in relation to Roche Group Third Party intellectual property rights the Roche Group secures after the Effective Date.
9.3.7 Maximum Deductions
In no event shall the reductions resulting from Sections 9.3.4(b), 9.3.5 or 9.3.6, in the aggregate, reduce the royalty payments to Eleven for any Licensed Product below fifty percent (50%) of the payments that would otherwise be due for such Licensed Product pursuant to Section 9.3.2 and 9.3.3, or, if Section 9.3.5(b) applies, below twenty-five percent (25%) of the payments that would be otherwise due for such Licensed Product pursuant to Section 9.3.2 and 9.3.3.
9.3.8 Apportionment of Compulsory Sublicensee Consideration
Compulsory Sublicense Compensation received by a member of the Roche Group from a Compulsory Sublicensee during the Royalty Term shall be shared with Eleven on an equivalent profit share percentage (the “Compulsory Profit Share Percentage”) calculated for the respective Calendar Year as follows:
At the end of the Calendar Year, Roche shall pay to Eleven the Compulsory Sublicense Compensation under a given country or region of the Territory multiplied by the Compulsory Profit Share Percentage. The first time the Roche Group receives Compulsory Sublicense Compensation with respect to a given country and Licensed Product, Roche shall provide in writing (to the extent allowed by Applicable Law) the (i) name of the Licensed Product, country and Compulsory Sublicensee to which such Compulsory Sublicense applies and (ii) the reason for the relevant Compulsory Sublicense. For clarity, any sales or payments by Compulsory Sublicensees under a Compulsory Sublicense shall not be considered as Net Sales and shall not give rise to any royalty payment under Section 9.3.2 of this Agreement.
9.4 Buy-out Options
Roche shall have the right by providing written notice (the “Buy-out Notice”) during either the First Option Period (the “First Buy-out Option”) or the Second Option Period (the “Second Buy-out Option”), to elect to make a one-time payment to Eleven to buy-out Roche’s remaining payment obligations under the Agreement with respect to events that had not yet been achieved under Section 9.2 and Sales that had not yet been made under Section 9.3 (the First Buy-out Option and the Second Buy-out Option each being a “Buy-out Option”). If Roche elects to make such payment by providing a timely Buy-out Notice and thereafter making the associated payment described in this Section, Roche’s exclusive license grant pursuant to Section 2.2 shall become perpetual, irrevocable and fully paid-up.
If Roche elects to make the First Buy-out Option, Roche shall pay Eleven a one-time payment of One Hundred Thirty-Five Million US Dollars (US$ 135,000,000) within thirty (30) days after providing such timely Buy-out Notice to Eleven and receipt by Roche of an invoice in such amount, after which Roche shall have no further payment (under Sections 9.2 and 9.3) or diligence obligations to Eleven under the Agreement (including, for clarity, any milestone payments on events that occur after delivery of the Buy-out Notice, but not prior to delivery of the Buy-out Notice).
If Roche elects to make the Second Buy-out Option, Roche shall pay Eleven a one-time payment of
within thirty (30) days after providing such timely Buy-out Notice to Eleven and receipt by Roche of an invoice in such amount, after which Roche shall have no further payment (under Sections 9.2 and 9.3) or diligence obligations to Eleven under the Agreement (including, for clarity, any milestone payments on events, or royalties on Sales, that occur after delivery of the Buy-out Notice, but not prior to delivery of the Buy-out Notice).
If Roche does not elect to make a Buy-out Option, all remaining payment obligations pursuant to Sections 9.2 and 9.3 shall continue.
9.5 Disclosure of Payments
Each Party acknowledges that the other Party may be obligated to disclose this financial arrangement, including all fees, payments and transfers of value, as may be advisable or required under Applicable Law, including the US Sunshine Act.
10. Accounting and Reporting
10.1 Timing of Payments
Roche shall calculate royalties on Net Sales quarterly as of March 31, June 30, September 30 and December 31 (each being the last day of an “Accounting Period”) and shall pay royalties on Net Sales within ninety (90) days after the end of each Accounting Period in which such Net Sales occur.
10.2 Late Payment
Any payment under this Agreement that is not paid on or before the date such payment is due shall bear interest, to the extent permitted by Applicable Law, at two (2) percentage points above the average one-month Euro Interbank Offered Rate (EURIBOR), as reported by Reuters from time to time, calculated on the number of days such payment is overdue.
10.3 Method of Payment
Royalties on Net Sales and all other amounts payable by Roche hereunder shall be paid by Roche in US Dollars (the “Payment Currency”) from a US bank account in immediately available funds to account(s) designated by Eleven.
10.4 Currency Conversion
When calculating the Sales of any Licensed Product that occur in currencies other than the Payment Currency, Roche shall convert the amount of such sales into Swiss Francs and then into the Payment Currency using Roche’s then-current internal foreign currency translation method actually used on a consistent basis in preparing its audited financial statements (at the Effective Date, YTD average rate as reported by Reuters).
10.5 Reporting
With each payment Roche shall provide Eleven in writing for the relevant Calendar Quarter on a Licensed Product-by-Licensed Product basis the following information:
11. Taxes
Eleven shall pay all sales, turnover, income, revenue, value added, and other taxes levied on account of any payments accruing or made to Eleven under this Agreement, excluding any of the foregoing due on the net income of a member of the Roche Group.
If Applicable Law of any country requires withholding of taxes of any type, levies or other charges with respect to any royalty or other amount payable under this Agreement by Roche to Eleven despite Roche’s compliance with Section 10.3, then Roche shall promptly pay such tax, levy or charge for and on behalf of Eleven to the proper governmental authority, and shall promptly furnish Eleven with receipt of payment, in which case Roche shall be entitled to deduct the amount of any such tax, levy or charge actually paid from any royalty or other payment due Eleven. Each Party agrees to reasonably assist the other Party in claiming exemption from such deductions or withholdings under double taxation or similar agreement or treaty from time to time in force and in minimizing the amount required to be so withheld or deducted, including by providing or filing any relevant certificate or other document.
All royalties and payments due to Eleven under the terms of this Agreement are expressed to be exclusive of value added tax (VAT). If VAT applies the VAT amount will be added to any royalties and payments under this Agreement.
12. Auditing
12.1 Eleven Right to Audit
Roche shall keep, and shall require its Affiliates and Sublicensees to keep, full, true and accurate books of account containing all particulars that may be necessary for the purpose of calculating all royalties payable under this Agreement. Such books of accounts shall be kept at their principal place of business. At the expense of Eleven, Eleven shall have the right to engage an internationally recognized independent public accountant reasonably acceptable to Roche to perform, on behalf of Eleven, an audit of such books and records of Roche and its Affiliates and Sublicensees that are deemed necessary by the independent public accountant to report on Net Sales of Licensed Product for the period or periods requested by Eleven and the correctness of any financial report or payments made under this Agreement.
Upon timely request and at least sixty (60) working days’ prior written notice from Eleven, such audit shall be conducted in the countries specifically requested by Eleven, during regular business hours in such a manner as to not unnecessarily interfere with Roche’s normal business activities. Such audit shall be limited to results in the three (3) Calendar Years prior to audit notification. Accordingly if Eleven does not request an audit of a given Calendar Year for a given country on or before the third (3rd) anniversary of the end of such Calendar Year, then Eleven will be deemed to have accepted the royalty payments and reports for such country in such Calendar Year.
Such audit shall not be performed more frequently than once per Calendar Year nor more frequently than once with respect to records covering any specific period of time.
All information, data documents and abstracts herein referred to shall be used only for the purpose of verifying royalty statements, shall be treated as Roche’s Confidential Information subject to the obligations of this Agreement and need neither be retained more than one (1) year after completion of an audit hereof, if an audit has been requested; nor more than three (3) years from the end of the Calendar Year to which each shall pertain; nor more than one (1) year after the date of termination of this Agreement.
12.2 Audit Reports
The auditors shall only state factual findings in the audit reports and shall not interpret this Agreement. The auditors shall share all draft audit findings with Roche before sharing such findings with Eleven and before the final audit report is issued. The final audit report shall be shared with Roche at the same time it is shared with Eleven.
12.3 Over- or Underpayment
If the audit reveals an overpayment, Eleven shall reimburse Roche for the amount of the overpayment within thirty (30) days. If the audit reveals an underpayment, Roche shall make up such underpayment with the next royalty payment or, if no further royalty payments are owed by Roche, Roche shall reimburse Eleven for the amount of the underpayment within thirty (30) days. Roche shall pay for the audit costs if the underpayment of Roche exceeds five percent (5%) of the aggregate amount of royalty payments owed with regard to the royalty statements subject of the audit. Section 10.2 shall apply to this Section 12.3.
13. Intellectual Property
13.1 Prosecution of Primary Eleven Patent Rights
13.1.1 Prior to Exercising Buy-out Option
Until such time as Roche exercises a Buy-out Option (or after the Second Option Period if Roche fails to timely exercise both Buy-out Options), Roche shall, at its own expense and, at Eleven’s request, in consultation with Eleven, Handle all
collectively the “Primary Eleven Patent Rights”.
During such time,
13.1.2 After Exercising Buy-out Option
After such time as Roche exercises a Buy-out Option, Roche may Handle all Primary Eleven Patent Rights (except those which Roche previously opted not to Handle under Section 13.1.1) at its own expense and
discretion and without consultation with Eleven. Roche shall not be required to use Commercially Reasonable Efforts to Handle such Primary Eleven Patent Rights and shall not be required to advise Eleven if it desires to discontinue the Handling of a given Primary Eleven Patent Right or be required to allow Eleven to continue Handling. If Roche so requests, Eleven will, at Roche’s expense, assign to Roche all of Eleven’s ownership rights under such Primary Eleven Patent Rights designated by Roche that are owned by Eleven (such rights, upon assignment, the “Eleven Assigned Patent Rights”). Eleven shall provide copies of lab notebooks and inventor contact information as may be necessary for Roche to assume ownership responsibility for such Eleven Assigned Patent Rights.
13.2 Prosecution of Select Non-Prosecution Patent Rights
Eleven shall, at its own expense and discretion, Handle Non-Prosecution Patent Rights, except with respect to the Non-Prosecution Patent Rights listed in Appendix 13.2 (the “Select Non-Prosecution Patent Rights”), (i) Eleven will not claim any Eleven Compoundsper se in the Select Non-Prosecution Patent Rights without the consent of Roche and (ii) Eleven will timely consult with Roche (unless Roche waives such right in writing) on the Handling of the Select Non-Prosecution Patent Rights so as to provide Roche with an opportunity to recommend any changes (which changes Eleven may not unreasonably refuse) that Roche reasonably believes are necessary to avoid damage to the Core Patent Rights listed in the Appendix 1.30 table headed “Improved IL-6 Antibodies” and patents and patent applications claiming priority from such Patent Right and any substitution, extension or supplementary protection certificate, reissue, reexamination, renewal, divisional, continuation or continuation-in-part of any of the foregoing; provided, however, that Eleven may abandon any Select Non-Prosecution Patent Right without consultation with or consent of Roche.
13.3 Patent Coordination Liaison
Where the Parties need to consult with or seek the assistance of each other on the Handling of Patent Rights, the Parties shall each nominate a patent liaison and shall adopt procedures for interacting on patent matters. Each Party shall reasonably cooperate and assist each other to effect the transfer of responsibility for such Handling of Patent Rights, and shall reasonably assist the other Party in such Handling where needed, including the execution of necessary authorizations and assignments and take such other actions as may be reasonably requested in the Handling of such Patent Rights.
13.4 Infringement
Each Party shall promptly provide written notice to the other Party during the Agreement Term of any
and shall provide the other Party with all factual evidence in its possession supporting such infringement or unauthorized use or misappropriation.
Within sixty (60) days after Roche provides or receives such written notice or such shorter period of time as is reasonably necessary for Eleven to avoid loss of material enforcement rights or remedies (unless such shorter period is not possible under the circumstances) (“Decision Period”), Roche, in its sole discretion, shall decide whether or not to initiate a suit or action in the Territory regarding such infringement or unauthorized use or misappropriation and shall notify Eleven of its decision in writing (“Suit Notice”).
If Roche decides to bring a suit or take action, once Roche provides Suit Notice, Roche shall commence such suit or take such action. In the event that Roche (i) does not in writing advise Eleven within the Decision Period that Roche will commence suit or take action, or (ii) fails to commence suit or take action within a reasonable time after providing Suit Notice, Eleven shall thereafter have the right (subject to Roche’s written consent, which except for Eleven Assigned Patent Rights is not to be unreasonably withheld) to commence suit or take action and shall provide written notice to Roche of any such suit commenced or action taken by Eleven.
Upon written request, the Party bringing suit or taking action (“Initiating Party”) shall keep the other Party informed of the status of any such suit or action and shall provide the other Party with copies, to the extent the Initiating Party is lawfully permitted to do so, of all substantive documents or communications filed in such suit or action. The Initiating Party shall have the sole and exclusive right to select counsel for any such suit or action.
The Initiating Party shall, except as provided below, pay all expenses of the suit or action, including the Initiating Party’s attorneys’ fees and court costs (and such costs of the other Party if participating at the Initiating Party’s request). Unless otherwise agreed by the Parties, and subject to the Parties’ respective obligations under Article 15, all monies recovered upon the final judgment or settlement of any action described in this Section 13.4 shall be used as follows:
(a) First, to reimburse the Initiating Party for its costs and, if any remains, to the other Party for any advisory counsel fees and costs not already reimbursed by the Initiating Party; and
(b) Second,
If the Initiating Party believes it is reasonably necessary or desirable to obtain an effective remedy, upon written request the other Party agrees to be joined as a party to the suit or action but shall be under no obligation to participate except to the extent that such participation is required as the result of its being a named party to the suit or action, all of which shall be at the Initiating Party’s expense. At the Initiating Party’s written request, the other Party shall offer reasonable assistance to the Initiating Party in connection therewith at no charge to the Initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred by the other Party in rendering such assistance. The other Party shall have the right to participate and be represented in any such suit or action by its own counsel at its own expense.
The Initiating Party may settle, consent to judgment or otherwise voluntarily dispose of the suit or action (“Settlement”) without the written consent of the other Party but only if such Settlement can be achieved without adversely affecting the other Party (including any of its Patent Rights). If a Settlement could materially adversely affect the other Party, then the written consent of the other Party would be required, which consent shall not be unreasonably withheld, however if the other Party is unable to timely respond, then such consent shall be deemed as granted.
For clarity, Roche shall be solely responsible, at its own expense and discretion, for responding to the infringement of any Eleven Assigned Patent Rights, and will receive all monies recovered upon the final
judgment or settlement of any action taken by Roche in connection therewith. If a Settlement could materially adversely affect Eleven, then the written consent of Eleven would be required, which consent shall not be unreasonably withheld, however if Eleven is unable to timely respond, then such consent shall be deemed as granted. Eleven will reasonably assist Roche in any such actions, at Roche’s expense.
13.5 Defense
Subject to Article 15, if an action for infringement is commenced against either Party, its licensees or its sublicensees related to the discovery, development, manufacture, use or sale of a Product, then Roche shall have the right (but not the obligation) to defend such action at its own expense, and Eleven shall assist and cooperate with Roche, at Roche’s expense, to the extent necessary in the defense of such suit. Roche shall have the right to settle the suit or consent to an adverse judgment thereto, in its sole discretion, so long as such settlement or adverse judgment does not adversely affect the rights of Eleven. Roche shall assume full responsibility for the payment of any award for damages, or any amount due pursuant to any settlement entered into by it with such Third Party.
13.6 Common Interest Disclosures
With regard to any information or opinions about intellectual property disclosed pursuant to this Agreement between the Parties, the Parties agree that, to the extent possible under Applicable Law, they have a common legal interest in (i) determining whether, and to what extent, Third Party intellectual property rights may affect Compounds or Products and (ii) defending against any actual or prospective Third Party claims based on allegations of misuse or infringement of intellectual property rights relating to Compounds or Products. Accordingly, the Parties agree that, to the extent possible under Applicable Law, (i) all such relevant information or opinions obtained by Eleven and Roche from each other will be used solely for purposes of the Parties’ common legal interests with respect to the conduct of the Agreement; (ii) all such information and materials will be treated as protected by the attorney-client privilege, the work product privilege, the joint defense privilege, the common interest privilege, and any other privilege or immunity that may otherwise be applicable; (iii) by sharing any such information and materials, neither Party intends to waive or limit any privilege or immunity that may apply to the shared information and materials. Nothing in this Section 13.6 shall prevent either Roche or Eleven from claiming a common interest privilege in any other matter properly subject to that privilege. Neither Party shall have the authority to waive any privilege or immunity on behalf of the other Party without such other Party’s prior written consent, nor shall the waiver of privilege or immunity resulting from the conduct of one Party be deemed to apply against any other Party.
It is expressly understood that nothing contained in this Section 13.6 shall limit the right of either Party to disclose to anyone (or withhold disclosure from anyone) any of their own documents and information, as they see fit.
13.7 Biosimilar or interchangeable biological products
Notwithstanding anything herein to the contrary, within four (4) years after the approval of a Product that has been licensed in the US as a biological product under 42 USC §262(a), and as may be needed from time to time thereafter, upon request by Roche, the Parties shall consult as to potential strategies with respect to unexpired US Primary Eleven Patent Rights Controlled by Eleven that Cover the Product. Specifically, in anticipation of a receipt by the Product’s reference product sponsor (“Reference Product Sponsor”) of a biosimilar or interchangeable product application pursuant to the Biologics Price Competition and Innovation Act of 2009 (Public Law 111-148), the Parties will discuss the Reference Product Sponsor’s likely course of action with regard to US Primary Eleven Patent Rights in the procedural steps set forth under 42 USC §262(l), including a general plan for timely communication between the Parties in light of the statutory response deadlines.
13.8 Patent Term Extensions
The Parties shall use Commercially Reasonable Efforts to obtain all available patent term extensions, adjustments or restorations, or supplementary protection certificates (“SPCs”, and together with patent term extensions, adjustments and restorations, “Patent Term Extensions”) for Primary Eleven Patent Rights. Eleven shall execute such authorizations and other documents and take such other actions as may be reasonably requested by Roche to obtain such Patent Term Extensions, including designating Roche as its agent for such purpose as provided in 35 USC § 156. All filings for such Patent Term Extensions shall be made by Roche; provided, that in the event that Roche elects not to file for a Patent Term Extension for a Primary Eleven Patent Right, Roche shall (i) promptly inform Eleven of its intention not to file and (ii) grant Eleven the right to file for such Patent Term Extension. Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions. The Parties shall cooperate with each other in gaining patent term restorations, extensions or SPCs wherever applicable to such Primary Eleven Patent Rights.
13.9 Consent to File Patent Applications
Eleven hereby provides consent under Section 4(f) of the Material Transfer Agreement by and between the Parties effective November 18, 2015, as amended (the “MTA”).
14. Representations and Warranties
14.1 Eleven Representations and Warranties
Eleven represents and warrants to Roche, in each case as of the Signature Date (except with respect to any such statement that is expressly made as of a specific date, which representation and warranty shall be as of such date):
14.1.1 Safety Data
14.1.2 Ownership of Patent Rights
Eleven is the exclusive owner of all right, title and interest in, or is the exclusive licensee of, the Eleven Base Patent Rights existing on the Signature Date. Appendix 1.30 and Appendix 13.2 collectively contain a complete and accurate list of all Patent Rights Controlled by Eleven as of the Signature Date that Cover Eleven Compounds. Between the Signature Date and the Effective Date, Eleven will have used Commercially Reasonable Efforts to prosecute or maintain the Core Patent Rights and has not granted and will not grant rights to any Third Party under the Eleven Base Patent Rights that conflict with the rights granted to Roche hereunder.
14.1.3 Third Party Eleven IP
To the knowledge of Eleven, the Third Party Eleven IP does not Cover or relate to Compounds or Products, and the scope of the Third Party Eleven IP does not overlap with the Eleven Base Patent Rights.
14.1.4 Inventors
Eleven warrants that the inventors of the inventions disclosed or claimed in Eleven Patent Rights have transferred to Eleven full ownership of the Patent Rights licensed under this Agreement.
14.1.5 Grants
To the best of Eleven’s knowledge and belief, Eleven has the lawful right to grant Roche and its Affiliates the rights and licenses described in this Agreement, assuming that no filing is required under the Hart Scott Rodino Antitrust Improvements Act of 1976 (the “HSR Act”).
14.1.6 Authorization
The execution, delivery and performance of this Agreement by Eleven and all instruments and documents to be delivered by Eleven hereunder, subject, in each case, to the receipt of the Required Company Stockholder Vote and assuming that no filing is required under the HSR Act: (i) are within the corporate power of Eleven; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of the certificate of incorporation of Eleven; (iv) to the knowledge of Eleven, will not violate any law or regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which Eleven is a party or by which Eleven or any of its property is bound; and (vi) do not require any filing or registration with, or the consent or approval of, any governmental body, agency, authority or any other person, which has not been made or obtained previously (other than filings of reports, schedules or materials with the Securities and Exchange Commission or pursuant to any applicable state securities laws and filings with Regulatory Authorities with respect to Products), except, in the case of clauses (iv), (v) and (vi), for any such violations, and for any filings, registrations or consents not obtained or made, that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition of Eleven or on the ability of Eleven to perform its obligations hereunder.
14.1.7 Validity of Patent Rights
Eleven is not in possession of information that Eleven reasonably believes could render invalid or unenforceable any claims that are in any of the Primary Eleven Patent Rights existing on the Signature Date. Eleven has no knowledge of any inventorship disputes concerning any Eleven Patent Rights.
14.1.8 Ownership and Validity of Know-How
The Eleven Know-How is legitimately in the possession of Eleven and has not been misappropriated from any Third Party. Eleven has taken reasonable measures to protect the confidentiality of the Eleven Know-How.
14.1.9 No Claims
There are no claims or investigations, pending or, to Eleven’s knowledge, threatened against Eleven, at law or in equity, or before or by any governmental authority relating to the matters contemplated under this Agreement that would materially and adversely affect Eleven’s ability to perform its obligations hereunder.
14.1.10 Scope of License
On the Signature Date and Effective Date, Eleven has not granted any rights to another entity that would reduce the scope of the license to Roche contemplated by this Agreement.
14.2 Roche Representations and Warranties
Roche represents and warrants to Eleven, in each case as of the Signature Date (except with respect to any such statement that is expressly made as of a specific date, which representation and warranty shall be as of such date):
14.2.1 Authorization
The execution, delivery and performance of this Agreement by Roche and all instruments and documents to be delivered by Roche hereunder: (i) are within the corporate power of Roche; (ii) have been duly authorized by all necessary or proper corporate action; (iii) are not in contravention of any provision of the certificate of formation or limited liability company agreement of Roche; (iv) to the knowledge of Roche, will not violate any law or regulation or any order or decree of any court of governmental instrumentality; (v) will not violate the terms of any indenture, mortgage, deed of trust, lease, agreement, or other instrument to which Roche is a party or by which Roche or any of its property is bound; and (vi) do not require any filing or registration with, or the consent or approval of, any governmental body, agency, authority or any other person, which has not been made or obtained previously (other than filings with the Securities and Exchange Commission or pursuant to any applicable state securities laws and filings with Regulatory Authorities with respect to Products), except, in the case of clauses (iv), (v) and (vi), for any such violations, and for any filings, registrations or consents not obtained or made, that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on the financial condition of Roche or on the ability of Roche to perform its obligations hereunder.
14.2.2 No Claims
There are no claims or investigations, pending or, to Roche’s knowledge, threatened against Roche, at law or in equity, or before or by any governmental authority relating to the matters contemplated under this Agreement that would materially adversely affect Roche’s ability to perform its obligations hereunder.
14.3 No Other Representations
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES, EXPRESS, STATUTORY OR IMPLIED AND WHETHER WRITTEN OR ORAL RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF PRODUCTS OR NON-INFRINGEMENT. ROCHE HAS RELIED SOLELY UPON ITS OWN INVESTIGATION AND ANALYSIS AND THE REPRESENTATIONS AND WARRANTIES OF ELEVEN EXPRESSLY SET FORTH IN THIS AGREEMENT.
15. Indemnification
15.1 Indemnification by Roche
Roche shall indemnify, hold harmless and defend Eleven and its directors, officers, employees and agents (collectively, “Eleven Indemnitees”) from and against any and all losses, expenses, cost of defense (including without limitation attorneys’ fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts Eleven becomes legally obligated to pay, because of a claim by a Roche Group Third Party, to the extent resulting from the breach of the Agreement by Roche or activities related to the Licensed Product (e.g., product liability claims) conducted by or on behalf of a member of the Roche Group (other than by Eleven Indemnitees), except to the extent such losses, expenses, costs and amounts are due to the breach of the Agreement by Eleven or the gross negligence or willful misconduct or failure to act of Eleven Indemnitees.
15.2 Indemnification by Eleven
Eleven shall indemnify, hold harmless and defend Roche and its directors, officers, employees and agents (collectively, “Roche Indemnitees”) from and against any and all losses, expenses, cost of defense (including without limitation attorneys’ fees, witness fees, damages, judgments, fines and amounts paid in settlement) and any amounts Roche becomes legally obligated to pay, because of a claim by a Roche Group Third Party, to the extent resulting from the breach of the Agreement by Eleven or activities related to the Licensed Product (e.g., product liability claims) conducted by or on behalf of Eleven (other than by Roche Indemnitees or any member of the Roche Group), except to the extent such losses, expenses, costs and amounts are due to the breach of the Agreement by Roche or the gross negligence or willful misconduct or failure to act of Roche Indemnitees or any member of the Roche Group.
15.3 Procedure
In the event of a claim by a Roche Group Third Party against a Party entitled to indemnification under this Agreement (“Indemnified Party”), the Indemnified Party shall promptly notify the other Party (“Indemnifying Party”) in writing of the claim and the Indemnifying Party shall undertake and solely manage and control, at its sole expense, the defense of the claim and its settlement. The Indemnified Party shall cooperate with the Indemnifying Party and may, at its option and expense, be represented in any such action or proceeding by counsel of its choice. The Indemnifying Party shall not be liable for any litigation costs or expenses incurred by the Indemnified Party without the Indemnifying Party’s written consent. The Indemnifying Party shall not settle any such claim unless such settlement fully and unconditionally releases the Indemnified Party from all liability relating thereto, unless the Indemnified Party otherwise agrees in writing.
16. Liability
16.1 Limitation of Liability
16.2 Coordination
Roche Basel and Roche US shall coordinate the exercise of Roche’s rights under this Agreement. Roche Basel and Roche US shall be jointly and severally liable for Roche’s obligations under this Agreement.
17. Obligation Not to Disclose Confidential Information
17.1 Non-Use and Non-Disclosure
During the Agreement Term and for five (5) years thereafter, a Receiving Party shall (and shall require its Affiliates to) (i) treat Confidential Information provided by Disclosing Party as it would treat its own information of a similar nature, (ii) take all reasonable precautions not to disclose such Confidential Information to Third Parties, without the Disclosing Party’s prior written consent, and (iii) not use such Confidential Information other than for fulfilling its obligations or exercising its rights under this Agreement.
17.2 Permitted Disclosure
Notwithstanding the obligation of non-use and non-disclosure set forth in Section 17.1, the Parties recognize the need for certain exceptions to this obligation, specifically set forth below, with respect to press releases, patent rights, publications, and certain commercial considerations.
17.3 Press Releases
17.4 Commercial Considerations
|
18. Agreement Expiration and Termination
18.1 Commencement and Expiration
This Agreement shall commence upon the date hereof (except for Sections 2.2 and 2.3, Articles 3-15 (except for Sections 9.5 and 14.3, which shall be effective as of the Signature Date) and Sections 18.2.1-18.2.4, 18.3, 18.4, 21.5 and 21.12 which shall commence as of the Effective Date, and except for such other provisions of this Agreement which expressly commence as of a specific date, which shall commence as of such date) and, unless earlier terminated under Section 18.2, shall expire on the Expiration Date.
18.2 Termination
18.2.1 Termination for Material Breach After the Effective Date
After the Effective Date, a Party (“Non-Breaching Party”) shall have the right to terminate this Agreement in its entirety or on a country-by-country basis in the event the other Party (“Breaching Party”) is in breach of any of its material obligations under this Agreement. The non-Breaching Party shall provide written notice to the Breaching Party, which notice shall identify the breach and the countries in which the Non-Breaching Party intends to have this Agreement terminate. The Breaching Party shall have a period of ninety (90) days after such written notice is provided (“Peremptory Notice Period”) to cure such breach. If the Breaching Party has abona fide dispute as to whether such breach occurred or has been cured, it will so notify the Non-Breaching Party, and the expiration of the Peremptory Notice Period shall be tolled until such dispute is resolved pursuant to Sections 21.2 or 21.3. Upon a determination of breach or failure to cure, the Breaching Party may have the
remainder of the Peremptory Notice Period to cure such breach. If such breach is not cured within the Peremptory Notice Period, then absent withdrawal of the Non-Breaching Party’s request for termination, this Agreement shall terminate in its entirety or such identified countries effective as of the expiration of the Peremptory Notice Period.
18.2.2 Termination by Roche without Cause After the Effective Date
After the Effective Date, Roche shall have the right to terminate this Agreement at any time as a whole or on a Product-by-Product or country-by-country basis upon ninety (90) days prior written notice before First Commercial Sale in the Territory or upon one hundred eighty (180) days prior written notice after the First Commercial Sale in the Territory. The effective date of termination under this Section 18.2.2 shall be the date ninety (90) days (or one hundred eighty (180) days as the case may be) after Roche provides such written notice to Eleven.
18.2.3 Termination by Eleven for Development Discontinuation After the Effective Date
After the Effective Date, Eleven shall have the right to terminate this Agreement upon written notice if, prior to the first BLA Filing for a Licensed Product, the Roche Group has discontinued material development of all Licensed Products for the previous twelve (12) consecutive months, and such discontinuations were not due to events outside of the reasonable control of the Roche Group (including actions taken by Regulatory Authorities, or any Third Party litigation relating to the safety of a Licensed Product).
18.2.4 Termination for Eleven Debarment
After the Effective Date, Roche shall have the right to terminate this Agreement upon written notice for Eleven’s debarment in accordance with Section 21.5.
18.2.5 Termination by a Party Prior to the Effective Date
18.3 Consequences of Termination
This Section 18.3 only applies to termination under Section 18.2.1-18.2.4.
18.3.1 Termination for Eleven Breach or Debarment
Upon any termination by Roche under Section 18.2.1 (material breach by Eleven) or 18.2.4 (Eleven debarment), the rights and licenses granted by Eleven to Roche under this Agreement shall terminate in their entirety or on a
country-by-country and Product-by-Product basis, as applicable, on the effective date of termination. In the event of a material breach by Eleven or Eleven’s debarment, if the Roche Group elects not to terminate this Agreement, Roche shall be entitled to seek remedies, including but not limited to damages and reduction of payment obligations in Article 9, subject to the terms and conditions of this Agreement.
18.3.2 Roche Activated Termination
Upon any Roche Activated Termination, the rights and licenses granted by Eleven to Roche under this Agreement shall terminate in their entirety or on a country-by-country and Product-by-Product basis, as applicable, on the effective date of termination. The Continuation Election Evaluation Process corresponding to an Involuntary Termination shall begin on the effective date of termination; the Continuation Election Evaluation Process corresponding to a Voluntary Termination shall begin on the date Roche provides its notice of termination to Eleven (each such date, a “CEEP Start Date”).
During the Continuation Election Evaluation Process, Roche shall continue activities, including preparatory activities, ongoing as of the CEEP Start Date with respect to the relevant Returnable Product(s). However, Roche shall not be obliged to initiate any new activities not ongoing as of the CEEP Start Date except as expressly set forth herein and except that Roche shall initiate such new activities at Eleven’s reasonable written request and expense. Where possible the Alliance Directors will cooperate with each other to facilitate meeting Eleven’s reasonable requests for information and continuation of activities reasonably needed for Eleven’s bona fide intention to continue development of the Returnable Product(s) while minimizing Roche’s investment in labor and expenses during the Continuation Election Evaluation Process.
Within ten (10) days after the CEEP Start Date, Roche shall have the opportunity (but not the obligation) to provide Eleven with either such information as Roche would like Eleven to consider or a notification waiving the right to provide such information. Within twenty (20) days after the CEEP Start Date, Eleven shall communicate to Roche either (x) a non-binding statement of continued interest in developing the specified Returnable Product(s) or (y) a binding waiver of Eleven’s right to submit a Continuation Election Notice. If Eleven elects to communicate the latter or fails to communicate with Roche, then Eleven shall have been deemed to have not provided a timely Continuation Election Notice and Section 18.3.4.1 shall apply. If Eleven elects to communicate the former, Roche shall promptly populate a secure data room with such material information pertaining to the applicable Roche Group’s development, manufacturing and commercialization activities for such Returnable Product(s) as is reasonably necessary for Eleven to make an informed decision as to whether to submit a Continuation Election Notice, which data room shall be fully populated and opened for Eleven’s access no later than thirty (30) days after Eleven’s communication of a non-binding indication of interest under clause (x) above. Roche shall make the relevant personnel available for Eleven’s reasonable follow-up questions and requests pertaining to such information, and Roche shall disclose such additional materials as are reasonably necessary to respond to Eleven’s requests. Notwithstanding anything in this Section, such data room and personnel follow-up is not intended to provide Eleven with a similar scope of information or follow-up as would be required and commensurate with types of investment and diligence commitment Roche has made to Eleven under this Agreement, nor is it a substitute for Roche Transfer Activities that are reimbursed in accordance with Section 18.3.4.3(d); rather it is intended to be a process to minimize Roche’s continuation activity costs where not required; provided, however, that the data provided in the data room must be adequate for Eleven to make a reasonably informed decision regarding the Continuation Election Notice. If Eleven desires to continue development or commercialization of Returnable Product(s), Eleven shall give a Continuation Election Notice to Roche within forty (40) days after the data room is reasonably populated and open for Eleven’s access; if during such forty (40) day period, Eleven does not have abona fide interest in pursuing development, Eleven shall promptly notify Roche.
After Roche’s receipt of a timely Continuation Election Notice from Eleven, to the extent reasonably requested by Eleven with respect to the Returnable Product(s) specified in such Continuation Election Notice:
|
| ||||
| ||||
| ||||
| ||||
Such royalties shall be paid on a Returnable Product-by-Returnable Product and country-by-country basis commencing on the first commercial sale of the Returnable Product in such country by Eleven, or any of its Affiliates or any of such of its licensees or sublicensees (other than an entity that is or was a member of the Roche Group) and ending ten (10) years after the first commercial sale of the Returnable Product in such country by any entity (including a member of the Roche Group). Royalties may be reduced upon entry of a biosimilar product in accordance with the reduction structure set forth in Section 9.3.5, and with respect to any other reductions described in Sections 9.3.3, 9.3.4 and 9.3.6, as if applied to Eleven, its Affiliates and licensees or sublicensees in lieu of the Roche Group. Such payments shall be subject to the reporting and auditing obligations comparable to those set forth in this Agreement, except with Eleven as the licensee instead of Roche.
Eleven shall ensure that all of the applicable terms and conditions of this Agreement shall apply to its Affiliates and licensees and sublicensees to the same extent as they apply to Eleven for all purposes, and Eleven assumes full responsibility for the performance of all obligations and observances of all terms so imposed on such Affiliates, licensees and sublicensees. Eleven shall provide Roche a copy of any such agreements with licensees and sublicensees which may be redacted to exclude financial terms and confidential information of Eleven or the licensee or sublicensee. For clarity, the licenses under this Section 18.3.2(e) shall not include any licenses that Roche has with a Third Party for which such grant would be prohibited or under which a member of the Roche Group would incur liability or financial obligations (unless Eleven agrees to pay such financial obligations) to such Third Party.
18.3.3 Direct License
Irrespective of anything to the contrary in this Agreement, any existing, permitted sublicense granted directly by Roche under Section 2.3.2 of this Agreement (and any further sublicenses thereunder) to any Third Party shall, upon the written request of Roche, remain in full force and effect to the extent that Roche had complied with its obligations under Section 2.3.2 with respect thereto, provided that (i) each such Sublicensee and any further sublicensees are not then in breach of its sublicense agreement (and, in the case of termination by Eleven for material breach by Roche, that neither such Sublicensee nor any further sublicensees caused the material breach that gave rise to the termination by Eleven); (ii) each such direct Sublicensee agrees to be bound to Eleven under all the terms and conditions of such sublicense agreement; and (iii) Eleven is provided with a true and complete copy of such sublicense agreement.
18.3.4 Other Obligations Applicable for Roche Activated Terminations
18.3.4.1 Obligations Related to Ongoing Activities
In addition to the foregoing, upon the request of Eleven, Roche shall, and shall ensure that its Affiliates shall, and, to the extent Roche or any of its Affiliates has the right to do so, shall require the other members of the Roche Group to, complete, or promptly transition to Eleven or its designee, any Clinical Studies related to the Returnable Product(s) that are being conducted under any of their INDs for the Returnable Product(s) and are ongoing as of the effective date of termination; provided, however, that
18.3.4.2 Obligations Related to Manufacturing
If Eleven elects to develop the Returnable Product(s), Roche shall, at Eleven’s request, transfer (i) all existing and available clinical material to Eleven at a price of Roche’s fully burdened manufacturing cost and (ii) as part of the Roche Transfer Activities of Section 18.3.2, all existing documentation as to the quality of such clinical material that is reasonably required for further development activities. Roche shall have no obligation to perform any additional activities concerning the clinical supplies (e.g., retesting, analyses). Upon request, Roche shall notify Eleven of any issues concerning such materials that to Roche’s knowledge might reasonably subject Eleven to liability through use of such materials, and Eleven may thereafter elect not to receive such materials. Eleven shall assume all liability for the use of such transferred material.
If a Returnable Product is marketed in any country of Territory on the date of the notice of termination of this Agreement, upon the request of Eleven, Roche shall manufacture and supply such Returnable Product to Eleven for a period of eighteen (18) months from the effective date of the termination of this Agreement (unless such obligation is earlier terminated by Eleven) at a price of one hundred twenty-five percent (125%) of Roche’s fully burdened manufacturing cost. Eleven shall use Commercially Reasonable Efforts to take over the manufacturing as soon as possible after the effective date of termination.
Irrespective of the foregoing, Roche shall not be required to provide Proprietary Manufacturing IP with respect to Early Returnable Products. Roche will continue to supply Eleven with Returnable Products other than Early Returnable Products at a price of one hundred twenty-five percent (125%) of Roche’s fully burdened manufacturing cost for a period, at Roche’s election, of either (i) indefinitely (in which case the Parties will promptly and in good faith negotiate the non-financial terms of applicable supply and quality agreements, and Roche shall make good faith efforts to supply Eleven with such Returnable Products during such negotiation period) or (ii) until such time as Roche transfers the process to a Third Party CMO acceptable to Roche under conditions of confidentiality and non-use acceptable to Roche. If Roche elects to transfer the process to a Third Party CMO and Eleven requests an additional CMO be utilized (for reasons such as second source manufacturing, competitive pricing), Roche will make good faith efforts to accommodate such request and transfer the process to a second Third Party CMO acceptable to Roche under conditions of confidentiality and non-use acceptable to Roche.
18.3.4.3 Limitations on Grant-Backs; Transfer Expenses
For purposes of clarity, irrespective of anything to the contrary in this Agreement:
even if a Returnable Product is intended (according to the investigation plan, proposed labeling or actual labeling, as applicable) for use with such other therapeutically active ingredients, therapeutically active products, or delivery technologies.
18.4 Royalty and Payment Obligations
Expiration or termination of this Agreement shall not release Roche from any obligation to pay royalties or make any payments to Eleven that are earned but not yet paid prior to the Expiration Date or effective date of termination, including milestone payments on events, and royalties on Sales, that occur prior to the Expiration Date or effective date of termination. Expiration of this Agreement as a result of Roche exercising a Buy-out Option shall not release Roche from the obligation to pay the fee associated with such Buy-out Option under
Section 9.4. Except as set forth in this Section 18.4, termination of this Agreement by a Party, for any reason, will release Roche from any obligation to pay royalties or make any payments to Eleven under Sections 9.2 or 9.3 that would otherwise become payable on or after the effective date of termination (including, for clarity, any milestone payments on events, or royalties on Sales, that occur after the effective date of termination, but not prior to the effective date of termination).
18.5 Survival
To the extent then in effect as set forth in Section 18.1, Article 1 (Definitions, to the extent necessary to interpret this Agreement), Section 9.5 (Disclosure of Payments), Article 10 (Accounting and Reporting) (solely as applicable to amounts described in Section 18.4), Article 12 (Auditing), Section 14.3 (No Other Representations), Article 15 (Indemnification), Article 16 (Liability), Article 17 (Obligation Not to Disclose Confidential Information), Article 18 (Agreement Expiration and Termination) and Article 21 (Miscellaneous) (except for Sections 21.4(a)-(c) (Assignment and Change of Control)) shall survive any expiration or termination of this Agreement for any reason. If Roche exercises a Buy-out Option, Section 9.4 (Buy-out Options), Article 13 (Intellectual Property) and Article 20 (Bankruptcy) shall also survive.
19. Solicitation
Except as otherwise set forth in Article 17 and in this Article 19, until the earlier of the Effective Date and the termination of this Agreement in accordance with Section 18.2.5, Eleven shall not, and shall use its reasonable best efforts to cause its officers, directors, employees, investment bankers, attorneys or other agents or advisors (collectively, “Representatives”) not to, directly or indirectly:
Notwithstanding the foregoing, Eleven may: (i) furnish non-public information relating to, and afford access to the business, properties, assets, books or records of, the IL-6 program to any Qualified Person (and the Representatives of any such Qualified Person), pursuant to a confidentiality agreement not materially less restrictive of the other party than the confidentiality obligations applicable to Roche pursuant to the NDA; (ii) engage in discussions or negotiations (including solicitation of revised proposals with respect to an Alternative Transaction) with any Qualified Person (and the representatives of such Qualified Person) with respect to a potential Alternative Transaction; (iii) amend or grant a waiver or release under, any standstill or similar agreement with respect to any capital stock of Eleven with any Qualified Person; or (iv) enter into an agreement with a Qualified Person with respect to an Alternative Transaction.
20. Bankruptcy
All licenses (and to the extent applicable rights) granted under or pursuant to this Agreement by Eleven to Roche are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11, US Code (the “Bankruptcy Code”) licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. Unless Roche elects to terminate this Agreement, the Parties agree that Roche, as a licensee or sublicensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code, subject to the continued performance of its obligations under this Agreement.
21. Miscellaneous
21.1 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware, US, without reference to its conflict of laws principles.
21.2 Disputes
After the Effective Date, unless otherwise set forth in this Agreement, in the event of any dispute in connection with this Agreement, such dispute shall be referred to the respective executive officers of the Parties designated below or the Party’s designee, for good faith negotiations attempting to resolve the dispute. The designated executive officers are as follows:
For Eleven: CEO
For Roche: Head of Roche Partnering
21.3 Jurisdiction; Arbitration
Prior to the Effective Date, each of the Parties (a) consents to submit itself to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or, solely if such court lacks subject matter jurisdiction, United States District Court sitting in Wilmington, Delaware, with respect to any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court, (c) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court and (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any other court, and each Party hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such legal proceeding brought in any such court has been brought in an inconvenient forum. Each Party hereby agrees that service of any process, summons, notice or document by U.S. registered mail to the respective addresses set forth in Section 21.13 shall be effective service of process.
After the Effective Date, should the Parties fail to agree within two (2) months after a dispute in connection with this Agreement has first arisen, it shall be finally settled by arbitration in accordance with the Rules of American Arbitration Association (AAA) as in force at the time when initiating the arbitration. The tribunal shall consist of three arbitrators. Each Party shall select one (1) arbitrator and the arbitrators shall select the third arbitrator. The place of arbitration shall be in the city of New York, New York, US. The language to be used shall be English. Notwithstanding anything to the contrary in this Agreement, a Party may seek temporary equitable relief in the form of specific performance, a temporary restraining order, a preliminary injunction or any other equitable remedy in any court of competent jurisdiction.
21.4 Assignment and Change of Control
Neither Party may assign its rights or obligations under this Agreement absent the prior written consent of the other Party, except to any of its Affiliates (provided that the assigning Party shall be responsible for the actions of its Affiliates) or in the context of a merger, an acquisition, a Change of Control, or a sale or other transaction involving all or substantially all of the assets of the Party seeking to assign. Any permitted assignment shall be binding on the successors of the assigning Party. Notwithstanding anything else herein to the contrary, Eleven may, without Roche’s consent, assign, distribute, dividend or otherwise transfer its right to receive payment(s) from Roche under all or part of Article 9, provided, however, for clarity, Roche’s right to pursue reduction of payments in the event of a material breach by Eleven shall not be impacted by such assignment, distribution, dividend or transfer; moreover this right extends only to the right to receive payment, so all other rights (including the right to audit) shall remain with Eleven absent Roche’s written consent.
If there is a Change of Control, then the following provisions shall apply and be in full force and effect:
21.5 Debarment
Eleven represents and warrants that, as of the Signature Date, it has never been debarred under 21 U.S.C. §335a, disqualified under 21 C.F.R. §312.70 or §812.119, sanctioned by a Federal Health Care Program (as defined in 42 U.S.C. §1320 a-7b(f)), including without limitation the federal Medicare or a state Medicaid program, or debarred, suspended, excluded or otherwise declared ineligible from any other similar Federal or state agency or program. In the event Eleven receives notice of its debarment, suspension, sanction, exclusion, ineligibility or disqualification under the above-referenced statutes, Eleven shall immediately notify Roche in writing and Roche shall have the right, but not the obligation, to terminate this Agreement, effective, at Roche’s option, immediately or at a specified future date.
21.6 Independent Contractor
No employee or representative of either Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever or to create or impose any contractual or other liability on the other Party without said Party’s prior written approval. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, each Party’s legal relationship to the other Party under this Agreement shall be that of independent contractor, and nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, employment, franchise, agency or fiduciary relationship between the Parties.
21.7 Unenforceable Provisions and Severability
If any of the provisions of this Agreement are held to be void or unenforceable, then such void or unenforceable provisions shall be replaced by valid and enforceable provisions that will achieve as far as possible the economic business intentions of the Parties. However the remainder of this Agreement will remain in full force and effect, provided that the material interests of the Parties are not affected, i.e., the Parties would presumably have concluded this Agreement without the unenforceable provisions.
21.8 Waiver
The failure by either Party to require strict performance or observance of any obligation, term, provision or condition under this Agreement will neither constitute a waiver thereof nor affect in any way the right of the respective Party to require such performance or observance. The waiver by either Party of a breach of any obligation, term, provision or condition hereunder shall not constitute a waiver of any subsequent breach thereof or of any other obligation, term, provision or condition.
21.9 Appendices
All Appendices to this Agreement shall form an integral part to this Agreement.
21.10 Entire Understanding
This Agreement, together with the Exclusivity Agreement, the MTA and the Non-Disclosure Agreement by and between Eleven and Roche US effective June, 2015 (the “NDA”), contains the entire understanding between the Parties with respect to the subject matter hereof and supersedes any and all prior agreements, understandings and arrangements, whether written or oral. For clarity, after the Effective Date, the treatment of Information related to Technology (as such terms are defined in the NDA) or Eleven’s business or financial information received by Roche or any of its Affiliates from Eleven under the NDA (the “Eleven NDA Information”), and any Confidential Information (as such term is defined in the MTA) of Eleven subject to the MTA (the “Eleven MTA Information”), is superseded by the licenses and treatment of Confidential Information under this Agreement. For clarity, the three-way confidentiality agreements among (i) Eleven, Roche US and Symbiosis, effective January 25, 2016, (ii) Eleven, Roche US and FujiFilm, effective January 25, 2016, and (iii) Eleven, Roche US and BioAgilytix Labs, LLC, effective June 3, 2016, shall remain in effect.
21.11 Amendments
No amendments of the terms and conditions of this Agreement shall be binding upon either Party hereto unless in writing and signed by both Parties.
21.12 Invoices
All invoices that are required or permitted hereunder shall be in writing and sent by Eleven to Roche at the following address or such other US address as Roche may later provide, and referencing the name and date of this Agreement:
Hoffmann-La Roche Inc.
Suite 8
150 Clove Road
Little Falls, NJ 07424
Attn: Roche Partnering Legal Department
21.13 Notice
All notices that are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:
| ||||
| ||||
| ||||
or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.
21.14 Interpretation
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Signature Date.
| ||||||||
| ||||||||
| ||||||||
|
| |||||||
| ||||||||
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
SPECIAL MEETING OF ELEVEN BIOTHERAPEUTICS, INC.
|
| |
|
| |
|
Please make your marks like this: x Use dark black pencil or pen only
The Board of Directors Recommends a VoteFORproposal 1 andFOR proposal 2.
|
| |||||||
|
| |||||||
| Please Sign Here | Please Date Above | |||||||
| Please Sign Here | Please Date Above |
| Please sign exactly as your name(s) appears on your stock certificate. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. | ||
 Please separate carefully at the perforation and return just this portion in the envelope provided. |
PRELIMINARY PROXY MATERIALS - SUBJECT TO COMPLETION
Special
Tuesday June 12, 2018
April 23, 2018
| VOTE BY: | ||||||||||
 |  | |||||||||
| ||||||||||
| | |||||||||
INTERNET Go To www.proxypush.com/ebio • | Cast your vote online 24 hours a day/7 days a week. • Have your Proxy Card/Voting Instructions Form ready. • View Meeting Documents. | OR MAIL | TELEPHONE (866) 221-8259 • | Use any touch-tone telephone toll-free 24 hours a day/7 days a week. | ||||||
• |
|
|
| Have your Proxy Card/Voting Instruction Form ready. • Follow the simple recorded instructions. | ||||||
|
| |||||||||
| OR | • Mark, sign and date your Proxy Card/Voting Instruction Form. | |||||||
• | Detach your Proxy Card/Voting Instruction Form. | |||||||
• | Return your Proxy Card/Voting Instruction Form in the postage-paid envelope provided. | |||||||
| ||||||||
| PROXY TABULATOR FOR | ||||
ELEVEN BIOTHERAPEUTICS, INC. c/o MEDIANT COMMUNICATIONS | ||||
| P.O. BOX 8016 | ||||
| CARY, NC 27512-9903 | ||||
| ||||||||||||||
| ||||||||||||||||||
| EVENT # | ||||||||||||||||||
| CLIENT # | ||||||||||||||||||
