Item 1.01.
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Entry into a Material Definitive Agreement.
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On April 18, 2018, Tocagen Inc.
(Tocagen), Beijing Apollo Venus Biomedical Technology Limited and ApolloBio Corp. (collectively, ApolloBio) entered into a license agreement (the Agreement) pursuant to which Tocagen granted to ApolloBio an
exclusive license to develop and commercialize Toca 511 & Toca FC within the greater China region, including mainland China, Hong Kong, Macao and Taiwan (the Licensed Territory).
Pursuant to the Agreement, ApolloBio will make an upfront payment of $16.0 million to Tocagen as a condition to the effectiveness of the
license and other rights granted under the Agreement (as more fully described below). Tocagen will be also be eligible for additional future payments totaling up to $111.0 million upon meeting certain development and commercial milestones,
including $4.0 million in near-term development milestones, including completion of enrollment in the Toca 5 study, in addition to low double-digit tiered royalty payments based on annual net sales of licensed products in the Licensed
Territory, subject to reduction under specified circumstances. ApolloBio will be responsible for all development and commercialization costs in the Licensed Territory.
ApolloBio must register the Agreement with Peoples Republic of China (PRC) authorities and obtain currency conversion
approval from PRC authorities to make the upfront payment, other than an initial installment payment that is payable within 10 days of execution of the Agreement. In the event that the initial installment of the upfront payment is not paid
within 10 days of execution of the Agreement, or the remainder of the upfront payment is not paid within 90 days after execution of the Agreement, Tocagen has the right to terminate the Agreement upon written notice to ApolloBio. Other
payments to be made under the Agreement are also subject to PRC currency exchange approval and may be subject to other approvals by PRC authorities. The license and other rights granted to ApolloBio under the Agreement are expected to become
effective in the second quarter of 2018.
Unless earlier terminated, the Agreement will expire upon the expiration of the
last-to-expire
royalty term for any and all licensed products, which royalty term is, with respect to a licensed product in a particular region (
i.e.
, mainland China,
Hong Kong, Macao and Taiwan) of the Licensed Territory (each, a Region), the latest of (i) 10 years after the first commercial sale of such licensed product in such Region, (ii) the expiration of all regulatory exclusivity as to
such licensed product in such Region and (iii) the date of expiration of the last valid patent claim covering such licensed product in such Region. Either party may terminate the Agreement upon a material breach by the other party that remains
uncured following 60 days (or, with respect to any payment breach, 10 days) after the date of written notice of such breach. ApolloBio may terminate the Agreement at any time by providing 90 days prior written notice to Tocagen. In addition,
Tocagen may terminate the Agreement upon written notice to ApolloBio under specified circumstances if ApolloBio challenges the licensed patent rights.
The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the complete
Agreement, a copy of which will be filed, with confidential terms redacted, with the Securities and Exchange Commission as an exhibit to Tocagens Quarterly Report on Form
10-Q
for the quarterly period
ending June 30, 2018.
On April 19, 2018, Tocagen and ApolloBio issued a joint press release announcing the Agreement. A copy of
this press release is attached hereto as Exhibit 99.1.