UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 000-23186
BIOCRYST PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
62-1413174
(I.R.S. Employer
Identification No.)
4505 Emperor Blvd., Suite 200, Durham, North Carolina 27703
(Address of principal executive offices)
(919) 859-1302
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
Title of each class
Common Stock, $0.01 par value
Trading Symbol(s)
BCRX
Name of each exchange on which registered
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The registrant estimates that the aggregate market value of the Common Stock on June 30, 2021 (based upon the closing price shown on the Nasdaq Global
Select Market on June 30, 2021) held by non-affiliates was $2,800,557,076.
The number of shares of Common Stock, par value $0.01, of the registrant outstanding as of January 31, 2022 was 184,661,799 shares.
Portions of the registrant’s definitive proxy statement to be filed in connection with the solicitation of proxies for its 2022 annual meeting of stockholders
are incorporated by reference into Items 10, 11, 12, 13, and 14 under Part III hereof.
DOCUMENTS INCORPORATED BY REFERENCE
TABLE OF CONTENTS
Cautionary Note Regarding Forward-Looking Statements
Risk Factor Summary
PART I
ITEM 1. BUSINESS
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. MINE SAFETY DISCLOSURES
PART II
Page No.
1
2
4
20
42
42
43
43
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF
43
44
44
55
56
87
87
87
88
88
88
88
88
88
88
96
97
EQUITY SECURITIES
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES
ITEM 16. FORM 10-K SUMMARY
SIGNATURES
EX-10.14
EX-10.72
EX-10.76
EX-10.101
EX-10.102
EX-10.103
EX-10.104
EX-21
EX-23
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101
EX-104
i
When used in this report, unless otherwise indicated, “we,” “our,” “us,” the “Company,” and “BioCryst” refer to BioCryst Pharmaceuticals, Inc.
and, where appropriate, its subsidiaries.
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K (this “report”) includes forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, which are subject to the “safe harbor” created in Section 21E. In particular, statements about our expectations, beliefs,
plans, objectives or assumptions of future events or performance are contained or incorporated by reference in this report. All statements other than
statements of historical facts contained herein are forward-looking statements. These forward-looking statements can generally be identified by the use of
words such as “may,” “will,” “intends,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “predicts,” “potential,” the negative of these words or
similar expressions. Statements that describe our future plans, strategies, intentions, expectations, objectives, goals or prospects are also forward-looking
statements. Discussions containing these forward-looking statements are principally contained in the “Business,” “Risk Factors,” and “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” sections of this report, as well as any amendments we make to those sections in
filings with the Securities and Exchange Commission (“SEC”). These forward-looking statements include, but are not limited to, statements about:
● the preclinical development, clinical development, commercialization, or post-marketing studies of our products and product candidates,
including ORLADEYO® (berotralstat), BCX9930, BCX9250, peramivir, galidesivir, and early stage discovery programs;
● the timing and success of our commercialization of ORLADEYO in the U.S. and elsewhere and expectations regarding the commercial
market for ORLADEYO;
● the potential for government stockpiling orders of our products and product candidates, including the timing or likelihood of entering into any
U.S. government stockpile order and our ability to execute any such order;
● the potential funding from our contracts with the Biomedical Advanced Research and Development Authority within the U.S. Department of
Health and Human Services (“BARDA/HHS”) and the National Institute of Allergy and Infectious Diseases within the HHS (“NIAID/HHS”)
for the development of galidesivir;
● additional regulatory approvals, or milestones, royalties or profit from sales of our products by us or our partners;
● the implementation of our business model, strategic plans for our business, products, product candidates and technology;
● our ability to establish and maintain collaborations or out-license rights to our products and product candidates;
● plans, programs, progress and potential success of our collaborations, including with Torii Pharmaceutical Co., Ltd. (“Torii”) for
ORLADEYO in Japan and Shionogi & Co., Ltd. (“Shionogi”) and Green Cross Corporation (“Green Cross”) for peramivir in their territories;
● our and our subsidiary guarantors’ ability to satisfy obligations under our Credit Agreement and to comply with the covenants as set forth in
the agreements governing our debt obligations;
● the scope of protection we are able to establish and maintain for intellectual property rights covering our products, product candidates, and
technology;
● our ability to operate our business without infringing the intellectual property rights of others;
● estimates of our expenses, revenues, capital requirements, annual cash utilization, and our needs for additional financing;
● the timing or likelihood of regulatory filings or regulatory agreements, deferrals, and approvals;
● our ability to manage our liquidity needs, including our ability to raise additional capital, to fund our operations or repay our recourse debt
obligations;
● our financial performance; and
● competitive companies, technologies, and our industry.
We have based any forward-looking statements on our current expectations about future events or performance. While we believe these expectations
are reasonable, forward-looking statements are inherently subject to known and unknown risks and uncertainties, many of which are beyond our control.
Actual results may differ materially from those suggested or implied by these forward-looking statements for various reasons, including those discussed in
this report under the heading “Risk Factors” in Part I, Item 1A, some of which are summarized in the “Risk Factor Summary” below. Any forward-looking
statement is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, industry, and future growth.
Given these risks and uncertainties, you are cautioned not to place undue reliance on our forward-looking statements. The forward-looking statements
included in this report are made only as of the date hereof. We do not undertake, and specifically decline, any obligation to update any of these statements
or to publicly announce the results of any revisions to any forward-looking statements to reflect future events or developments, except as may be required
by U.S. federal securities laws.
1
Risk Factor Summary
An investment in the Company involves risks. You should carefully read this entire report and consider the uncertainties and risks discussed in the
“Risk Factors” section in Part I, Item 1A of this report, which may adversely affect our business, financial condition, or results of operations, along with the
other information included in our other filings with the Securities and Exchange Commission, before deciding to invest in the Company. A summary of the
principal factors that make an investment in the Company speculative or risky is set forth below.
● The ongoing novel coronavirus (“COVID-19”) pandemic could create challenges in all aspects of our business, including, without limitation,
delays, stoppages, difficulties, and increased expenses with respect to our and our partners’ development, regulatory processes, and supply chains,
negatively impact our ability to access the capital or credit markets to finance our operations, or have the effect of heightening many of the risks
described below or in the “Risk Factors” section in Part I, Item 1A of this report.
● We have incurred losses since our inception, expect to continue to incur losses, and may never be profitable.
● We may need to raise additional capital in the future. If we are unable to raise capital when needed, we may need to adjust our operations.
● Our success depends upon our ability to advance our product candidates through the various stages of development, especially through the clinical
trial process, to receive and maintain regulatory approval for the commercial sale of our product candidates, and to successfully commercialize
any approved products. The development process and related regulatory processes are complex and uncertain, may be lengthy and expensive, and
require, among other things, an indication that our products and product candidates are safe and effective. For example, applicable regulatory
agencies could refuse to approve, or impose restrictions or warnings on, our product candidates, require us to conduct additional studies or adopt
study designs that differ from our planned development strategies, suspend or terminate our clinical trials, or take other actions that could
materially impact the cost, timing, and success of our planned development strategies.
● We rely heavily upon third parties, including development partners, contractors, contract research organizations, and third-party suppliers,
manufacturers, and distributors, for many important stages of our product candidate development and in the commercialization of certain of our
products and product candidates. Our failure to maintain these relationships, the failure of any such third party to perform its obligations under
agreements with us, or the failure of such a relationship to meet our expectations could have a material adverse impact on our business, financial
condition, and results of operations.
● If we fail to obtain additional financing or acceptable partnership arrangements, we may be unable to complete the development and
commercialization of our products and product candidates or continue operations.
● The commercial viability of any approved product could be compromised if the product is less effective than expected, causes undesirable side
effects that were not previously identified, or fails to achieve market acceptance by physicians, patients, third-party payors, health authorities, and
others.
● There can be no assurance that our or our partners’ commercialization efforts, methods, and strategies for our products or technologies will
succeed, and our future revenue generation is uncertain.
● We expect to continue expanding our development and regulatory capabilities and implementing sales, marketing, and distribution capabilities,
and as a result, we may encounter difficulties managing our growth, which could disrupt our operations.
● We face intense competition, and if we are unable to compete effectively, the demand for our products may be reduced. In addition, developments
by others may render our products, product candidates, or technologies obsolete or noncompetitive.
● We are subject to various laws and regulations related to our products and product candidates, and if we or our employees, consultants, or partners
do not comply with these laws and regulations, we could face substantial penalties and our reputation could be harmed. In addition, we and our
partners may be subject to new legislation, regulatory proposals, and healthcare payor initiatives that may increase our costs of compliance and
adversely affect our or our partners’ ability to market our products, obtain collaborators, and raise capital.
2
● If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of those rights would
diminish. Legal proceedings to protect or enforce our patents, the patents of our partners, or our other intellectual property rights could be
expensive, time consuming, and unsuccessful.
● We face an inherent risk of liability in the event that the use or misuse of our products or product candidates results in personal injury or death, and
our product liability insurance coverage may be insufficient.
● We face risks related to our government-funded programs and are subject to various U.S. Government contract requirements, which typically
contain a number of extraordinary provisions that would not typically be found in commercial contracts and which may create a disadvantage and
additional risks to us as compared to competitors that do not rely on U.S. Government contracts.
● If we fail to reach milestones or to make annual minimum payments or otherwise breach our obligations under our license agreements, our
licensors may terminate our agreements with them and seek additional remedies.
● Our Credit Agreement contains conditions and restrictions that limit our flexibility in operating our business. We may be required to make a
prepayment or repay our outstanding indebtedness under the Credit Agreement earlier than we expect if a prepayment event or an event of default
occurs, including a material adverse change with respect to us, which could have a material adverse effect on our business.
● International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks. For example, our
actual or perceived failure to comply with European governmental regulations and other obligations related to privacy, data protection, and
information security could harm our business. In addition, the United Kingdom’s withdrawal from the European Union could result in increased
regulatory and legal complexity, which may make it more difficult for us to do business in Europe and impose additional challenges in securing
regulatory approval of our product candidates in Europe.
● If our facilities incur damage or power is lost for a significant length of time, our business will suffer.
● A significant disruption in our information technology systems or a cybersecurity breach could adversely affect our business.
● Our existing principal stockholders hold a substantial amount of our common stock and may be able to influence significant corporate decisions,
which may conflict with the interests of other stockholders.
● Our stock price has been, and is likely to continue to be, highly volatile, which could cause the value of an investment in our common stock to
decline significantly.
● Natural disasters, epidemic or pandemic disease outbreaks, trade wars, political unrest, or other events could disrupt our business or operations or
those of our development partners, manufacturers, regulators, or third parties with whom we conduct business now or in the future.
● We are subject to legal proceedings, which could harm our reputation or result in other losses or unexpected expenditure of time and resources.
● If we fail to retain our existing key personnel or fail to attract and retain additional key personnel, the development of our product candidates, the
commercialization of our products, and the related expansion of our business will be delayed or stopped.
3
ITEM 1. BUSINESS
Our Business
PART I
We are a commercial-stage biotechnology company that discovers novel, oral, small-molecule medicines. We focus on oral treatments for rare
diseases in which significant unmet medical needs exist and an enzyme plays the key role in the biological pathway of the disease. We integrate the
disciplines of biology, crystallography, medicinal chemistry and computer modeling to discover and develop small molecule pharmaceuticals through the
process known as structure-guided drug design. Structure-guided drug design is a drug discovery approach by which we design synthetic compounds from
detailed structural knowledge of the active sites of enzyme targets associated with particular diseases. We use X-ray crystallography, computer modeling of
molecular structures and advanced chemistry techniques to focus on the three-dimensional molecular structure and active site characteristics of the
enzymes that control cellular biology. Enzymes are proteins that act as catalysts for many vital biological reactions. Our goal generally is to design a
compound that will fit in the active site of an enzyme and thereby prevent its catalytic activity. Molecules from our discovery efforts that are commercially
available or that are in active development are summarized in the table below and are discussed in further detail under “Products and Product Candidates”
in this “Part I(cid:0)Item 1(cid:0)Business” section of this report.
Drug/Drug
Candidate
ORLADEYO®
(berotralstat)
Drug Class
Therapeutic Area(s)
Phase
Rights*
Oral Serine Protease Inhibitor
Hereditary Angioedema (“HAE”)
Approved
Targeting Kallikrein (once-daily
treatment)
(U.S., European Union,
Japan, United Kingdom, &
United Arab Emirates)
BioCryst (worldwide,
except Japan); Torii
Pharmaceutical Co., Ltd.
(Japan)
BCX9930
Oral Factor D Inhibitor
Complement-mediated diseases
Pivotal
BioCryst (worldwide)
(paroxysmal nocturnal hemoglobinuria)
Complement-mediated diseases (C3
Phase 2
BioCryst (worldwide)
glomerulopathy, IgA nephropathy, primary
membranous nephropathy)
BCX9250
Oral Activin Receptor-like
Fibrodysplasia ossificans progressiva
Phase 1
BioCryst (worldwide)
Kinase-2 Inhibitor
(“FOP”)
RAPIVAB®
(peramivir
injection)
RAPIACTA®
(peramivir
injection)
PERAMIFLU®
(peramivir
injection)
Intravenous Neuraminidase
Acute uncomplicated Influenza
Approved
Inhibitor
(U.S., Australia & Canada)
Intravenous Neuraminidase
Uncomplicated seasonal Influenza
Approved
Inhibitor
(Japan & Taiwan)
BioCryst (worldwide,
except Japan, Taiwan,
Korea and Israel)
Shionogi & Co., Ltd.
(Japan & Taiwan)
Intravenous Neuraminidase
Uncomplicated seasonal Influenza
Inhibitor
Approved
(Korea)
Green Cross Corporation
(Korea)
Galidesivir
(BCX4430)
RNA dependent-RNA
Polymerase Inhibitor
Broad spectrum antiviral for 20 RNA
Phase 1
viruses, including Marburg, Yellow Fever,
and Ebola
BioCryst
(worldwide)
* See “Business(cid:0)Collaborations and In-License Relationships” for a description of our relationships with the third parties identified in this
column.
4
Business Strategy
Our business strategy is to create stockholder value both by focusing our discovery and development efforts on oral drugs for rare diseases for which
a significant unmet medical need exists and by efficiently commercializing these drugs in the United States and certain other regions upon regulatory
approval. By focusing on rare disease markets, we believe that we can more effectively control the costs of, and our strategic allocation of financial
resources toward, post-approval commercialization.
We select disease targets and product candidates in which a small molecule would offer a significant benefit over existing products or would be the
first to market. We strive to advance our product candidate portfolio from discovery to commercial markets efficiently by utilizing a small group of talented
and highly-skilled employees working in conjunction with strategic outsource partners. We are unique in our approach to treat orphan diseases with orally-
administered, small molecules, identified by utilizing crystallography and structure-guided drug design. The principal elements of our strategy are:
● Focusing on High Value-Added Structure-Guided Drug Design Technologies. We utilize structure-guided drug design in order to most efficiently
develop new therapeutic candidates. Structure-guided drug design is a process by which we design a product candidate through detailed analysis
of the enzyme target, which the product candidate must inhibit in order to stop the progression of the disease or disorder. We believe that structure-
guided drug design is a powerful tool for the efficient development of small-molecule product candidates that have the potential to be safe and
effective. Our structure-guided drug design technologies typically allow us to design and synthesize multiple product candidates that inhibit the
same enzyme target, with the goal of establishing broad intellectual property protection and formulating compounds with competitive advantages.
● Selecting Inhibitors that are Promising Product Candidates. We start by selecting disease targets with well-understood biology and characteristics
that fit with our ability to utilize structure-guided drug design capabilities to build potent and specific enzyme inhibitors. Next, we narrow our
selection of these product candidates based on product characteristics, such as initial indications of safety and biologic activity on the target.
● Developing our Product Candidates Efficiently. An important element of our business strategy is to efficiently progress our product candidates
through the development process. In order to accomplish this, we typically strive for disease targets with a defined clinical and regulatory pathway
for approval or diseases where high unmet needs allow for frequent interactions with regulators. In addition, as we determine such relationships to
be appropriate or desirable, we control certain fixed costs and overhead by outsourcing with strategic partners and contractors or entering into
license agreements with third parties, including the U.S. Government. For example, our galidesivir research program is currently being developed
under U.S. Government contracts. By contracting with the U.S. Government and outsourcing certain aspects of our operations, we are able to
control overhead costs and focus financial resources directly where they provide the most benefit and reduce our business risk.
● Commercializing our Product Candidates Globally. A core part of our strategy is to commercialize our rare disease products globally. We have
established commercial teams in the United States and Europe for the commercialization of ORLADEYO, and we are continuing to build the
structure and expertise to commercialize our products in markets where we believe we can do this efficiently and effectively. We have also
established relationships with licensing and distribution partners in certain markets, including Japan, and will continue to seek such relationships
where we determine this to be an effective approach.
Products and Product Candidates
ORLADEYO (Berotralstat)
ORLADEYO is an oral, once-daily therapy discovered and developed by BioCryst for the prevention of hereditary angioedema (“HAE”) attacks.
HAE is a rare, severely debilitating and potentially fatal genetic condition with a prevalence of between 1 in 33,000 to 1 in 67,000 people. HAE symptoms
include recurrent episodes of edema in various locations, including the hands, feet, face, genitalia and airway. Airway swelling is particularly dangerous
and can lead to death by asphyxiation. In addition, patients often have bouts of severe abdominal pain, nausea and vomiting caused by swelling in the
intestinal wall. By inhibiting plasma kallikrein, ORLADEYO suppresses bradykinin production. Bradykinin is the mediator of acute swelling attacks in
HAE patients.
ORLADEYO was approved by the U.S. Food and Drug Administration (“FDA”) in December 2020 for prophylaxis to prevent attacks of HAE in
adults and pediatric patients 12 years and older. Our specialty pharmacy provider for ORLADEYO in the U.S. began shipping ORLADEYO to patients
with a prescription in the U.S. in December 2020. Through EMPOWER Patient Services, administered by our specialty pharmacy provider, we aim to
streamline access to therapy by providing each HAE patient and their healthcare provider with a single point of contact for access to ORLADEYO. A
dedicated care coordinator supports access for each patient with comprehensive financial support tools and reimbursement support.
ORLADEYO also received marketing and manufacturing approval from the Ministry of Health, Labor and Welfare (“MHLW”) in Japan in January
2021 for prophylactic treatment of HAE in adults and pediatric patients 12 years and older. ORLADEYO is the first and only prophylactic HAE medication
approved in Japan. On April 14, 2021, we announced that the Japanese National Health Insurance System (“NHI”) approved the addition of ORLADEYO
to the NHI drug price list on April 21, 2021. Torii, our collaborative partner commercializing ORLADEYO in Japan, launched ORLADEYO in Japan on
April 23, 2021. The NHI price listing triggered a $15 million milestone payment from Torii to us. In addition, under our agreement with Torii, we are
entitled to receive tiered royalty payments, ranging from 20% to 40% of net sales of ORLADEYO in Japan during each calendar year. See “Collaborations
and In-License Relationships” below for a description of our relationship with Torii. OrphanPacific, Inc., our representative partner in Japan, holds the
marketing authorization for ORLADEYO in Japan.
5
On April 30, 2021, we announced that the European Commission (“EC”) approved ORLADEYO for routine prevention of recurrent attacks of HAE
in adult and adolescent patients aged 12 years and older. The EC approval is applicable to all European Union (“EU”) member states plus Iceland, Norway,
and Liechtenstein. ORLADEYO is the first oral, once-daily prophylactic therapy for the prevention of HAE attacks approved in Europe. On June 3, 2021,
we announced the launch of ORLADEYO in Germany. Appropriate HAE patients aged 12 years and older in France currently have access to ORLADEYO
through an Autorisation Temporaire d’Utilisation de cohort, or Temporary Authorization for Use, granted by the French National Agency for Medicines
and Health Products Safety in March 2021. In addition, we have also launched ORLADEYO in Norway and Sweden.
On May 12, 2021, we announced that the United Kingdom’s Medicines and Healthcare Regulatory Agency (“MHRA”) granted marketing
authorization for ORLADEYO for the routine prevention of recurrent HAE attacks in HAE patients 12 years and older. We announced on September 15,
2021 that the United Kingdom’s National Institute for Health and Care Excellence (“NICE”) recommended ORLADEYO for preventing recurrent attacks
of HAE in eligible patients 12 years and older if they have at least two attacks per month. With this recommendation, HAE patients in England, Wales, and
Northern Ireland will have access to the first oral, once-daily therapy for routine prevention of recurrent HAE attacks.
On June 16, 2021, we announced that the Israeli Ministry of Health has accepted the regulatory submission of ORLADEYO for the prevention of
recurrent attacks in patients with HAE 12 years and older and that the Israeli Ministry of Health has granted an accelerated review. In addition, we entered
into a distribution and supply agreement granting Neopharm Ltd., a corporation organized under the laws of the State of Israel, the exclusive rights to
commercialize ORLADEYO in Israel.
On August 25, 2021, we announced that the new drug submission for ORLADEYO was accepted for review by Health Canada for the prevention of
recurrent attacks in patients with HAE 12 years and older. We also announced that Swissmedic accepted the Company’s marketing authorization
application for ORLADEYO review.
On September 9, 2021, we announced that the Ministry of Health and Prevention (“MOHAP”) in the United Arab Emirates (“UAE”) granted
marketing authorization for ORLADEYO for the prevention of recurrent attacks in patients with HAE 12 years and older. To support commercialization
efforts in the UAE, we entered into a supply and distribution agreement with NewBridge Pharmaceuticals, which also covers the Gulf Cooperation Council
and Iraq.
On January 10, 2022, we announced that ORLADEYO is now covered by all major payors and national and regional pharmacy benefit managers in
the U.S.
On December 7, 2020, we entered into a Purchase and Sale Agreement (the “2020 RPI Royalty Purchase Agreement”) with RPI 2019 Intermediate
Finance Trust (“RPI”), pursuant to which we sold to RPI the right to receive certain royalty payments from the Company for a purchase price of $125
million in cash. On November 19, 2021, we entered into a second Purchase and Sale Agreement (the “2021 RPI Royalty Purchase Agreement” and
together with the 2020 RPI Royalty Purchase Agreement, (the “RPI Royalty Purchase Agreements”) with RPI, pursuant to which we sold to RPI the right
to receive certain royalty payments from the Company for a purchase price of $150 million in cash. On November 19, 2021, we also entered into a
Purchase and Sale Agreement (the “OMERS Royalty Purchase Agreement”) and collectively with the RPI Royalty Purchase Agreements, the “Royalty
Purchase Agreements”) with OCM IP Healthcare Holdings Limited, an affiliate of OMERS Capital Markets (“OMERS”), pursuant to which we sold to
OMERS the right to receive certain royalty payments from the Company for a purchase price of $150 million in cash. The transactions contemplated under
the Royalty Purchase Agreements are referred to herein as the “Royalty Sales.” Under the Royalty Purchase Agreements, RPI and OMERS are entitled to
receive tiered, sales-based royalties on net product sales of ORLADEYO in the U.S. and certain key European markets (collectively, the “Key Territories”),
and other markets where we sell ORLADEYO directly or through distributors (collectively, the “Direct Sales”). In addition, RPI and OMERS are entitled
to receive a tiered revenue share on amounts generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of
the Key Territories. See “Note 8(cid:0)Royalty Monetizations(cid:0)ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part
II, Item 8 of this report for additional information about our obligations under the Royalty Purchase Agreements.
We built out our U.S. commercial infrastructure in 2020 to support the launch of ORLADEYO in the U.S. in December 2020 and are continuing to
build our commercial infrastructure to support launches in Europe and elsewhere. Based on proprietary analyses of HAE prevalence and market research
studies with HAE patients, physicians, and payors in the U.S. and Europe, and our first full year of commercialization of ORLADEYO in the U.S. in 2021,
we anticipate the commercial market for ORLADEYO has the potential to reach a global peak of more than $1 billion in annual sales. We expect at least 70
to 80 percent of our revenue at peak to come from the U.S. These expectations are subject to numerous risks and uncertainties that may cause our actual
results, performance, or achievements to be materially different. There can be no assurance that our commercialization methods and strategies will succeed,
or that the market for ORLADEYO will develop in line with our current expectations. See “Risk Factors(cid:0)Risks Relating to Our Business(cid:0)Risks Relating
to Drug Development and Commercialization(cid:0)There can be no assurance that our commercialization efforts, methods, and strategies for our products or
technologies will succeed, and our future revenue generation is uncertain” in Part I, Item 1A of this report for further discussion of these risks.
6
Complement-Mediated Diseases
The complement system is part of the body’s natural immune system and is responsible for helping the body eliminate microbes (including viral and
bacterial infections) and damaged cells. It is comprised of proteins that are primarily produced in the liver and circulate in the blood. Once activated, the
complement system stimulates inflammation, phagocytosis and cell lysis. Excessive or uncontrolled activation of the complement system can cause severe,
and potentially fatal, immune and inflammatory disorders. The complement system comprises biological cascades of amplifying enzyme cleavages
involving more than 30 proteins and protein fragments, and may be activated through three pathways: the classical pathway (initiated by antibody-antigen
complexes), the lectin pathway (initiated by lectin binding) and the alternative pathway (initiated by microbial surfaces). The alternative pathway also
provides a critical amplification loop for all three pathways, regardless of the initiating mechanism. Factor D is an essential enzyme in the alternative
pathway, thus making Factor D an attractive target to address complement-mediated diseases. Several rare diseases are known to be mediated by
dysregulation of the complement system.
BCX9930 is a novel, oral, potent, and selective small molecule inhibitor of Factor D, discovered by the Company and currently in clinical
development for the treatment of complement-mediated diseases. Based on the safety and proof-of-concept (“PoC”) data generated to date in patients with
paroxysmal nocturnal hemoglobinuria (“PNH”), the program has advanced to pivotal studies of oral BCX9930 (500 mg twice-daily) in PNH and to a
proof-of-concept trial of oral BCX9930 (500 mg twice-daily) in three renal complement-mediated diseases, C3 glomerulopathy (C3G), IgA nephropathy
(IgAN), and primary membranous nephropathy (PMN). We are working closely with regulators and key opinion leaders in hematology and nephrology to
map the advanced development strategy across a broad set of indications. Our goal is to develop oral BCX9930 as a monotherapy for complement-
mediated diseases.
We have completed a proof-of-concept trial in patients with PNH, including both treatment-naïve and those patients with an inadequate response to
C5 inhibitors. Patients on BCX9930 have been allowed to roll over with continued follow-up into a long-term safety trial. We continue to monitor the
patients who continue in the long-term safety trial.
On November 29, 2021, we announced the enrollment of the first patient in the REDEEM-2 pivotal trial with BCX9930 in patients with PNH.
REDEEM-2 is a randomized, placebo-controlled trial evaluating the efficacy and safety of BCX9930 (500 mg twice-daily) as monotherapy versus placebo
in PNH patients not currently receiving complement inhibitor therapy. In part 1 of this trial, patients will be randomized 2:1 to receive BCX9930 or placebo
under double-blind conditions for 12 weeks. All patients will receive BCX9930 in part 2 (weeks 13-52) to assess the long-term safety, tolerability, and
effectiveness of BCX9930, with patients randomized to placebo in part 1 switching to BCX9930 at the week 12 visit. The primary endpoint of REDEEM-2
is change from baseline in hemoglobin, as assessed at week 12.
On January 7, 2022, we announced the enrollment of the first patient in the REDEEM-1 pivotal trial with BCX9930 in patients with PNH.
REDEEM-1 is a randomized, open-label, active comparator-controlled comparison of the efficacy and safety of BCX9930 (500 mg twice-daily)
monotherapy in PNH patients with an inadequate response to a C5 inhibitor. In part 1 of this trial, patients who have not had an adequate response to a C5
inhibitor will be randomized 2:1 to discontinue their C5 inhibitor and receive BCX9930 as monotherapy or to continue receiving their C5 inhibitor for 24
weeks. All patients will receive BCX9930 in part 2 (weeks 25-52) to assess the long-term safety, tolerability, and effectiveness of BCX9930. Patients who
are randomized to C5 inhibitor therapy in part 1 will discontinue that therapy at the week 24 visit and start BCX9930 for part 2. The primary endpoint of
REDEEM-1 is change from baseline in hemoglobin, as assessed at weeks 12 to 24.
On February 22, 2022, we announced the enrollment of the first patient in the RENEW proof-of-concept basket study with BCX9930 in patients
with C3 glomerulopathy, IgA nephropathy, and primary membranous nephropathy. RENEW is an open-label, multicenter, proof-of-concept study designed
to evaluate the safety, tolerability, and therapeutic potential of BCX9930 (twice-daily) administered for 24 weeks in patients with either C3G, IgAN, or
PMN. All patients will be enrolled into one of three parallel study cohorts, based on confirmation of diagnosis and disease activity in a recent kidney
biopsy, and will receive BCX9930 for the 24-week treatment period. The primary endpoint of RENEW is percent change from baseline in 24-hour urine
protein-to-creatinine ratio (uPCR), as assessed at week 24.
BCX9930 has received Orphan Drug and Fast Track designations from the FDA for the treatment of PNH. Orphan drug designation qualifies
BCX9930 for various development incentives, including tax credits for certain clinical costs, a waiver of the new drug application fee, and a designated
period of market exclusivity following approval. According to the FDA, the purpose of the Fast Track designation is to get important new drugs to patients
earlier by facilitating the development, and expediting the review, of drugs to treat serious conditions and meet an unmet medical need.
Under the RPI Royalty Purchase Agreements, RPI will be entitled to receive tiered, sales-based royalties on net product sales, if any, of BCX9930
and another earlier stage Factor D inhibitor, as well has tiered, profit share amounts of up to 3.0% from certain other permitted sales in certain markets. See
“Note 8(cid:0)Royalty Monetizations(cid:0)ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report
for additional information about our obligations under the RPI Royalty Purchase Agreements.
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Fibrodysplasia Ossificans Progressiva (“FOP”)
FOP is an ultra-rare disease that affects approximately 1 in 2 million people worldwide. It is a severely disabling condition characterized by the
irregular formation of bone outside the normal skeleton, also known as heterotopic ossification (“HO”). HO can occur in muscles, tendons and soft tissue.
FOP patients progressively become bound by this irregular ossification, with restricted movement and fused joints, resulting in deformities and premature
mortality. In patients with FOP, minor trauma can result in rapid development of painful inflammatory masses. These progress over several weeks resulting
in the replacement of the affected soft tissue by permanent bone masses. There is no cure for this condition, and there are no approved treatments for FOP
in the U.S.
In 2018, we announced the advancement of a program exploring activin receptor-like kinase-2 (“ALK2”) inhibitors for treatment of FOP. ALK2
enzyme is a part of the normal signaling pathway for bone formation and responds to binding its specific ligands (bone morphogenic proteins, or BMPs),
by stimulating normal bone growth and renewal in healthy children and adults. Specific activating mutations of the ALK2 gene are seen in all cases of FOP.
An activating mutation in ALK2 is necessary for the disease to occur, making the ALK2 kinase an ideal drug target for treatment of FOP with an ALK2
kinase inhibitor.
The goal of our ALK2 inhibitor program is to discover and develop orally administered kinase inhibitor drug candidates that are able to slow or
prevent HO. In a phase 1 clinical trial in healthy volunteers, our lead compound, BCX9250, was safe and well tolerated at all doses studied, with linear and
dose-proportional exposure supporting once-daily dosing.
Peramivir Injection (RAPIVAB, RAPIACTA, PERAMIFLU)
RAPIVAB (peramivir injection) was developed under a $234.8 million contract from the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services (“BARDA/HHS”). In January 2010, our partner, Shionogi, received the first approval
for peramivir injection and launched it in Japan under the commercial name RAPIACTA. It is approved in Japan for the treatment of adults, children, and
infants with uncomplicated seasonal influenza and those patients at high-risk for complications associated with influenza. In August 2010, our partner,
Green Cross, received marketing and manufacturing approval from the Korean Food & Drug Administration under the commercial name PERAMIFLU to
treat patients with influenza A & B viruses, including pandemic H1N1 and avian influenza. See “Collaborations and In-License Relationships” below for a
discussion of these licensing arrangements.
Peramivir was also approved in the United States in 2014, Taiwan in 2016, Canada in 2017, and Australia in 2018. A Supplemental New Drug
Application (“sNDA”) was approved in the United States in February 2021, extending RAPIVAB’s availability for the treatment of acute uncomplicated
influenza to pediatric patients six months and older. Prior to this approval, peramivir had been indicated in the United States for pediatric patients two years
and older. In the United States, peramivir is indicated for the treatment of acute uncomplicated influenza in patients who have been symptomatic for no
more than two days.
In September 2018, the U.S. Department of Health and Human Services (“HHS”) awarded us a $34.7 million contract for the procurement of up to
50,000 doses of RAPIVAB over a five-year period to supply the Strategic National Stockpile for use in a public health emergency. We delivered 20,000
doses of RAPIVAB under this contract in 2019 for a total price of approximately $13.9 million. We delivered another 9,980 doses of RAPIVAB under this
contract in 2021 for a total price of approximately $6.9 million. On September 1, 2021, we announced that HHS exercised its option to purchase an
additional 10,000 doses of RAPIVAB under this contract for a total price of approximately $6.9 million. As a result, we expect to deliver at least one
shipment of 10,000 doses within the contract in 2022.
Galidesivir (BCX4430)
Galidesivir is a broad-spectrum antiviral (“BSAV”) that has been shown to be active against more than 20 RNA viruses in nine different families,
including filoviruses, togaviruses, bunyaviruses, arenaviruses, paramyxoviruses, coronaviruses and flaviviruses. In animal studies, galidesivir has
demonstrated survival benefits against a variety of serious pathogens, including Marburg, Yellow Fever, Ebola, and Zika viruses and from exposures to
aerosolized Marburg virus, an experimental condition designed to mimic an exposure scenario that could result during a bioterrorist attack.
The objective of our BSAV program is to develop galidesivir as a broad-spectrum therapeutic for viruses that pose a threat to national health and
security. The primary focus of the program is treatment of hemorrhagic fever viruses. Our galidesivir research program is currently being developed under
contracts with the National Institute of Allergy and Infectious Diseases within the HHS (“NIAID/HHS”) and BARDA/HHS.
NIAID/HHS funding has supported galidesivir’s development as a treatment for Marburg virus, Yellow Fever and Ebola virus. Since September
2013, NIAID/HHS has supported the development of galidesivir as a therapeutic for Ebola and Marburg viruses. As of the date hereof, all options under
our initial contract with NIAID/HHS have been awarded. The total amount under the initial contract, as amended, is $47.3 million, inclusive of the $1.4
million added to the contract in September 2021 to pay for certain additional costs, including additional manufacturing development costs and overhead.
This is the commencement of the closing out of the initial contract.
8
The contract we entered into with NIAID/HHS in August 2020 for the manufacture and evaluation of the safety, efficacy, and tolerability of
galidesivir, with potential aggregate funding of up to $43.9 million if all contract options are exercised, remains ongoing. NIAID/HHS made an initial
award of $6.3 million under this contract in 2020.
Since March 2015, BARDA/HHS has supported the development of galidesivir as a potential treatment for filoviruses. The total BARDA/HHS
contract value to advance the program through toxicology studies and manufacturing work to support a new drug application is $39.1 million if all contract
options are exercised. As of the date hereof, a total of $20.6 million has been awarded under exercised options within this contract.
Collaborations and In-License Relationships
Torii Pharmaceutical Co., Ltd. (“Torii”)
On November 5, 2019, we entered into a Commercialization and License Agreement with Torii (the “Torii Agreement”), granting Torii the exclusive
right to commercialize ORLADEYO for the prevention of HAE attacks in Japan. Under the Torii Agreement, we received an upfront, non-refundable
payment of $22.0 million. We received an additional milestone payment of $15.0 million in the second quarter of 2021 upon receipt from the NHI of a
reimbursement price approval for ORLADEYO.
Under the Torii Agreement, we are entitled to receive tiered royalty payments, ranging from 20% to 40% of annual net sales of ORLADEYO in
Japan during each calendar year. Torii’s royalty payment obligations are subject to customary reductions in certain circumstances, but may not be reduced
by more than 50% of the amount that otherwise would have been payable to us in the applicable calendar quarter. Torii’s royalty payment obligations
commenced upon the first commercial sale of ORLADEYO in Japan and expire upon the later of (i) the tenth anniversary of the date of first commercial
sale of ORLADEYO in Japan, (ii) the expiration of our patents covering ORLADEYO, and (iii) the expiration of regulatory exclusivity for ORLADEYO
in Japan. We are responsible for supplying Torii with its required amounts of ORLADEYO. The activities of the parties pursuant to the Torii Agreement are
overseen by a joint steering committee, composed of an equal number of representatives from each party to coordinate the development and
commercialization of ORLADEYO in Japan.
Under the Torii Agreement, we granted Torii a right of first negotiation (“ROFN”) to commercialize ORLADEYO in Japan for the acute treatment
of HAE attacks if we develop ORLADEYO for such indication and to commercialize any additional kallikrein inhibitor that we may develop in the future
for use in HAE in Japan. Under both ROFNs, if the parties do not agree to terms with respect to a definitive amendment to the Torii Agreement or new
agreement, as applicable, the terms of the amendment or agreement would be set by a third-party arbitrator.
Shionogi & Co., Ltd. (“Shionogi”)
In February 2007, we entered into a License, Development and Commercialization Agreement (as amended, supplemented or otherwise modified,
the “Shionogi Agreement”), an exclusive license agreement with Shionogi to develop and commercialize peramivir in Japan for the treatment of seasonal
and potentially life-threatening human influenza. In October 2008, we and Shionogi amended the Shionogi Agreement to expand the territory covered by
the agreement to include Taiwan. Under the terms of the Shionogi Agreement, Shionogi obtained rights to injectable formulations of peramivir in Japan in
exchange for a $14.0 million upfront payment. The license provided for development milestone payments (up to $21.0 million), which have all been paid,
and for commercial milestone payments (up to $95.0 million) in addition to double-digit (between 10% and 20%) royalty payments on product sales of
peramivir, in accordance with the terms of the Shionogi Agreement.
In December 2017, we, on behalf of JPR Royalty Sub LLC, a wholly-owned subsidiary of BioCryst (“Royalty Sub”), instituted arbitration
proceedings against Shionogi in order to resolve a dispute with Shionogi under the Shionogi Agreement regarding the achievement of sales milestones and
escalating royalties. The arbitration proceedings concluded with the decision that no sales milestones had been achieved and that royalties would remain the
same. The costs associated with the arbitration proceedings are recoverable from the assets of Royalty Sub in accordance with the terms of the Indenture
and servicing agreement relating to the PhaRMA Notes (each as defined below under “Shionogi Royalty Monetization and Non-Recourse Notes Payable”).
Generally, all payments under the Shionogi Agreement are non-refundable and non-creditable, but they are subject to audit. Shionogi is responsible
for all development, regulatory, and marketing costs in Japan. The term of the Shionogi Agreement is from February 28, 2007 until terminated. Either party
may terminate the Shionogi Agreement in the event of an uncured breach. Shionogi has the right of termination without cause. In the event of termination,
all license and rights granted to Shionogi shall terminate and shall revert back to us. We developed peramivir under a license from the University of
Alabama Birmingham (“UAB”) and have paid sublicense payments to UAB on the upfront payments and will owe sublicense payments on any future
event payments and/or royalties received by us from Shionogi.
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Shionogi Royalty Monetization and Non-Recourse Notes Payable.
On March 9, 2011, we completed a $30.0 million financing transaction to monetize certain future royalty and milestone payments under the
Shionogi Agreement. Pursuant to the transaction, Royalty Sub issued $30.0 million in aggregate principal amount of its PhaRMA Senior Secured 14.0%
Notes due 2020 (the “PhaRMA Notes”) in a private placement to institutional investors. The PhaRMA Notes were issued under an indenture, dated as of
March 9, 2011 (the “Indenture”), by and between Royalty Sub and U.S. Bank National Association, as Trustee. We received net proceeds of $22.7 million
from this transaction.
As part of the transaction, we entered into a purchase and sale agreement, dated as of March 9, 2011, with Royalty Sub, whereby we transferred to
Royalty Sub, among other things, (i) our rights to receive commercial royalty and milestone payments from Shionogi under the Shionogi Agreement and
(ii) the right to receive payments under a Japanese yen/US dollar foreign currency hedge arrangement, which was put into place by us in connection with
the transaction and expired in November 2020. Royalty payments are paid by Shionogi in Japanese yen, and milestone payments are paid in U.S. dollars.
Our collaboration with Shionogi was not impacted by this transaction.
Principal and interest on the PhaRMA Notes are payable from, and are secured by the rights to royalty and milestone payments under the Shionogi
Agreement, which were transferred by us to Royalty Sub. The PhaRMA Notes bear interest at 14.0% per annum, payable annually in arrears on September
1st of each year (the “Payment Date”). We remain entitled to receive any royalties and milestone payments related to sales of peramivir by Shionogi
following repayment by Royalty Sub of the PhaRMA Notes.
Royalty Sub’s obligations to pay principal and interest on the PhaRMA Notes are obligations solely of Royalty Sub and are without recourse to any
other person, including the Company, except to the extent of our pledge of our equity interests in Royalty Sub in support of the PhaRMA Notes. We may,
but are not obligated to, make capital contributions to a capital account that may be used to redeem, or on up to one occasion pay any interest shortfall on,
the PhaRMA Notes.
In September 2014, Royalty Sub was unable to pay the full amount of interest payable in September 2013 by the next succeeding payment date for
the PhaRMA Notes, which was September 1, 2014. This inability constituted an event of default under the terms of the Indenture. Accordingly, we
classified the PhaRMA Notes and related accrued interest as current liabilities on our balance sheet since that time. The PhaRMA Notes matured on
December 1, 2020, at which time the outstanding principal amount of the PhaRMA Notes of $30.0 million, together with all accrued and unpaid interest of
$20.6 million, was due in full. The failure by Royalty Sub to repay in full the outstanding principal amount of the PhaRMA Notes, together with any
accrued and unpaid interest, at the December 1, 2020 final maturity date, constituted an additional event of default under the PhaRMA Notes. As a result of
the continuing events of default under the PhaRMA Notes, the holders of the PhaRMA Notes may foreclose on the collateral securing the PhaRMA Notes
and our equity interests in Royalty Sub, and they may exercise other remedies available to them under the Indenture in respect of the PhaRMA Notes. In
such event, we may not realize the benefit of future royalty payments, if any, that might otherwise accrue to us following repayment of the PhaRMA Notes
and we might otherwise be adversely affected. Due to the non-recourse nature of the PhaRMA Notes, in the event of any potential foreclosure, we believe
the primary impact to us would be the loss of future royalty payments, if any, from Shionogi and the legal costs associated with retiring the PhaRMA
Notes. As a result, we do not currently expect the continuing events of default on the PhaRMA Notes to have a significant impact on our future results of
operations or cash flows. However, there can be no assurance that this will be the case or that we will not otherwise be adversely affected as a result of the
continuing events of default under the PhaRMA Notes.
As of December 31, 2021, the PhaRMA Notes remained in default. We wrote off the balance due under the PhaRMA Notes to other income as a
debt extinguishment as of December 31, 2021. See “Note 8−Royalty Monetizations−RAPIACTA−Non-Recourse Notes Payable−Debt Extinguishment” in
the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about the write-off.
The Indenture does not contain any financial covenants. The Indenture includes customary representations and warranties of Royalty Sub,
affirmative and negative covenants of Royalty Sub, events of default and related remedies, and provisions regarding the duties of the Trustee,
indemnification of the Trustee, and other matters typical for indentures used in structured financings of this type.
Green Cross Corporation (“Green Cross”)
In June 2006, we entered into an agreement with Green Cross to develop and commercialize peramivir in Korea. Under the terms of the agreement,
Green Cross is responsible for all development, regulatory, and commercialization costs in Korea and we are entitled to share in profits resulting from the
sale of peramivir in Korea, including the sale of peramivir to the Korean government for stockpiling purposes. Furthermore, Green Cross will pay us a
premium over its cost to supply peramivir for development and any future marketing of peramivir products in Korea. Both parties have the right to
terminate the agreement in the event of an uncured material breach. In the event of termination, all rights, data, materials, products, and other information
would be transferred to us.
Albert Einstein College of Medicine of Yeshiva University and Industrial Research, Ltd. (“AECOM” and “IRL,” respectively)
In June 2000, we licensed a series of potent inhibitors of Purine Nucleoside Phosphorylase (“PNP”) from AECOM and IRL (together, the
“Licensors”). The lead product candidate from this collaboration is forodesine. We have obtained worldwide exclusive rights to develop and ultimately
distribute it, or any other, product candidates that might arise from research on these inhibitors. We have the option to expand our license agreement with
the Licensors to include other inventions in the field made by the investigators or employees of the Licensors. Under this agreement, as amended and
restated, we have agreed to use commercially reasonable efforts to develop these drugs and to pay certain milestone payments for each licensed product
(which range in the aggregate from $1.4 million to almost $4.0 million per indication) for future development, single digit royalties on net sales of any
resulting product made by us, and to share a portion of future payments received from other third-party partners, if any. In addition, we have agreed to pay
annual license fees, which can range from $150,000 to $500,000, that are creditable against actual royalties and other payments due to the Licensors. The
Licensors have also granted us an exclusive worldwide license of galidesivir for any antiviral use.
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The University of Alabama at Birmingham (“UAB”)
We currently have agreements with UAB for influenza neuraminidase and complement inhibitors. Under the terms of these agreements, UAB
performed specific research for us in return for research payments and license fees. UAB has granted us certain rights to any discoveries in these areas
resulting from research developed by UAB or jointly developed with us. We have agreed to pay single digit royalties on sales of any resulting product and
to share in future payments received from other third-party partners. We have completed the research under the UAB agreements. These two agreements
have initial 25-year terms, are automatically renewable for five-year terms throughout the life of the last patent and are terminable by us upon three
months’ notice and by UAB under certain circumstances. Upon termination, both parties shall cease using the other parties’ proprietary and confidential
information and materials, the parties shall jointly own joint inventions, and UAB shall resume full ownership of all UAB licensed products. There is
currently no activity between us and UAB on these agreements, but when we license this technology, such as in the case of the Shionogi and Green Cross
agreements, or commercialize products related to these programs, we will owe sublicense fees or royalties on amounts received.
Government Contracts
RAPIVAB (Peramivir Injection)
In September 2018, HHS awarded us a $34.7 million contract for the procurement of up to 50,000 doses of RAPIVAB over a five-year period,
including an initial base order of 10,000 doses. In each of September 2019, 2020, and 2021, HHS exercised its options to purchase an additional 10,000
doses of RAPIVAB. We delivered a total of 20,000 doses of RAPIVAB and recorded approximately $13.9 million of product sales in 2019. In 2021, we
delivered another shipment of 9,980 doses within the contract, totaling approximately $6.9 million in product sales. We expect to deliver at least one
shipment of 10,000 doses within the contract in 2022, totaling approximately $6.9 million in product sales. The RAPIVAB purchases by HHS will supply
the Strategic National Stockpile, the nation’s largest supply of life-saving pharmaceuticals and medical supplies for use in a public health emergency.
Galidesivir
In March 2015, BARDA/HHS awarded us a contract for the continued development of galidesivir as a potential treatment for diseases caused by
RNA pathogens, including filoviruses. This BARDA/HHS contract has a potential value of $39.1 million if all contract options are exercised. As of the
date of this report, a total of $20.6 million has been awarded under exercised options within this contract.
In September 2013, NIAID/HHS contracted with us for the development of galidesivir as a treatment for Marburg, and subsequently, Yellow Fever
and Ebola virus disease. All options under this contract have been awarded, and the total value of the contract, as amended, is $47.3 million, inclusive of
the $1.4 million added to the contract in September 2021 to pay for certain additional costs, including additional manufacturing development costs and
overhead. This contract is in the process of being closed out.
In August 2020, NIAID/HHS awarded us a new $43.9 million contract for the manufacture and evaluation of the safety, efficacy, and tolerability of
galidesivir. NIAID/HHS made an initial award of $6.3 million under this new contract.
The contracts with BARDA/HHS and NIAID/HHS are cost-plus-fixed-fee contracts. That is, we are entitled to receive reimbursement for all costs
incurred in accordance with the contracts provisions that are related to the development of peramivir and galidesivir plus a fixed fee, or profit.
BARDA/HHS and NIAID/HHS will make periodic assessments of progress and the continuation of the contract is based on our performance, the
timeliness and quality of deliverables, and other factors. The government has rights under certain contract clauses to terminate these contracts. These
contracts are also terminable by the government at any time for breach or without cause.
Patents and Proprietary Information
Our success will depend in part on our ability to obtain and enforce patent protection for our products, methods, processes, and other proprietary
technologies, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in other
countries. We own or have rights to certain proprietary information, proprietary technology, issued and allowed patents and patent applications which relate
to compounds we are developing. We actively seek, when appropriate, protection for our products, proprietary technology, and proprietary information by
means of U.S. and foreign patents, trademarks, and contractual arrangements. In addition, we rely upon trade secrets and contractual arrangements to
protect certain of our proprietary information, proprietary technology, and products and product candidates.
11
The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. Our ability to maintain and
solidify our proprietary position for our technology will depend on our success in obtaining effective patent claims and enforcing those claims once
granted. We do not know whether any of our patent applications or those patent applications that we license will result in the issuance of any patents. Our
issued patents and those that may issue in the future, or those licensed to us, may be challenged, invalidated, rendered unenforceable or circumvented,
which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for our
products. In addition, the rights granted under any issued patents may not provide us with competitive advantages against competitors with similar
compounds or technology. Furthermore, our competitors may independently develop similar technologies or duplicate any technology developed by us in a
manner that does not infringe our patents or other intellectual property. Because of the extensive time required for development, testing and regulatory
review of a potential product, it is possible that, before any of our product candidates or those developed by our partners can be commercialized, any
related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent.
As of December 31, 2021, we have been issued approximately 28 U.S. patents that expire between 2023 and 2039 and that relate to our kallikrein
inhibitor compounds, neuraminidase inhibitor compounds, BSAV compounds, PNP inhibitor compounds, and complement-mediated disease program
compounds. We have licensed a number of compounds protected by certain composition of matter patents from AECOM and IRL, totaling three additional
U.S. patents that expire between 2023 and 2029. Additionally, we have approximately 25 Patent Cooperation Treaty or U.S. patent applications pending
related to kallikrein inhibitor compounds, neuraminidase inhibitor compounds, BSAV compounds, PNP inhibitor compounds, FOP program compounds,
and complement-mediated disease program compounds. Our pending applications may not result in issued patents, our patents may not cover the products
of interest or may not be enforceable in all, or any jurisdictions and our patents may not provide us with sufficient protection against competitive products
or otherwise be commercially viable. After expiration of composition of matter patents for our products and product candidates, we may rely on data
exclusivity, or in some cases, method of use patents. The enforceability of these patents varies from jurisdiction to jurisdiction and may not be allowed or
enforceable in some territories where we may seek approval. We may not have the funds to continue patent prosecution or to defend all of our existing
patents in our current patent estate and may selectively abandon patents or patent families worldwide or in certain territories.
Our success is also dependent upon the skills, knowledge and experience of our scientific and technical personnel, none of which is patentable. To
help protect our rights, we require all employees, consultants, advisors and partners to enter into confidentiality agreements, which prohibit the disclosure
of confidential information to anyone outside of BioCryst and, where possible, require disclosure and assignment to us of their ideas, developments,
discoveries, and inventions. These agreements may not provide adequate protection for our trade secrets, know-how, or other proprietary information in the
event of any unauthorized use or disclosure or the lawful development by others of such information.
Competition
The pharmaceutical and biotechnology industries are intensely competitive. Many companies, including biotechnology, chemical and pharmaceutical
companies, are actively engaged in activities similar to ours, including research, development, and commercialization of drugs for the treatment of rare
medical conditions. Many of these companies have substantially greater financial and other resources, larger research and development staffs, and more
extensive commercial and manufacturing organizations than we do. In addition, many have considerable experience in preclinical testing, clinical trials,
and other regulatory approval procedures. In addition, there are also academic institutions, governmental agencies and other research organizations who
conduct research in areas in which we are working. We expect to encounter significant competition for any of the pharmaceutical products we plan to
develop. Companies that successfully complete clinical trials, obtain required regulatory approvals, and commence commercial marketing and sales of their
products may achieve a significant competitive advantage.
In order to compete successfully, we must develop proprietary positions in patented drugs for therapeutic markets that have not been satisfactorily
addressed by conventional research strategies and, in the process, expand our expertise in structure-based drug design. Our product candidates, even if
successfully tested and developed, may not be adopted by physicians over other products and may not offer economically feasible alternatives to other
therapies.
HAE
HAE is an autosomal dominant disease characterized by painful, unpredictable, recurrent attacks of inflammation affecting the hands, feet, face,
abdomen, urogenital tract, and the larynx. The inflammation can be disfiguring, debilitating, or in the case of laryngeal attacks, life-threatening. Prevalence
for HAE is uncertain but is estimated to be approximately 1 case per 33,000 to 67,000 persons without known differences among ethnic groups and is
caused by deficient (Type I) or dysfunctional (Type II) levels of C1-Inhibitor (“C1-INH”), a naturally occurring molecule that is known to inhibit kallikrein,
bradykinin, and other serine proteases in the blood. If left untreated, HAE can result in a mortality rate as high as 40% primarily due to upper airway
obstruction. There are several licensed therapies for HAE, including the following:
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● C1-INH replacement therapy is available as an acute therapy (Berinert®) and as a prophylactic therapy (Haegarda® and Cinryze®). These
therapies are dosed subcutaneously and intravenously. Recombinant C1-INH (Ruconest®) is also available as an acute therapy.
● Kallikrein Inhibitors (cid:0) Kalbitor® (ecallantide) is a specific recombinant plasma kallikrein inhibitor that is dosed subcutaneously by healthcare
providers to treat acute HAE attacks. Takhzyro® (lanadelumab-flyo) is a monoclonal antibody approved for prophylaxis of HAE attacks and
can be self-administered as a subcutaneous injection.
● Bradykinin receptor antagonist (cid:0) Firazyr® (icatibant) and generic icatibant are indicated for the treatment of acute attacks and is administered
by subcutaneous administration.
● Other medications (cid:0) Prophylactic administration of synthetic attenuated androgens (generically available as danazol or stanozolol) has been
utilized to reduce the frequency or severity of attacks. However, long-term use of danazol or stanozolol may result in liver damage,
virilization and arterial hypertension. Six-month liver function tests, annual lipid profiles, and biennial hepatic ultrasound are recommended
for patients on chronic androgen therapy.
We are aware of a number of HAE therapies in clinical development that, if approved, may compete with ORLADEYO. These include:
Company
KalVista
Pharvaris
Attune
CSL
Ionis
Asset
KVD-900
KVD-824
PHA121
(PHVS416/PHVS719)
ATN-249
Garadacimab
Donidalorsen
Complement-Mediated Diseases
Mechanism of Action
Kallikrein inhibitor
Kallikrein inhibitor
B2 bradykinin antagonist
Oral
Oral
Oral
Route of Administration Trial Phase
Kallikrein inhibitor
Anti-factor XII mAb
Antisense inhibitor of prekallikrein
Oral
IV/Subcutaneous
Subcutaneous
Role in Therapy
Acute treatment
Prophylaxis
Acute and Prophylaxis
Prophylaxis
Prophylaxis
Prophylaxis
III
II
II
I
III
III
Several rare diseases are known to be mediated by defects of the complement system, including PNH, atypical hemolytic uremic syndrome
(“aHUS”), complement 3 glomerulopathy (“C3G”), and myasthenia gravis. Alexion, AstraZeneca Rare Disease’s Soliris® (eculizumab) is a C5 inhibitor
approved for PNH, aHUS, myasthenia gravis, and neuromyelitis optica spectrum disorder. Soliris had global sales of over $1.9 billion in 2021. Alexion
also received FDA approval for Ultomiris® (ravulizumab), a longer-acting C5 inhibitor, as a treatment for PNH in late 2018 and aHUS in late 2019. Global
sales for Ultomiris were $688 million in 2021. Apellis Pharmaceuticals, Inc.’s Empaveli® is a C3 inhibitor approved for PNH in the U.S. and Europe in
2021.
In addition to BCX9930, we are aware of a number of complement pathway-based products in development, which include:
Company
Apellis
Akari
Roche
Regeneron
Omeros
AstraZeneca
Novartis
ChemoCentryx
Ra / UCB
Alnylam
Asset
Empaveli
Nomacopan
Crovalimab (RG6107)
Pozelimab
Narsoplimab
OMS906
Danicopan (ALXN2040)
Vermicopan (ALXN2050)
Iptacopan (LNP023)
Tesidolumab
Avacopan
Zilucoplan
Cemdisiran
Mechanism of Action
C3 Inhibitor
C5 Inhibitor
C5 Inhibitor
C5 Inhibitor
MASP-2
MASP-3
Factor D Inhibitor
Factor D Inhibitor
Factor B Inhibitor
C5 Inhibitor
C5aR Inhibitor
C5 Inhibitor
C5 Inhibitor
Route of Administration
Subcutaneous
Subcutaneous
IV / Subcutaneous
IV / Subcutaneous
IV / Subcutaneous
Subcutaneous
Oral
Oral
Oral
IV
Oral
Subcutaneous
Subcutaneous
Trial Phase
Approved
III
III
III
BLA
I
III
II
III
II
Approved
II
II
Amgen (Phase 3), Samsung, and Isu Abxis are also in clinical trials developing biosimilars of eculizumab.
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FOP
FOP is a rare, severely disabling condition characterized by HO. HO can occur in muscles, tendons, and soft tissue. FOP patients progressively
become bound by this irregular ossification, with restricted movement and fused joints, resulting in deformities and premature mortality. There are
currently no approved treatments for FOP in the U.S.
In addition to BCX9250, we are aware of a number of FOP therapies in clinical development, which include:
Company
Ipsen
Regeneron
Incyte
Keros
Asset
Palovarotene
IPN60130
Garetosmab
INCB00928
KER-047
Mechanism of Action
Retinoic Acid Receptor (RAR) Gamma Agonist
ALK-2 Inhibitor
Anti-activin A
ALK-2 Inhibitor
ALK-2 Inhibitor
Route of Administration
Oral
Oral
IV
Oral
Oral
Trial Phase
NDA
II
III
II
I/II
Antivirals
The pharmaceutical market for products that prevent or treat influenza is very competitive. Key competitive factors for RAPIVAB (peramivir
injection) include, among others, efficacy, ease of use, safety, price and cost-effectiveness, storage and handling requirements, and reimbursement. A
number of products are currently available in the U.S. and/or other counties, including Japan, for the prevention or treatment of influenza, including
seasonal flu vaccines, F. Hoffmann-La Roche Ltd.’s (“Roche”) TAMIFLU® (oseltamivir), generic oseltamivir, GlaxoSmithKline plc’s (“GSK”)
RELENZA®, Genentech and Shiongi’s XOFLUZA® and Daiichi Sankyo Co., Ltd.’s INAVIR®. In addition, FUJIFILM Corporation’s favipiravir, a
polymerase inhibitor, is approved in Japan.
Various government entities throughout the world are offering incentives, grants, and contracts to encourage additional investment into preventative
and therapeutic agents against influenza, which may have the effect of further increasing the number of our competitors and/or providing advantages to
certain competitors.
Galidesivir is a product candidate in our BSAV research program and is currently being developed under contracts with NIAID/HHS and
BARDA/HHS. The objective of our BSAV program is to develop galidesivir as a broad-spectrum therapeutic for viruses that pose a threat to national health
and security. The U.S. Government is investing in a number of programs intended to address gaps in its medical countermeasure plan.
Research and Development
We initiated our research and development activities in 1986. We have assembled a scientific research staff with expertise in a broad base of
advanced research technologies, including protein biochemistry, X-ray crystallography, chemistry, and pharmacology. Our research facilities, located in
Birmingham, Alabama, include protein biochemistry and organic synthesis laboratories, testing facilities, X-ray crystallography, computer and graphics
equipment and facilities to make product candidates on a small scale for early-stage clinical trials.
Compliance
We conduct our business in an ethical, fair, honest, and lawful manner. We act responsibly, respectfully, and with integrity in our relationships with
patients, health care professionals, collaborators, governments, regulatory entities, stockholders, suppliers, and vendors.
In order to ensure compliance with applicable laws and regulations, our Chief Financial Officer, Chief Legal Officer, and Chief People Officer
oversee compliance training, education, auditing, and monitoring; enforce disciplinary guidelines for any infractions of our corporate polices; implement
new policies and procedures; respond to any detected issues; and undertake corrective action procedures. Our controls address compliance with laws and
regulations that govern public pharmaceutical companies, including, but not limited to, the following: federal and state law, such as the Sarbanes-Oxley Act
of 2002 and the U.S. Foreign Corrupt Practices Act of 1977; Nasdaq listing requirements; the regulations of the Financial Industry Regulatory Authority,
the SEC, the FDA, and HHS; and applicable laws and regulations administered by foreign regulatory authorities, including those of the EU, the U.K., and
Japan. Our standard operating procedures are designed to provide a framework for corporate governance in accordance with ethical standards and best legal
practices.
Government Regulation
The FDA regulates the pharmaceutical and biotechnology industries in the U.S., and our product candidates are subject to extensive and rigorous
domestic government regulations prior to commercialization. The FDA regulates, among other things, the development, testing, manufacture, safety,
efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale and distribution of pharmaceutical products. In foreign countries, our
products are also subject to extensive regulation by foreign governments. These government regulations are a significant factor in the production and
marketing of any pharmaceutical products that we develop. Failure to comply with applicable FDA and other regulatory requirements at any stage during
the regulatory process may subject us to sanctions, including:
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● delays;
● warning letters;
● fines;
● product recalls or seizures;
● injunctions;
● penalties;
● refusal of the FDA to review pending market approval applications or supplements to approval applications;
● total or partial suspension of production;
● civil penalties;
● withdrawals of previously approved marketing applications; and
● criminal prosecutions.
The regulatory review and approval process is lengthy, expensive, and uncertain. Before obtaining regulatory approvals for the commercial sale of
any products, we or our partners must demonstrate that our product candidates are safe and effective for use in humans. The approval process takes many
years, substantial expenses may be incurred, and significant time may be devoted to clinical development.
The policies of the FDA and foreign regulatory authorities may change, and additional government regulations may be enacted which could prevent
or delay regulatory approval of our product candidates or approval of new indications for our existing products. We cannot predict the likelihood, nature, or
extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.
FDA Regulation
Before testing potential product candidates in humans, we carry out laboratory and animal studies to determine safety and biological activity. After
completing preclinical trials, we must file an investigation new drug application (“IND”), including a proposal to begin clinical trials, with the FDA. Thirty
days after filing an IND, a phase 1 human clinical trial can start, unless the FDA places a hold on the trial.
Clinical trials to support a new drug application (“NDA”) are typically conducted in three sequential phases, but the phases may overlap.
Phase 1 — During phase 1, which involves the initial introduction of the drug into healthy volunteers, the drug is tested to assess metabolism,
pharmacokinetic, and pharmacological actions and safety, including side effects associated with increasing doses.
Phase 2 — Phase 2 usually involves trials in a limited patient population to: (1) assess the efficacy of the drug in specific, targeted indications; (2)
assess dosage tolerance and optimal dosage; and (3) identify possible adverse effects and safety risks.
Phase 3 (pivotal) — If a compound is found to be potentially effective and to have an acceptable safety profile in phase 2 evaluations, phase 3
clinical trials, also called pivotal studies, major studies, or advanced clinical trials, are undertaken to further demonstrate clinical efficacy and to further test
for safety within an expanded patient population at geographically dispersed clinical trial sites. In general, the FDA requires that at least two adequate and
well-controlled phase 3 clinical trials be conducted.
Initiation and completion of the clinical trial phases are dependent on several factors, including things that are beyond our control. For example, the
clinical trials cannot begin at a particular site until that site receives approval from its Institutional Review Board (“IRB”), which reviews the protocol and
related documents. This process can take several weeks to several months. In addition, clinical trials are dependent on patient enrollment, but the rate at
which patients enroll in the study depends on:
● willingness of investigators to participate in a study;
● ability of clinical sites to obtain approval from their IRB;
● the availability of the required number of eligible subjects to be enrolled in a given trial;
● the availability of existing or other experimental drugs for the disease we intend to treat;
● the willingness of patients to participate; and
● the patients meeting the eligibility criteria.
Delays in planned patient enrollment may result in increased expense and longer development timelines.
After successful completion of the required clinical testing, generally an NDA is submitted. Upon receipt of the NDA, the FDA will review the
application for completeness. Within 60 days, the FDA will determine if the application is sufficiently complete to warrant full review and will consider the
application “filed” at that time. Also upon receipt of the application, the FDA will assign a review priority to the application. Priority review applications
are usually reviewed within 6 months; standard review applications are usually reviewed within 10 months. The FDA may refer NDAs for new molecular
entities to an appropriate advisory committee for review and evaluation in regard to providing a recommendation as to whether the application should be
approved. The FDA is not bound to follow the recommendation of an advisory committee.
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Following the review of the application, which may include requests for additional information from the sponsor and results from inspections of
manufacturing and clinical sites, the FDA will issue an “action letter” on the application. The action letter will either be an “approval letter,” in which case
the product may be lawfully marketed in the United States, or a “complete response letter.” A complete response letter will state that the FDA cannot
approve the NDA in its present form and, usually, will describe all of the specific deficiencies that the FDA has identified in the application. The complete
response letter, when possible, will include the FDA’s recommended actions to place the application in a condition for approval. Deficiencies can be minor
(e.g., labeling changes) or major (e.g., requiring additional clinical trials). A complete response letter may also be issued before the FDA conducts the
required facility inspection and/or reviews labeling, leaving the possibility that additional deficiencies in the original NDA could be subsequently cited. An
applicant receiving a complete response letter is permitted to resubmit the NDA addressing the identified deficiencies (in which case a new two- or six-
month review cycle will begin), or withdraw the NDA. The FDA may consider a failure to take action within one year of a complete response letter to be a
request to withdraw, unless the applicant has requested an extension of time in which to resubmit the NDA. If the FDA approves an NDA, the marketing of
the product will be limited to the particular disease states and conditions of use that are described in the product label. The FDA strictly regulates
marketing, labeling, advertising, and promotion of products that are placed on the market. The FDA and other agencies actively enforce the laws and
regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to
significant liability, including investigation by federal and state authorities.
Approved drugs that are manufactured or distributed in the U.S. pursuant to FDA approvals are subject to pervasive and continuing regulation by the
FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and
promotion, and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or
other labeling claims and some manufacturing and supplier changes, are subject to prior FDA review and approval. The FDA may impose a number of
post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including phase 4 clinical
trials, and surveillance programs to further assess and monitor the product's safety and effectiveness after commercialization.
We and all of our contract manufacturers are also required to comply with the applicable FDA current Good Manufacturing Practice, or cGMP,
regulations during clinical development and to ensure that the product can be consistently manufactured to meet the specifications submitted in an NDA.
The cGMP regulations include requirements relating to product quality, as well as the corresponding maintenance of records and documentation.
Manufacturing facilities must be approved by the FDA before they can be used to manufacture our products. Based on an inspection, the FDA determines
whether manufacturing facilities are in compliance with applicable regulations. Manufacturing facilities in non-United States countries that are utilized to
manufacture drugs for distribution into the United States are also subject to inspection by the FDA. Additionally, failure to comply with local regulatory
requirements could affect production and availability of product in relevant markets.
Orphan Drugs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a
disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation, if sought, must be requested before submitting an
NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA.
Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant
with FDA orphan drug designation for a particular active ingredient to receive FDA approval of the designated drug for the disease indication for which it
has such designation, is entitled to a seven-year exclusive marketing period (“Orphan drug exclusivity”) in the U.S. for that product, for that indication.
During the seven-year period, the FDA may not finally approve any other applications to market the same drug for the same disease, except in limited
circumstances, such as a showing of clinical superiority to the product with Orphan drug exclusivity or if the license holder cannot supply sufficient
quantities of the product. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same
drug for a different disease or condition, provided that the sponsor has conducted appropriate clinical trials required for approval. Among the other benefits
of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee for the orphan indication.
Fast Track Designation
Under the Fast Track program, the sponsor of an IND may request the FDA to designate the drug candidate as a Fast Track drug if it is intended to
treat a serious condition and fulfill an unmet medical need. The FDA must determine if the drug candidate qualifies for Fast Track designation within 60
days of receipt of the sponsor's request. Once the FDA designates a drug as a Fast Track candidate, it is required to facilitate the development and expedite
the review of that drug by providing more frequent communication with, and guidance to, the sponsor.
In addition to other benefits, such as greater interactions with the FDA, the FDA may initiate review of sections of a Fast Track drug's NDA before
the application is complete. This rolling review is available if the applicant provides, and the FDA approves, a schedule for the submission of the remaining
information and the applicant pays applicable user fees. However, the FDA's review period as specified under PDUFA V for filing and reviewing an
application does not begin until the last section of the NDA has been submitted. Additionally, the Fast Track designation may be withdrawn by the FDA if
the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
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Foreign Regulation
In addition to regulations in the United States, we are subject to a variety of foreign regulatory requirements governing human clinical trials and
marketing approval, commercial sales, and distribution of drugs. The foreign regulatory approval process includes all of the risks associated with FDA
approval set forth above, as well as additional country-specific regulations. Whether or not we obtain FDA approval for a product, we must obtain approval
of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those
countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The
requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country.
The various phases of pre-clinical and clinical research in the European Union (the “EU”) are subject to significant regulatory controls. Pursuant to
the Clinical Trials Directive 2001/20/EC, as amended (the “Clinical Trials Directive”), a system for the approval of clinical trials in the EU has been
implemented through national legislation of the member states. Under this system, approval must be obtained from the national competent authority of each
EU member state in which a clinical trial is planned to be conducted. A clinical trial application (“CTA”) is submitted, which must be supported by an
investigational medicinal product dossier and further supporting information prescribed by the Clinical Trials Directive and other applicable guidance
documents, including but not limited to the clinical trial protocol. Further, a clinical trial may only be started after an independent ethics committee has
issued a favorable opinion on the CTA in that country.
In April 2014, the EU adopted a new Clinical Trials Regulation (EU) No 536/2014 (the “Regulation”), which is set to replace the current Clinical
Trials Directive. The Regulation came into effect in January 2022 with a three-year transition period in which clinical trial sponsors will be able to choose
among different submission pathways. The Regulation, which is directly applicable in all EU member states, aims to simplify and streamline the approval
of clinical trials in the EU. For instance, the Regulation provides for a streamlined application procedure via a single entry point and strictly defined
deadlines for the assessment of clinical trial applications.
Manufacturing and import into the EU of investigational medicinal products for use in clinical trials is subject to the holding of appropriate
authorizations and must be carried out in accordance with cGMP.
Under EU regulatory systems, we may submit marketing authorizations either under a centralized or decentralized procedure. The centralized
procedure provides for the grant of a single marketing authorization that is valid for all EU member states. Under the centralized procedure, a single
marketing authorization application is submitted to the Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”),
which then makes a recommendation to the European Commission (“EC”). The EC makes the final determination on whether to approve the application.
The decentralized procedure provides for mutual recognition of national approval decisions, and the holder of a national marketing authorization may
submit an application to the remaining member states.
The United Kingdom’s (“U.K.”) exit from the EU, or Brexit, has caused political and economic uncertainty, including in the regulatory framework
applicable to our operations and product candidates, and this uncertainty may persist for years. From January 1, 2021, the Medicines and Healthcare
products Regulatory Agency (“MHRA”) is the U.K.’s standalone medicines and medical devices regulator. As a result of the Northern Ireland protocol,
different rules apply in Northern Ireland than in England, Wales and Scotland (together, Great Britain or “GB”). Northern Ireland continues to follow the
EU regulatory regime, but its national competent authority remains the MHRA. The MHRA has published a draft guidance on how various aspects of the
U.K. regulatory regime for medicines will operate in GB and in Northern Ireland following the expiry of the Brexit transition period on December 31,
2020. The guidance includes clinical trials, marketing authorizations, importing, exporting and pharmacovigilance and is relevant to any business involved
in the research, development or commercialization of medicines in the U.K. The U.K. regulatory regime largely mirrors that of the EU.
Under the Japanese regulatory system administered by the Japanese Pharmaceuticals and Medical Devices Agency (“PMDA”), pre-marketing
approval and clinical studies are required for all pharmaceutical products. To obtain manufacturing/marketing approval, we must submit an application for
approval to the Ministry of Health, Labor and Welfare (“MHLW”) with results of nonclinical and clinical studies to show the quality, efficacy, and safety of
a new drug. A data compliance review, good Clinical Practices, or GCP, on-site inspection, cGMP audit, and detailed data review are undertaken by the
PMDA. The application is then discussed by the committees of the Pharmaceutical Affairs and Food Sanitation Council (“PAFSC”). Based on the results of
these reviews, the final decision on approval is made by the MHLW. In Japan, the National Health Insurance system maintains a Drug Price List specifying
which pharmaceutical products are eligible for reimbursement, and the MHLW sets the prices of the products on this list. The price will be determined
within 60 to 90 days following approval unless the applicant disagrees, which may result in extended pricing negotiations. The government generally
introduces price cut rounds every other year and also mandates price decreases for specific products. New products judged innovative or useful, that are
indicated for pediatric use, or that target orphan or small population diseases, however, may be eligible for a pricing premium. The Japanese government
has also promoted the use of generics, where available.
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Fraud and Abuse and Related Regulatory Laws
We are subject to various federal and state laws pertaining to health care “fraud and abuse,” including both federal and state anti-kickback and false
claims laws. Outside of the U.S., we may be subject to analogous foreign laws and regulations in the various jurisdictions in which we operate. These laws
and regulations apply to our or our partners’ operations, sales and marketing practices, price reporting, and relationships with physicians and other
customers and third-party payors. Anti-kickback laws generally prohibit a manufacturer from soliciting, offering, receiving, or paying any remuneration to
generate business, including the purchase or prescription of a particular drug. Although the specific provisions of these laws vary, their scope is generally
broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices. False claims laws
prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third party payors (including Medicare and Medicaid)
claims for reimbursement or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary
items or services.
In addition, we are subject to the federal physician sunshine act and certain similar physician payment and drug pricing transparency legislation in
various states. The sunshine provisions apply to manufacturers with products reimbursed under certain government programs and require those
manufacturers to disclose annually to the federal government certain payments made to physicians (defined to include doctors, dentists, optometrists,
podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians (as defined above) and their
immediate family members. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Violations of the
physician sunshine act and similar legislation or the fraud and abuse laws may be punishable by civil or criminal sanctions, including fines and civil
monetary penalties, and future exclusion from participation in government healthcare programs.
Reimbursement and Healthcare Reform
In both domestic and foreign markets, sales and reimbursement of any approved products will depend, in part, on the extent to which the costs of
such products will be covered by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations.
These third-party payors are increasingly challenging the prices charged for medical products and services and imposing controls to manage costs. The
containment of healthcare costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort.
Governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement, and
requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in
jurisdictions with existing controls and measures, could limit our net revenue and results. In addition, there is significant uncertainty regarding the
reimbursement status of newly approved healthcare products.
Adequate coverage and reimbursement in the U.S. and other markets is critical to the commercial success of approved products. Recently in the
U.S., there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in
several Congressional inquiries and proposed bills designed to, among other things, reform government program reimbursement methodologies. Individual
states in the U.S. have been increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing,
including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Regional healthcare authorities and individual
hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription
drug and other healthcare programs. Third-party payors are increasingly challenging the prices charged for medical products and services and, in some
cases, imposing restrictions on the coverage of particular drugs. Many third-party payors negotiate the price of medical services and products and develop
formularies that establish pricing and reimbursement levels. Exclusion of a product from a formulary can lead to its sharply reduced usage in the third-party
payor’s patient population. The process for obtaining coverage can be lengthy and costly, and it could take several months before a particular payor initially
reviews a product and makes a decision with respect to coverage. For example, third-party payors may require cost-benefit analysis data in order to
demonstrate the cost-effectiveness of a particular product.
Outside the U.S., ensuring adequate coverage and payment for drug products can have challenges. Pricing of prescription pharmaceuticals is subject
to governmental control in many countries. Pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory marketing
approval for a product and may require us to conduct an active comparator clinical trial to demonstrate the relative effectiveness of our therapeutic
candidates or products to other available therapies to support our pricing, which could be expensive and result in delays in our commercialization efforts.
Third-party payors are challenging the prices charged for medical products and services, and many third-party payors limit reimbursement for newly-
approved healthcare products. Recent budgetary pressures in many EU countries are also causing governments to consider or implement various cost-
containment measures, including reference price grouping, price freezes, increased price cuts, and rebates. If budget pressures continue, governments may
implement additional cost-containment measures. Cost-control initiatives could decrease the price we might establish for products that we may develop or
sell, which would result in lower product revenues or royalties payable to us. There can be no assurance that any country that has price controls or
reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products.
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The Patient Protection and Affordable Care Act (“PPACA”) made extensive changes to the delivery of healthcare in the U.S. The PPACA included
numerous provisions that affect pharmaceutical companies, some of which became effective immediately and others of which have taken effect over the
past several years. For example, the PPACA expanded healthcare coverage to the uninsured through private health insurance reforms and an expansion of
Medicaid. The PPACA also imposed substantial costs on pharmaceutical manufacturers, such as an increase in liability for rebates paid to Medicaid, new
drug discounts that must be offered to certain enrollees in the Medicare prescription drug benefit, an annual fee imposed on all manufacturers of brand
prescription drugs in the U.S., and an expansion of an existing program requiring pharmaceutical discounts to certain types of hospitals and federally
subsidized clinics. The PPACA also contains cost containment measures that could reduce reimbursement levels for healthcare items and services
generally, including pharmaceuticals. It also required reporting and public disclosure of payments and other transfers of value provided by pharmaceutical
companies to physicians and teaching hospitals.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or
reduce costs of healthcare could result in decreased net revenues from our pharmaceutical products and decreased potential returns from our development
efforts. In addition, pharmaceutical and device manufacturers are also required to report and disclose certain payments and transfers of value to, and
investment interests held by, physicians and their immediate family members during the preceding calendar year. Failure to submit required information
may result in civil monetary penalties for payments, transfers of value, or ownership or investment interests not reported in an annual submission.
Compliance with the PPACA and state laws with similar provisions is difficult and time consuming, and companies that do not comply with these state
laws face civil penalties.
In addition, there have been a number of other legislative and regulatory proposals aimed at changing the pharmaceutical industry. For example,
legislation has been enacted in certain states and at a federal level that requires development of an electronic pedigree to track and trace each prescription
drug at the saleable unit level through the distribution system. Compliance with these electronic pedigree requirements may increase our operational
expenses and impose significant administrative burdens.
Data Privacy and Security Laws
Pharmaceutical companies may be subject to U.S. federal and state health information privacy, security, and data breach notification laws, which
may govern the collection, use, disclosure, and protection of health-related and other personal information. State laws may be more stringent, broader in
scope, or offer greater individual rights with respect to protected health information (“PHI”), than the federal Health Insurance Portability and
Accountability Act of 1996, as amended, and its implementing regulations, which are collectively referred to as HIPAA, and state laws may differ from
each other, which may complicate compliance efforts. Entities that are found to be in violation of HIPAA or that enter into a resolution agreement with the
HHS to settle actual or potential allegations of HIPAA noncompliance may be subject to significant civil, criminal, and administrative fines and penalties
and/or additional reporting and oversight obligations.
Many state laws govern the privacy of personal information in specified circumstances. For example, in California the California Consumer Privacy
Act (“CCPA”), establishes a privacy framework for covered businesses by creating an expanded definition of personal information, establishing data
privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a potentially
severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to
prevent data breaches. While clinical trial data and information governed by HIPAA are currently exempt from the CCPA, other personal information may
be covered, and possible changes to the CCPA may broaden its scope.
EU member states, the U.K., Switzerland, and other jurisdictions have also adopted data protection laws and regulations, which impose significant
compliance obligations. In the European Economic Area (“EEA”), the collection and use of personal data, including clinical trial data, is governed by the
provisions of the General Data Protection Regulation (“GDPR”). The GDPR, together with national legislation, regulations, and guidelines of the states in
the EEA, the U.K., and Switzerland governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze,
and transfer personal data, including health data from clinical trials and adverse event reporting. In particular, these obligations and restrictions concern the
consent of the individuals to whom the personal data relates, the information provided to the individuals, the transfer of personal data out of the EEA, the
U.K., or Switzerland, security breach notifications, security and confidentiality of the personal data, and imposition of substantial potential fines for
breaches of the data protection obligations. European data protection authorities may interpret the GDPR and national laws differently and impose
additional requirements, which add to the complexity of processing personal data in or from the EEA, the U.K., or Switzerland. Guidance on
implementation and compliance practices are often updated or otherwise revised.
Human Capital Resources
As of December 31, 2021, we had approximately 358 employees, of whom approximately 190 employees were engaged in the research and
development function of our operations. Our research and development staff, approximately 76 of whom hold Ph.D. or M.D. degrees, have diversified
experience in biochemistry, pharmacology, X-ray crystallography, synthetic organic chemistry, computational chemistry, medicinal chemistry, clinical
development, and regulatory affairs.
We believe that our ability to successfully execute on our strategic initiatives is highly dependent upon our ability to recruit, retain, and reward our
employees. We engage in targeted recruitment strategies to fill highly skilled positions. Our employees enjoy competitive salaries and benefits, as well as
equity participation. Our compensation philosophy is designed to provide an appealing, competitive, and rewarding compensation program that encourages
high personal and company performance, strong cultural and ethical behavior, and incentives aligned with stockholder interests.
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We are committed to providing a workplace that protects the health and wellbeing of our employees. All employees are required to abide by our
Code of Conduct and Compliance Plan and health and safety parameters and to contribute to a positive, inclusive, and friendly company culture. Where we
believe such arrangements can be effective, we have implemented flexible working arrangements, including work from home arrangements, for our
employees, in part, to encourage employee health and wellness during the global COVID-19 pandemic. We consider our relations with our employees to be
satisfactory.
Corporate Information
We are a Delaware corporation originally founded in 1986. Our corporate headquarters is located at 4505 Emperor Blvd., Suite 200, Durham, North
Carolina 27703, and our corporate telephone number is (919) 859-1302. For more information about us, please visit our website at www.biocryst.com. The
information on our website is not incorporated into this Form 10-K.
Financial Information
For information related to our revenues, profits, net loss and total assets, in addition to other financial information, please refer to the Consolidated
Financial Statements and Notes to Consolidated Financial Statements contained in Part II, Item 8 of this report. Financial information about revenues
derived from foreign countries is included in Notes 1 and 2 to the Consolidated Financial Statements contained in this report.
Available Information
Our website address is www.biocryst.com. We make available, free of charge, at our website our Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as
soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. We also make available at our website copies of our
audit committee charter, compensation committee charter, corporate governance and nominating committee charter and our code of business conduct,
which applies to all our employees as well as the members of our Board of Directors. Any amendment to, or waiver from, our code of business conduct
will be posted on our website.
ITEM 1A. RISK FACTORS
An investment in our stock involves risks. You should carefully read this entire report and consider the following uncertainties and risks, which may
adversely affect our business, financial condition or results of operations, along with all of the other information included in our other filings with the SEC,
before making an investment decision regarding our common stock.
Risks Relating to Our Business
Risks Relating to COVID-19
Our business, operations, clinical development or commercialization plans and timelines, and access to capital could be adversely affected by the
effects of the ongoing COVID-19 pandemic on us or on third parties with whom we conduct business, including without limitation our development
partners, manufacturers, clinical research organizations (“CROs”), and others, as well as on the regulatory and government agencies with whom we
work.
The global COVID-19 pandemic continues to affect the United States and global economies, and could cause disruptions to our business, operations,
and clinical development or commercialization plans and timelines, as well as the business and operations of third parties with whom we conduct business.
For example, government orders and evolving business policies and procedures have impacted and may continue to impact, among other things: (1) our
personnel and those of third parties on whom we rely, including our development partners (such as Torii), manufacturers, CROs, and others; (2) the conduct
of our current and future clinical trials and commercial interactions; and (3) the operations of the FDA, EMA, PMDA, and other health and governmental
authorities, which could result in delays of reviews and approvals.
If our operations or those of third parties with whom we conduct business are impaired or curtailed as a result of these events, the development and
commercialization of our products and product candidates could be stopped or delayed, or the costs of such development and commercialization activities
could increase, any of which could have a material adverse impact on our business. For example, our suppliers or other vendors may be unable to meet
their obligations to us or perform their services as expected as a result of the COVID-19 pandemic or other health epidemics. In such circumstances, we
may not be able to enter into arrangements with alternative suppliers or vendors or do so on commercially reasonable terms or in a timely manner. Such
delays could adversely impact our ability to meet our desired clinical development and any commercialization timelines. Although we carefully manage
our relationships with our suppliers and vendors, there can be no assurance that we will not encounter challenges or delays in the future or that these delays
or challenges will not have an adverse impact on our business, financial condition and prospects.
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In addition, our clinical trials have been and may continue to be affected by the COVID-19 pandemic. For example, the acceleration of COVID-19
slowed startup of the inadequate C5 responder cohorts in our complement oral Factor D inhibitor program and, as a result, delayed the reporting of related
data in 2020. Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic or
concerns among patients about participating in clinical trials during a pandemic. Some patients may have difficulty following certain aspects of clinical trial
protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, our inability to successfully recruit and retain patients and
principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19 or experience additional restrictions by
their institutions, city, or state could adversely impact our clinical trial operations.
If global health concerns prevent the FDA, EMA, PMDA or other regulatory authorities from conducting their inspections, reviews, or other
regulatory activities, it could significantly impact the ability of such authorities to timely review and process our regulatory submissions, which could have
a material adverse effect on our business and clinical development and commercialization plans and timelines.
Although our business operations under the ongoing COVID-19 pandemic continue to evolve, where possible and practical, we continue to provide
work-from-home flexibility for our employees, which could negatively impact productivity, disrupt our business and delay our clinical programs and
timelines. In addition, we are a government contractor, and as such, we are subject to the federal COVID-19 safety protocols, including the vaccine
mandate. We cannot accurately predict the impact on operations of our return-to-the-office plan, nor of the federal COVID-19 safety protocols on our
business or on third parties with whom we conduct business. Our business may be negatively impacted in the event that large numbers of employees or
key employees do not comply with these protocols. These and similar, and perhaps more severe, disruptions in our operations could negatively impact our
business, operating results and financial condition.
The spread of COVID-19, which has caused a broad impact globally, could also materially affect our access to capital. While the future economic
impact brought by, and the duration of, COVID-19 may be difficult to assess or predict, the pandemic could result in significant disruption of global
financial markets, reducing our ability to access the equity or debt capital markets or obtain other sources of capital, which could negatively affect our
liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 and related responses could materially affect our business
and the value of our common stock.
The global pandemic of COVID-19 continues to evolve, with the ultimate impact of the COVID-19 pandemic or a similar health epidemic being
uncertain and subject to change. These effects could be material, and we will continue to monitor the COVID-19 situation closely. We do not yet know the
full extent and magnitude of the impacts that COVID-19 has had or will have on our business, on the healthcare system, or on the global economy. In
addition, the COVID-19 pandemic could have the effect of heightening many of the other risks described below.
Financial and Liquidity Risks
We have incurred losses since our inception, expect to continue to incur such losses, and may never be profitable.
Since our inception, we have not achieved sustained profitability. We expect to incur additional losses for the foreseeable future, and our losses could
increase as our research and development efforts and commercial activities progress. We expect that such losses will fluctuate from quarter to quarter and
that losses and fluctuations may be substantial. To become profitable, we, or our collaborative partners, must successfully manufacture and develop
products and product candidates, receive regulatory approval, and successfully commercialize our products and/or enter into profitable commercialization
arrangements with other parties. It could take longer than expected before we receive, or we may never receive, significant revenue from any current or
future license agreements or significant revenues directly from product sales. Even if we are able to successfully commercialize our existing products, or to
develop new commercially viable products, certain obligations we have to third parties, including, without limitation, our obligation to pay RPI and
OMERS, as applicable, royalties on certain revenues from ORLADEYO, BCX9930, and another earlier stage Factor D inhibitor under the Royalty
Purchase Agreements, may reduce the profitability of such products.
Because of the numerous risks and uncertainties associated with developing our product candidates, launching new products, and their potential for
commercialization, we are unable to predict the extent of any future losses. Even if we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.
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We may need to raise additional capital in the future. If we are unable to raise capital when needed, we may need to adjust our operations.
We have sustained operating losses for the majority of our corporate history and expect that our 2022 expenses will exceed our 2022 revenues. We
expect to continue to incur operating losses and negative cash flows unless and until revenues reach a level sufficient to support ongoing operations.
Our liquidity needs will be largely determined by the success of operations in regard to the commercialization of our products and the progression of
our product candidates in the future. Our plans for managing our liquidity needs primarily include controlling the timing and spending on our research and
development programs, raising additional funds through equity and/or debt financings, and commercializing our approved products. We regularly evaluate
other opportunities to fund operations including: (1) securing or increasing U.S. Government funding of our programs, including obtaining additional and
delivering on procurement contracts; (2) out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash
milestone payments and/or royalties; (3) raising additional capital through equity or debt financings or from other sources, including royalty or other
monetization transactions; (4) obtaining additional product candidate regulatory approvals, which would generate revenue, milestone payments and cash
flow; (5) reducing spending on research and development programs, including by discontinuing and suspending development; and/or (6) restructuring
operations to change our overhead structure.
There can be no assurance that any of our plans will be successful or that additional capital will be available to us on reasonable terms, or at all, when
needed. If we are unable to obtain sufficient additional capital, we may be forced to adjust or curtail our operations; delay, reduce, or stop ongoing clinical
trials or commercialization efforts; cease operations altogether; or file for bankruptcy.
Risks Relating to Drug Development and Commercialization
Our success depends upon our ability to advance our product candidates through the various stages of development, especially through the clinical
trial process, and to receive regulatory approval for the commercial sale of our product candidates.
To receive the regulatory approvals necessary for the commercial sale of our product candidates, we or our partners must demonstrate through
preclinical studies and clinical trials that each product candidate is safe and effective. The development process and related regulatory process are complex
and uncertain. The preclinical and clinical development of our product candidates is susceptible to the risk of failure inherent at any stage of drug
development, including failure to demonstrate efficacy and safety, the occurrence of adverse events that are severe or medically or commercially
unacceptable, our or our partners’ failure to comply with trial protocols, applicable regulatory requirements, and industry standards, or a determination by
the FDA or any comparable foreign regulatory authority that a product candidate may not continue development or be approved in accordance with our
development plans or at all. We cannot guarantee that any preclinical studies and clinical trials will be conducted as planned or completed on schedule, if at
all, or that the results of such trials will be sufficient to support regulatory approval for our product candidates.
Progression of our product candidates through the clinical development process is dependent upon our trials indicating that our product candidates
have adequate safety and efficacy in the patients being treated by achieving pre-determined safety and efficacy endpoints according to the clinical trial
protocols. Failure to achieve any of these endpoints in any of our programs, including our Factor D program (inclusive of BCX9930), BCX9250,
galidesivir, and our other rare disease product candidates, could result in delays in or modifications to our trials or require the performance of additional
unplanned trials. If any of our product candidates is associated with adverse events or undesirable side effects or has properties that are unexpected, we may
need to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other
characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Product candidates that initially show promise in clinical
or preclinical testing could later be found to cause undesirable or unexpected side effects that could result in delays in the development of our product
candidates, significant unexpected costs, or the termination of programs. The development plans for our product candidates, including our clinical trials,
may not be adequately designed or executed, which could negatively affect the outcome and analysis of study results. Because of the cost and duration of
clinical trials, we may decide to discontinue development of product candidates that are unlikely to show favorable results in clinical trials, unlikely to help
advance a product to the point of a meaningful collaboration, or unlikely to have reasonable commercial potential.
Undesirable or inconclusive data in our pre-clinical studies and clinical trials or side effects in humans could result in the FDA or foreign regulatory
authorities (including, e.g., the EMA, the MHLW or the MHRA) refusing to approve a product candidate for any targeted indications or imposing
restrictions or warnings that could impact development or the ultimate commercial viability of a product candidate. In addition, the FDA or foreign
regulatory authorities may determine that study data from our product candidates necessitates additional studies or study designs which differ from our
planned development strategy, and such regulatory authorities may also require patient monitoring and testing or may implement restrictions or other
conditions on our development activities, any of which could materially impact the cost and timing of our planned development strategy. We, our partners,
the FDA, or foreign regulatory authorities may suspend or terminate clinical trials at any time if we or they believe the trial participants face unacceptable
health risks.
Our ability to successfully complete the clinical development process is dependent upon many factors, including but not limited to:
● our or our partners’ ability to secure suitable clinical sites and investigators and to enroll and maintain an adequate number of patients on a
timely basis or at all;
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● patients that enroll in a clinical trial may not comply with the clinical trial protocol or maintain contact with investigators to provide complete
data during and after treatment;
● our product candidates may not prove to be either safe or effective or may produce unfavorable or inconclusive results;
● we or our partners may decide, or be required by regulatory authorities, to suspend or terminate clinical research for various reasons,
including a finding that the participants are being exposed to unacceptable health risks, undesirable side effects or other unexpected
characteristics of the product candidate, noncompliance with regulatory requirements or their standards of conduct, or findings of undesirable
effects caused by a chemically or mechanistically similar product or product candidate;
● regulatory authorities may disagree with our or our partners’ clinical trial protocols or our or their interpretation of data from preclinical
studies and clinical trials;
● clinical protocols or study procedures may not be adequately designed or followed by the investigators;
● formulation improvements may not work as expected, which could negatively impact commercial demand for our product candidates;
● regulatory authorities may fail to approve or subsequently find fault with the manufacturing processes or facilities of third-party
manufacturers with which we or our partners enter into agreements for clinical and commercial supplies;
● the supply or quantity of raw materials or manufactured product candidates or other materials necessary to conduct development activities
may be insufficient, inadequate, or unavailable at an acceptable cost, and we or our partners may experience interruptions in supply;
● our or our partners’ development plans may be delayed or changed as a result of changes in development strategy, the impact of new or
different regulations, requirements, and guidelines, or other unexpected events or conditions;
● the cost of pre-clinical studies and clinical trials may be greater than we anticipate;
● we or our third-party contractors, including those manufacturing our product candidates or components or ingredients thereof, or conducting
clinical trials or laboratory testing on our or our partners’ behalf, may fail to comply with regulatory requirements and industry standards or
meet contractual obligations in a timely manner or at all; and
● the impact of the ongoing COVID-19 pandemic on one or more of the foregoing factors.
Clinical trials are lengthy and expensive. Many of the factors listed above could result in increased clinical development costs or longer clinical
development times for any of our programs. We or our partners incur substantial expense for, and devote significant time to, preclinical testing and clinical
trials, yet we cannot be certain that the tests and trials will ever result in the commercial sale of a product. Even if we or our partners successfully complete
clinical trials for our product candidates, we or our partners might not file the required regulatory submissions in a timely manner, may not receive
regulatory approval for the product candidates, in which case we would be unable to generate any revenues from product sales or licensing arrangements,
or any product candidate, if approved, may be subject to restrictions on labeling, marketing, distribution, prescribing, and use, which could adversely
impact the sales of such product.
If our development collaborations with third parties, such as our development partners, contractors and contract research organizations, fail, the
development of our product candidates will be delayed or stopped.
We rely heavily upon third parties for many important stages of our product candidate development, including but not limited to:
● discovery of natural proteins that cause or enable biological reactions necessary for the progression of the disease or disorder, called enzyme
targets;
● execution of certain pharmacology preclinical studies and late-stage development for our compounds and product candidates;
● management of our phase 1, 2 and 3 clinical trials, including medical monitoring, laboratory testing, and data management;
● execution of toxicology studies that may be required to obtain approval for our product candidates;
● formulation improvement strategies and methods;
● manufacturing the starting materials and drug substance required to formulate our products and the product candidates to be used in our
clinical trials, toxicology studies and any potential commercial product; and
● management of certain regulatory interactions outside of the United States.
Our failure to engage in successful collaborations at any one of these stages would greatly impact our business. If we do not license enzyme targets
or inhibitors from academic institutions or from other biotechnology companies on acceptable terms, our drug development efforts would suffer. Similarly,
if the contract research organizations or third-party contractors that conduct our initial or late-stage clinical trials, conduct our toxicology or other studies,
manufacture our starting materials, drug substance and product candidates, provide laboratory testing or other services in connection with our clinical trials,
or assist with our regulatory function breach their obligations to us, perform their services inconsistent with industry standards, or fail to comply with
regulatory requirements, this would delay or prevent both the development of our product candidates and the availability of any potential commercial
product.
If we lose our relationship with any one or more of these parties, we could experience a significant delay in both identifying another comparable
provider and then contracting for its services. We may be unable to retain an alternative provider on reasonable terms, if at all. Even if we locate an
alternative provider, it is likely that this provider may need additional time to respond to our needs and may not provide the same type or level of service as
the original provider. In addition, any provider that we retain will be subject to applicable FDA current Good Laboratory Practices, current Good
Manufacturing Practices (“cGMP”) and current Good Clinical Practices, and comparable foreign standards. We do not have control over compliance with
these regulations by these providers. Consequently, if these practices and standards are not adhered to by these providers, the development and
commercialization of our product candidates could be delayed. If any of the foregoing risks are realized, our business, financial condition and results of
operations could be materially adversely affected.
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If we fail to obtain additional financing or acceptable partnership arrangements, we may be unable to complete the development and
commercialization of our products and product candidates or continue operations.
As our programs advance, our costs are likely to increase. Our current and planned discovery, development, approval, and commercialization efforts
will require significant capital. Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including: our ability
to obtain regulatory approval for our product candidates, including BCX9930, BCX9250, and galidesivir; our ability to maintain regulatory approval for,
successfully commercialize, and achieve market acceptance of our products, including ORLADEYO; our ability to raise additional capital; the amount of
funding we receive from partnerships with third parties for the development and commercialization of our products and product candidates (including our
collaborations with Torii, BARDA/HHS, and NIAID/HHS); the commercial success of our products achieved by our partners; the amount or profitability of
any orders for peramivir or galidesivir by any government agency or other party; the progress and results of our current and proposed clinical trials for our
product candidates; and the progress made in the manufacture of our lead products and the progression of our other programs.
In order to continue future operations, progress our drug development programs, and commercialize our current products and product candidates, we
will be required to raise additional capital. In addition to seeking strategic partnerships, transactions and government funding, we may access the equity or
debt markets, incur additional borrowings, or seek other sources of funding to meet liquidity needs at any time, including to take advantage of attractive
opportunities in the capital markets. Additional funding, whether through additional sales of securities, additional borrowings, royalty or other monetization
transactions, collaborative arrangements with partners, including corporate partners such as Torii and governmental agencies such as BARDA/HHS or
NIAID/HHS, or from other sources, may not be available when needed or on terms acceptable to us. The issuance of preferred or common stock or
convertible securities, with terms and prices significantly more favorable than those of our currently outstanding common stock, could have the effect of
diluting or adversely affecting the holdings or rights of our existing stockholders. Additional borrowings may subject us to more restrictive covenants than
are currently applicable to us under our Credit Agreement. In addition, collaborative arrangements may require us to transfer certain material rights to such
corporate partners. Insufficient funds or lack of an acceptable partnership may require us to delay, scale-back or eliminate certain of our research and
development programs.
Our ability to raise additional capital when needed or at all may be limited and may greatly depend upon our success in commercializing and
achieving market acceptance of ORLADEYO and the success of our current drug development programs, including the progress, timeline and ultimate
outcome of the development programs (including but not limited to formulation progress, long-term human safety studies, and carcinogenicity, drug-drug
interaction, toxicity, or other required studies) for BCX9250 for the treatment of FOP, our Factor D program (including BCX9930) for diseases of the
complement system, our broad-spectrum antiviral program, including galidesivir, and other rare disease product candidates, as well as any post-approval
studies for our products. In addition, constriction and volatility in the equity and debt markets, including as a result of the impacts of COVID-19, may
restrict our future flexibility to raise capital when such needs arise. Furthermore, we have exposure to many different industries, financing partners and
counterparties, including commercial banks, investment banks and partners (which include investors, licensing partners, and the U.S. Government), which
may be unstable or may become unstable in the current economic and political environment, including as a result of the impacts of COVID-19. Any such
instability may impact these parties’ ability to fulfill contractual obligations to us, or it might limit or place burdensome conditions upon future transactions
with us. Also, it is possible that suppliers may be negatively impacted. Any such unfavorable outcomes in our current programs or unfavorable economic
conditions could place severe downward pressure on the price of our common stock and may decrease opportunities to raise capital in the capital or credit
markets, and further could reduce the return available on invested corporate cash, which, if severe and sustained, could have a material and adverse impact
on our results of operations and cash flows and limit our ability to continue development and commercialization of our products and product candidates.
If we or our partners do not obtain governmental approval for our product candidates or maintain governmental approval for our products, we or
our partners will not be able to commercialize and sell these products and potential products, which would significantly harm our business because
we will receive no revenue.
We or our partners must obtain regulatory approval before marketing or selling our products. If the FDA or a comparable foreign regulatory authority
delays or denies regulatory approval of one of our product candidates, or revokes approval of a previously approved product, we would be unable to market
or sell the product in the applicable jurisdiction and would not receive revenue from sales or licensing arrangements related thereto, which could have a
material and adverse impact on our business.
The process of preparing for and obtaining regulatory approval in any jurisdiction may be lengthy and expensive, and approval is never certain.
Because of the risks and uncertainties inherent to the development process, including risks and uncertainties related to the impact of COVID-19, our
product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. As discussed under “Risk
Factors—Risks Relating to Our Business—Risks Relating to Drug Development and Commercialization—Our success depends upon our ability to advance
our product candidates through the various stages of development, especially through the clinical trial process, and to receive regulatory approval for the
commercial sale of our product candidates,” we or our partners may experience any number of unfavorable outcomes during or as a result of pre-clinical
studies and clinical trials that could delay or prevent regulatory approval of our product candidates, or negatively impact our management’s credibility, our
value and our operating results.
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Even if the FDA or foreign regulatory authorities approve a product candidate, the approval may limit the indicated uses for a product candidate,
impose other restrictions on the product candidate, and/or may require post-approval studies that could impair the commercial viability of a product
candidate. Even upon any approval to market our potential products, whether in the United States or internationally, we will continue to be subject to
extensive regulatory requirements. These requirements are wide ranging and govern, among other things:
● adverse drug experience reporting regulations;
● product promotion;
● product manufacturing, including good manufacturing practice requirements; and
● product changes or modifications.
Our failure to comply with existing or future regulatory requirements for regulatory approval, or our loss of, or changes to, previously obtained
approvals, could impair our ability to generate any revenues from product sales or licensing arrangements, which could have a material adverse effect on
our business, financial condition, and results of operations.
We focus on rare diseases, which may create additional risks and challenges.
Because we focus on developing drugs as treatments for rare diseases, we may seek orphan drug, breakthrough therapy or fast track designations for
our product candidates in the United States or the equivalent designations elsewhere in the world. Often, regulatory authorities have broad discretion in
determining whether or not to grant such designations. We cannot guarantee that our product candidates will receive orphan drug status from the FDA or
equivalent designations from other regulatory authorities. We also cannot guarantee that we will receive breakthrough therapy, fast track, or equivalent
designations, which provide certain potential benefits such as more frequent meetings with the applicable regulatory authorities to discuss development
plans, intensive guidance on efficient drug development programs, and potential eligibility for rolling review or priority review. Even if we are successful
in obtaining any such designations for our product candidates, such designations may not lead to faster development or regulatory review or approval and
do not increase the likelihood that our product candidates will receive marketing approval. For instance, although BCX9930 for PNH has received Fast
Track and Orphan Drug designations from the FDA, we may not experience a faster development, review or approval process compared to the
conventional process in the relevant jurisdictions. We may not be able to obtain or maintain these designations for BCX9930 or other product candidates
that receive them, and our competitors may obtain these designations for their product candidates, which could impact our ability to develop and
commercialize our products and product candidates or compete with such competitors, which may adversely impact our business, financial condition or
results of operations.
The commercial viability of any approved product could be compromised if the product is less effective than expected, causes undesirable side effects
that were not previously identified, or fails to achieve market acceptance within the medical community.
If, after obtaining regulatory approval of a product, we or others discover that it is less effective than previously believed or causes undesirable side
effects that were not previously identified, any of the following adverse events could occur:
● regulatory authorities may withdraw their approval of, or impose marketing or manufacturing restrictions on, the product, or require us or our
partners to create a medication guide outlining the risks of unidentified side effects for distribution to patients;
● we or our partners may be required to recall the product, change the way the product is administered, conduct additional clinical trials, or be
subject to civil or criminal penalties; and
● the product may become less competitive and our reputation may suffer.
Even after receiving regulatory approval, any product could fail to gain sufficient, or even any, market acceptance by physicians, patients, third-party
payors, health authorities and others in the medical community. For example, physicians are often reluctant to switch their patients from existing therapies
even when new and potentially more effective or convenient treatments enter the market. Further, patients often acclimate to the therapy that they are
currently taking and do not want to switch unless their physicians recommend switching products or they are required to switch therapies due to lack of
reimbursement for existing therapies. If an approved product does not achieve an adequate level of market acceptance, it may not generate significant
revenues. The occurrence of any of the foregoing could have a material and adverse impact on our business.
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If we fail to successfully commercialize or establish collaborative relationships to commercialize certain of our products and product candidates, or
if any partner terminates or fails to perform its obligations under agreements with us, potential revenues from commercialization of our products
and product candidates could be reduced, delayed or eliminated.
Our business strategy includes increasing the asset value of our product and product candidate portfolio. We believe this is best achieved by retaining
full product rights or through collaborative arrangements with third parties as appropriate. As needed, potential third-party relationships could include
preclinical development, clinical development, regulatory approval, marketing, sales, and distribution of our products and product candidates.
Currently, we have established collaborative relationships, including with Torii for the commercialization of ORLADEYO in Japan and with each of
Shionogi and Green Cross for the development and commercialization of peramivir. The process of establishing and implementing collaborative
relationships is difficult, time-consuming and involves significant uncertainty, including:
● our partners may seek to renegotiate or terminate their relationships with us due to unsatisfactory commercial, regulatory or clinical results,
including post-approval clinical commitments, a change in business strategy, a change of control or other reasons;
● our contracts for collaborative arrangements may expire;
● the possibility that expiration or termination of collaborative relationships, such as those with certain of our distribution partners, may trigger
repurchase obligations of the Company for unsold product held by our partner;
● our partners may choose to pursue alternative technologies, including those of our competitors;
● we have had in the past, and in the future may have, disputes with a partner that could lead to litigation or arbitration, which could result in
substantial costs and divert the attention of our management;
● we do not have day-to-day control over the activities of our partners and have limited control over their decisions;
● our ability to generate future event payments and royalties from our partners depends upon their abilities to establish the safety and efficacy of
our product candidates, obtain regulatory approvals and achieve market acceptance of products developed from our product candidates;
● we or our partners may fail to properly initiate, maintain or defend our intellectual property rights, where applicable, or a party may utilize our
proprietary information in such a way as to invite litigation that could jeopardize or potentially invalidate our proprietary information or
expose us to potential liability;
● we or our partners may not devote sufficient capital or resources toward our products and product candidates; and
● we or our partners may not comply with applicable government regulatory requirements.
If we or our partners fail to fulfill our responsibilities in a timely manner, or at all, our development and commercialization efforts related to that
collaboration could be reduced, delayed or terminated, or it may be necessary for us to assume responsibility for activities that would otherwise have been
the responsibility of our partner. If we are unable to establish and maintain collaborative relationships on acceptable terms, we may have to delay or
discontinue further development or commercialization of one or more of our products or product candidates, undertake commercialization activities at our
own expense or find alternative sources of funding. Any delay in the development or commercialization of our products and product candidates would
severely affect our business, because if our product candidates do not progress through the development process or reach the market in a timely manner, or
at all, or if our products do not achieve market success, we may not receive any revenues from product sales or licensing arrangements.
The results of our partnership with Torii may not meet our current expectations.
We have an agreement with Torii for the development and commercialization of ORLADEYO in Japan. Our ability to realize the expected benefits of
this collaboration, including with respect to the receipt or amounts of royalty payments, is subject to a number of risks, including that the commercial
potential of ORLADEYO may not meet our current expectations, we or Torii may fail to comply with our respective obligations under the Torii Agreement,
and third parties may fail to perform their obligations to us on a timely basis or at all.
The Torii Agreement provides that we are entitled to receive tiered royalty payments, the amounts of which will depend upon the amount of annual
net sales of ORLADEYO in Japan during each calendar year and other factors. We remain responsible for regulatory activities with respect to
ORLADEYO in Japan for one year after the first commercial sale. We continue to use third parties to satisfy many of our obligations under the Torii
Agreement, including but not limited to our regulatory and other responsibilities in Japan. If our interactions, or those of our third-party agents, are
unsuccessful, we could fail to meet our obligations under the Torii Agreement, which could negatively impact the commercial success and the partnership,
impact the economic benefit expected or require additional development of ORLADEYO.
Torii may terminate the Torii Agreement under certain limited circumstances, including upon one year’s written notice after the sixth anniversary of
the first commercial sale of ORLADEYO in Japan. If the Torii Agreement is terminated in connection with these provisions, we will no longer be entitled
to receive any milestone or royalty payments thereunder, which could have a material adverse impact on our business and results of operations.
Torii has sole control over, and decision-making authority with respect to, commercialization activities for ORLADEYO for the prevention of HAE
attacks in Japan, subject to oversight from a joint steering committee. Therefore, our receipt, and the amounts, of any royalty payments under the Torii
Agreement are dependent upon Torii’s successful performance of such commercialization activities. In addition, competitive products and variations in
patient demand, prescription levels, reimbursement determinations or other factors may limit the commercial potential of ORLADEYO in Japan, which
could materially reduce the amount of any royalties we are entitled to receive under the Torii Agreement.
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Under the Torii Agreement, we are responsible for supplying Torii with its required amounts of ORLADEYO for commercial sale. If, due to the
failure of our third-party contract manufacturers to produce sufficient drug product, we fail to supply to Torii the required amounts of ORLADEYO, then
Torii’s ability to successfully commercialize ORLADEYO in Japan could be materially impaired, and we may receive less royalty income under the Torii
Agreement, or none at all.
Any of the foregoing risks could materially adversely impact our ability to perform our obligations under the Torii Agreement, which could
materially reduce the economic benefits of the Torii Agreement to us and impair or result in the termination of our collaboration with Torii.
There can be no assurance that our commercialization efforts, methods, and strategies for our products or technologies will succeed, and our future
revenue generation is uncertain.
There can be no assurance that our and our partners’ commercialization efforts, methods and strategies will succeed. We may be unable to establish
or sufficiently increase our sales, marketing and distribution capabilities for products we currently, or plan to, commercialize. Our ability to receive revenue
from products we or our partners commercialize is subject to several risks, including:
● we or our partners may fail to successfully complete clinical trials, or satisfy post-marketing commitments, sufficient to obtain and keep
regulatory agency marketing approval;
● many competitors are more experienced and have significantly more resources, and their products could reach the market faster, be more cost
effective or have a better efficacy or tolerability profile than our products and product candidates;
● we may fail to employ a comprehensive and effective intellectual property strategy, which could result in decreased commercial value of our
Company, our products and product candidates, or royalties associated with such products (e.g., the loss of the peramivir patent in Korea,
which may result in a reduced royalty from Green Cross);
● we may fail to employ a comprehensive and effective regulatory strategy, which could result in a delay or failure in commercialization of our
products;
● our and our partners’ ability to successfully commercialize our products is affected by the competitive landscape, which cannot be fully
known at this time;
● revenue from product sales would depend on our ability to obtain and maintain favorable pricing;
● reimbursement is constantly changing, which could greatly affect usage of our products;
● future revenue from product sales would depend on our ability to successfully complete clinical studies, obtain regulatory approvals, and
manufacture, market, distribute and commercialize our approved drugs; and
● the impact of the COVID-19 pandemic on us or our partners.
In addition, future revenue from sales of ORLADEYO is subject to uncertainties and will depend on several factors, including the success of our and
our partners’ commercialization efforts in the U.S. and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the
number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party payors, the conversion of patients from
our clinical trials and early access programs to commercial customers, and market trends.
Even if we are able to successfully commercialize our existing products, or to develop new commercially viable products, certain obligations we
have to third parties, including, without limitation, our obligations to pay royalties on certain revenues from ORLADEYO, BCX9930, and another earlier
stage Factor D inhibitor under the Royalty Purchase Agreements may reduce the profitability of such products.
We expect to continue expanding our development and regulatory capabilities and implementing sales, marketing and distribution capabilities, and
as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
We expect to continue experiencing significant growth in the number of our employees and the scope of our operations, particularly in the areas of
drug development, regulatory affairs, sales, marketing, and distribution. To manage our anticipated future growth, we must continue to implement and
improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. For
example, we expanded our internal commercial team in 2020 in preparation for the commercial launch of ORLADEYO, and we continued to add additional
headcount throughout 2021. Due to our limited financial resources and the limited experience of our management team in managing a company with such
anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit, train, and retain additional qualified personnel.
The expansion of our operations may lead to significant costs and may divert our management and business development resources. In addition, if a
commercial launch for any product or product candidate for which we recruit a commercial team and establish marketing capabilities in any region is
delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. Any inability to manage
growth could delay the execution of our business plans or disrupt our operations.
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We depend on third-party vendors in the manufacture and distribution of our products, product candidates and the materials for our products and
product candidates. If we cannot rely on existing third-party vendors, we will be required to incur significant costs and potential delays in finding
new third-party vendors, which could adversely impact the development and commercialization timeframes for our products and product candidates.
We depend on third-party vendors, including third-party manufacturers, distributors, and specialty pharmacies, in the manufacture and distribution of
our products, product candidates, and the materials for our product candidates. Often, especially in the early development and commercialization process,
we have only one or limited sources for a particular product or service, such as manufacturing and/or distribution. We depend on these third-party vendors
to perform their obligations in a timely manner and in accordance with applicable governmental regulations. Our third-party vendors, particularly our third-
party manufacturers and distributors, which may be the only vendor we have engaged for a particular product or service or in a particular region, may
encounter difficulties with meeting our requirements, including but not limited to problems involving, as applicable:
● insufficient resources being devoted in the manner necessary to satisfy our requirements within expected timeframes;
● inconsistent production yields;
● product liability claims or recalls of commercial product;
● difficulties in scaling production to commercial and validation sizes;
● interruption of the delivery of materials required for the manufacturing process;
● failure to distribute commercial supplies of our products to commercial vendors or end users in a timely manner;
● scheduling of plant time with other vendors or unexpected equipment failure;
● potential catastrophes that could strike their facilities or have an effect on infrastructure;
● potential impurities in our drug substance or products that could affect availability of product for our clinical trials or future
commercialization;
● poor quality control and assurance or inadequate process controls;
● failure to provide us with accurate or timely information regarding inventories, the number of patients who are using our products, or serious
adverse events and/or product complaints regarding our products;
● inability of third parties to satisfy their financial obligations to us or to others;
● potential breach of the manufacturing or distribution agreement by the third party;
● possible termination or nonrenewal of a critical agreement by the third party at a time that is costly or inconvenient to us; and
● lack of compliance or cooperation with regulations and specifications or requests set forth by the FDA or other foreign regulatory agencies or
local customs, particularly associated with ORLADEYO, BCX9930, BCX9250, galidesivir, peramivir and our early-stage compounds.
Many additional factors could cause production or distribution interruptions with the manufacture and distribution of any of our products and product
candidates, including human error, natural disasters, pandemics, labor disputes, acts of terrorism or war, equipment malfunctions, or raw material shortages.
If our commercial distribution partners are not able to satisfy our requirements within the expected timeframe, or are unable to provide us with accurate or
timely information and data, including inventories and sales, serious adverse events, and/or product complaints, our business, including our commercial
launch and sales of ORLADEYO may be at risk. In addition, if specialty pharmacy services, including our third-party call center services, which provide
patient support and financial services, prescription intake and distribution, reimbursement adjudication, and ongoing compliance support, is not effectively
managed, the continuance of our commercial launch and sales of ORLADEYO may be delayed or compromised.
In addition, our contract manufacturers may not be able to manufacture the materials required for our products or product candidates at a cost or in
quantities necessary to make them commercially viable. Our raw materials, drug substances, products, and product candidates are manufactured by a
limited group of suppliers, including some at a single facility. If any of these suppliers were unable to produce these items, this could significantly impact
our supply of products and product candidate material for further preclinical testing and clinical trials. To date, our third-party manufacturers have met our
manufacturing requirements, but they may not continue to do so. Furthermore, changes in the manufacturing process or procedure, including a change in
the location where the drug is manufactured or a change of a third-party manufacturer, may require prior review and approval in accordance with the FDA’s
cGMP and comparable foreign requirements. This review may be costly and time-consuming and could delay or prevent the launch of a product. The FDA
or foreign regulatory authorities may at any time implement new standards, or change their interpretation and enforcement of existing standards, for
manufacture, packaging or testing of products. If we or our contract manufacturers are unable to comply, we or they may be subject to regulatory action,
civil actions or penalties, any of which could be costly to us and could result in a delay or shortage of product.
If we are unable to maintain current third-party relationships, or enter into new agreements with additional third parties on commercially reasonable
terms, or if there is poor manufacturing or distribution performance or failure to comply with any regulatory agency on the part of any of our third-party
vendors, we may not be able to complete development of, obtain timely approval of, or commercialize, our products and product candidates.
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Commercialization of our products by us and our partners is subject to the potential commercialization risks described herein and numerous
additional risks. Any potential revenue benefits to us, including in the form of milestone payments, royalties or other consideration are highly
speculative.
Commercialization success of our products is uncertain and is subject to all the risks and uncertainties disclosed in our other risk factors relating to
drug development and commercialization. In addition, commercialization of our products is subject to further risks and may be negatively impacted by a
number of factors, including, but not limited to, the following:
● our products may not prove to be adequately safe and effective for market approval in markets other than the markets in which they are
currently approved;
● necessary funding for post-marketing commitments and further development of our products may not be available timely, at all, or in
sufficient amounts;
● advances in competing products could substantially replace potential demand for our products;
● government and third-party payors may not provide sufficient coverage or reimbursement, which would negatively impact the demand for our
products;
● we may not be able to supply commercial material to our partners and our partners may not be able to maintain or establish sufficient and
acceptable commercial manufacturing, either directly or through third-party manufacturers;
● the commercial demand and acceptance for our products by healthcare providers and by patients may not be sufficient to result in substantial
product revenues to us or to our partners and may result in little to no revenue, milestone payments, or royalties to us;
● effectiveness of marketing and commercialization efforts for our products by us or our partners;
● market satisfaction with existing alternative therapies;
● perceived efficacy relative to other available therapies;
● disease prevalence;
● cost of treatment;
● pricing and availability of alternative products;
● marketing and sales activities of competitors;
● shifts in the medical community to new treatment paradigms or standards of care; and
● relative convenience and ease of administration.
Risks Relating to Competing in Our Industry
We face intense competition, and if we are unable to compete effectively, the demand for our products may be reduced.
The biotechnology and pharmaceutical industries are highly competitive and subject to rapid and substantial technological change. There are many
companies seeking to develop products for the same indications that we currently target. Our competitors in the United States and elsewhere are numerous
and include, among others, major multinational pharmaceutical and chemical companies and specialized biotechnology firms. Most of these competitors
have greater resources than we do, including greater financial resources, larger research and development staffs and more experienced manufacturing,
marketing, and sales organizations. In addition, most of our competitors have greater experience than we do in conducting clinical trials and obtaining FDA
and other regulatory approvals. Accordingly, our competitors may succeed in obtaining FDA or other regulatory approvals of product candidates more
rapidly than we do or for products that compete with our products. Companies that complete clinical trials, obtain required regulatory approvals, and
commence commercial sale of their drugs before we do may achieve a significant competitive advantage, including patent and FDA exclusivity rights that
would delay our ability to market products. We face, and will continue to face, competition in the commercialization of our products, licensing of potential
product candidates for desirable disease targets, licensing of desirable product candidates, and development and marketing of our product candidates from
academic institutions, government agencies, research institutions and biotechnology and pharmaceutical companies. Competition may also arise from,
among other things:
● other drug development technologies;
● methods of preventing or reducing the incidence of disease, including vaccines; and
● new small molecule or other classes of therapeutic agents.
Developments by others may render our products, product candidates, or technologies obsolete or noncompetitive.
We received FDA approval of ORLADEYO, an oral, once-daily therapy for the prevention of HAE attacks in adults and pediatric patients 12 years
and older, in December 2020. We subsequently received regulatory approvals for ORLADEYO in Japan, the European Union, the United Kingdom, and the
United Arab Emirates in January 2021, April 2021, May 2021, and September 2021, respectively. In addition, we are performing research on or developing
products for the treatment of several other rare diseases, including diseases of the complement system and FOP, as well as developing broad spectrum
antivirals for use as medical countermeasures. We expect to encounter significant competition for our pharmaceutical products and product candidates.
Companies that complete clinical trials, obtain required funding or government support, obtain required regulatory approvals and commence commercial
sales or stockpiling orders of their products before their competitors may achieve a significant competitive advantage. There are licensed therapies for HAE
(including Berinert®, Haegarda®, Cinryze®, Kalbitor®, Takhzyro®, Firazyr® (icatibant), generic icatibant, and Ruconest®), therapies for certain
complement-mediated diseases such as PNH, aHUS, myasthenia gravis, and neuromyelitis optica spectrum disorder (Soliris®, Ultomiris®, and
Empaveli®), products for the prevention or treatment of influenza (seasonal flu vaccines, Tamiflu® (oseltamivir), generic oseltamivir, Relenza®, and
Inavir®, favipiravir, and Xofluza®), and a number of additional products in clinical development in these therapeutic areas and for the treatment of FOP. In
addition, various government entities throughout the world may offer incentives, grants and contracts to encourage additional investment into preventative
and therapeutic agents against viruses such as influenza, coronavirus, Ebola, and others, which may have the effect of further increasing the number of our
competitors and/or providing advantages to certain competitors. See “Business—Competition” in Part I, Item 1 of this report for further discussion of our
competitors, competitive products or programs, and the competitive conditions in these and other therapeutic areas.
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If one or more of our competitors’ products or programs, including potential competitors not currently identified, are successful, the market for our
products may be reduced or eliminated.
Compared to us, many of our competitors and potential competitors have substantially greater:
● capital resources;
● research and development resources, including personnel and technology;
● regulatory experience;
● preclinical study and clinical testing experience;
● manufacturing, marketing, and sales experience; and
● production facilities.
Any of these competitive factors could impede our funding efforts, render our products, product candidates, or technologies noncompetitive or eliminate
or reduce demand for our products and product candidates.
Legal and Regulatory Risks
We are subject to various laws and regulations related to our products and product candidates, and if we or our partners do not comply with these
laws and regulations, we could face substantial penalties.
Our or our partners’ activities related to approved products or, following their regulatory approval, any of our product candidates under development,
such as BCX9930, BCX9250, and galidesivir, are subject to regulatory and law enforcement authorities in the United States (including the FDA, the
Federal Trade Commission, the Department of Justice, and state and local governments) and their foreign equivalents (including the EMA, MHLW,
MHRA, and others).
We are responsible for reporting adverse drug experiences, have responsibility for certain post-approval studies, and may have responsibilities and
costs related to a recall or withdrawal of our products from sale in the jurisdictions in which they are approved. We may also incur liability associated with
product manufacturing contracted by us or in support of any of our partners. We are required to maintain records and provide data and reports to regulatory
agencies related to our products (e.g. risk evaluation and mitigation strategies, track and trace requirements, and adverse events), and we may incur certain
promotional regulatory and government pricing risks, all of which could have a material adverse impact on our operations and financial condition. Similar
responsibilities would apply upon regulatory approval of any of our other product candidates currently under development.
In addition, we are subject to the federal physician sunshine act and certain similar physician payment and drug pricing transparency legislation in
various states. We are also subject to various federal and state laws pertaining to health care “fraud and abuse,” including both federal and state anti-
kickback and false claims laws. Outside of the United States, we may be subject to analogous foreign laws and regulations in the various jurisdictions in
which we operate. These laws and regulations apply to our or our partners’ operations, sales and marketing practices, price reporting, and relationships with
physicians and other customers and third-party payors. Anti-kickback laws generally prohibit a manufacturer from soliciting, offering, receiving, or paying
any remuneration to generate business, including the purchase or prescription of a particular drug. Although the specific provisions of these laws vary, their
scope is generally broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices. False
claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third party payors (including Medicare
and Medicaid) claims for reimbursement or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for
medically unnecessary items or services. The sunshine provisions apply to manufacturers with products reimbursed under certain government programs
and require those manufacturers to disclose annually to the federal government certain payments made to physicians (defined to include doctors, dentists,
optometrists, podiatrists and chiropractors) and teaching hospitals, as well as, ownership and investment interests held by physicians (as defined above) and
their immediate family members. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Although we
seek to comply with these statutes, it is possible that our practices, or those of our partners, might be challenged under healthcare fraud and abuse, anti-
kickback, false claims or similar laws. Violations of the physician sunshine act and similar legislation or the fraud and abuse laws may be punishable by
civil or criminal sanctions, including fines and civil monetary penalties, and future exclusion from participation in government healthcare programs.
The principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in
connection with such services. Under certain circumstances, we may be required to report some of these relationships to certain regulatory authorities,
including the FDA and comparable foreign regulatory authorities. Consequently, the FDA or other regulatory authority may conclude that a financial
relationship between us and a principal investigator creates a conflict of interest or otherwise affects interpretation of the study. In the event of a conflict of
interest with respect to a study, the integrity of the data generated at the applicable clinical trial site may be questioned or the utility of the clinical trial itself
may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA or other regulatory authority, as the
case may be, and may ultimately lead to the denial of marketing approval of one or more of our product candidates.
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The FDA and foreign regulatory authorities may also impose post-approval commitments on us for approved products, which we may not complete
successfully or on time for any number of reasons, including but not limited to lack of funds to complete the studies and insufficient interest by appropriate
sites, investigators or study subjects. We are currently subject to certain post-approval commitments. If we fail to comply with post-approval legal and
regulatory requirements, we could be subject to penalties, and our products could be subject to continual recordkeeping and reporting requirements, review
and periodic inspections by the FDA and other regulatory bodies. Regulatory approval of a product may be subject to limitations on the indicated uses for
which the product may be marketed or to the other restrictive conditions of approval that limit our ability to promote, sell or distribute a product.
Furthermore, the approval of our products and any other future product candidates may be subject to requirements for costly post-approval testing and
surveillance to monitor its safety or efficacy.
Advertising and promotion are subject to stringent FDA rules and oversight, and as an NDA-holder, we may be held responsible for any advertising
and promotion that is not in compliance with the rules and regulations. In particular, the claims in all promotional materials and activities must be
consistent with the FDA approvals for approved products and must be appropriately substantiated and fairly balanced with information on the safety risks
and limitations of the products. We are also required to engage in appropriate truthful, non-misleading, and non-promotional scientific exchange concerning
our products, and applicable regulatory authorities, competitors, and other third parties may take the position that we are not in compliance with such
regulations. In addition to medical education efforts, we may offer patient support services to assist patients receiving treatment with our commercially
approved products which have increasingly become the focus of government investigation.
Adverse event information concerning approved products must be reviewed, and as an NDA-holder, we are required to make expedited and periodic
adverse event reports to the FDA and other regulatory authorities. In addition, the research, manufacturing, distribution, sale and promotion of products are
potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid
Services, other divisions of the U.S. Department of Health and Human Services, the U.S. Department of Justice and individual U.S. Attorney offices within
the Department of Justice, state and local governments, and foreign equivalents of the foregoing. All of these activities are also potentially subject to
healthcare false claims and fraud and abuse laws, as well as consumer protection and unfair competition laws.
If our operations with respect to our products that are subject to healthcare laws and regulations are found to be in violation of any of the healthcare
fraud and abuse laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal
penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our
operations could adversely affect our ability to operate our business and our financial results. Although compliance programs can mitigate the risk of
investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even if
we successfully defend against it, could cause us to incur significant legal expenses and divert our management's attention from the operation of our
business. Moreover, achieving and sustaining compliance with all applicable fraud and abuse laws may be costly.
Our employees and consultants may engage in misconduct or other improper activities, including non-compliance with regulatory standards and
requirements, which could cause significant liability for us and harm our reputation.
We are subject to the risk of fraud or other misconduct by our employees and consultants, including intentional failures to comply with FDA
regulations or similar regulations of comparable foreign regulatory authorities, provide accurate information to the FDA or comparable foreign regulatory
authorities, comply with manufacturing standards we have established, comply with federal and state healthcare fraud and abuse laws and regulations and
similar laws and regulations established and enforced by comparable foreign regulatory authorities, report financial information or data accurately or
disclose unauthorized activities to us. Employee and consultant misconduct could also involve the improper use of information obtained in the course of
clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter employee and
consultant misconduct, whether intentional, reckless, negligent, or unintentional, and the precautions we take to detect and prevent this activity may not be
effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming
from a failure to be in compliance with such laws, standards or regulations. If any such actions are instituted against us and we are not successful in
defending ourselves or asserting our rights, those actions could have a significant impact on our business and results of operations, including the imposition
of significant fines or other sanctions.
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We and our partners may be subject to new legislation, regulatory proposals and healthcare payor initiatives that may increase our costs of
compliance and adversely affect our or our partners’ ability to market our products, obtain collaborators and raise capital.
The Patient Protection and Affordable Care Act (“PPACA”), made extensive changes to the delivery of healthcare in the U.S. The PPACA included
numerous provisions that affect pharmaceutical companies, some of which became effective immediately and others of which have taken effect over the
past several years. For example, the PPACA expanded health care coverage to the uninsured through private health insurance reforms and an expansion of
Medicaid. The PPACA also imposed substantial costs on pharmaceutical manufacturers, such as an increase in liability for rebates paid to Medicaid, new
drug discounts that must be offered to certain enrollees in the Medicare prescription drug benefit, an annual fee imposed on all manufacturers of brand
prescription drugs in the U.S., and an expansion of an existing program requiring pharmaceutical discounts to certain types of hospitals and federally
subsidized clinics. The PPACA also contains cost containment measures that could reduce reimbursement levels for health care items and services
generally, including pharmaceuticals. It also required reporting and public disclosure of payments and other transfers of value provided by pharmaceutical
companies to physicians and teaching hospitals.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or
reduce costs of health care could result in decreased net revenues from our pharmaceutical products and decrease potential returns from our development
efforts. In addition, pharmaceutical and device manufacturers are also required to report and disclose certain payments and transfers of value to, and
investment interests held by, physicians and their immediate family members during the preceding calendar year. Failure to submit required information
may result in civil monetary penalties for payments, transfers of value, or ownership or investment interests not reported in an annual submission.
Compliance with the PPACA and state laws with similar provisions is difficult and time consuming, and companies that do not comply with these state
laws face civil penalties. Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities
could be subject to challenge under one or more of such laws. Such a challenge could have a material adverse effect on our business, financial condition,
results of operations and growth prospects.
In addition, there have been a number of other legislative and regulatory proposals aimed at changing the pharmaceutical industry. For example,
legislation has been enacted in certain states and at a federal level that requires development of an electronic pedigree to track and trace each prescription
drug at the saleable unit level through the distribution system. Compliance with these electronic pedigree requirements may increase our operational
expenses and impose significant administrative burdens. In addition, our compliance may be deemed insufficient and we could face a material adverse
effect on our business, financial condition, results of operations and growth prospects. As a result of these and other new proposals, we may determine to
change our current manner of operation, provide additional benefits or change our contract arrangements, any of which could have a material adverse effect
on our business, financial condition and results of operations.
Adequate coverage and reimbursement in the U.S. and other markets is critical to the commercial success of our approved products. Recently in the
U.S., there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in
several Congressional inquiries and proposed bills designed to, among other things, reform government program reimbursement methodologies. Individual
states in the United States have been increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product
pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and
transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Regional health care authorities
and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their
prescription drug and other healthcare programs. Third-party payors are increasingly challenging the prices charged for medical products and services and,
in some cases, imposing restrictions on the coverage of particular drugs. Many third-party payors negotiate the price of medical services and products and
develop formularies which establish pricing and reimbursement levels. Exclusion of a product from a formulary can lead to its sharply reduced usage in the
third-party payor’s patient population. The process for obtaining coverage can be lengthy and costly, and we expect that it could take several months before
a particular payor initially reviews a product and makes a decision with respect to coverage. For example, third-party payors may require cost-benefit
analysis data from us in order to demonstrate the cost-effectiveness of our products or any other product we might bring to market. For any individual third-
party payor, we may not be able to provide data sufficient to gain reimbursement on a similar or preferred basis to competitive products, or at all, which
may have a material adverse effect on our business, financial condition and results of operations.
We are subject to data security and privacy risks, and our actual or perceived failure to comply with regulations and other legal obligations related
to privacy and data protection could harm our business.
We are subject to legal obligations related to privacy and data protection. Compliance with U.S. and international data protection laws and
regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use, and disclose data, or in some cases,
impact our ability to operate in certain jurisdictions. For example, we may be subject to the California Consumer Privacy Act, which gives California
residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing, and receive detailed
information about how their personal information is used. We also may be subject to the General Data Protection Regulation in the EEA and similar
legislation in the U.K. and Switzerland. See “Risks Relating to Our Business—Risks Relating to International Operations—Our actual or perceived failure
to comply with European governmental regulations and other legal obligations related to privacy, data protection and information security could harm our
business” in this section for additional discussion of international privacy laws and regulations. Failure to comply with these laws and regulations could
result in government enforcement actions, private litigation, or harm to our reputation and our business.
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If because of our use of hazardous materials, we violate any environmental controls or regulations that apply to such materials, we may incur
substantial costs and expenses in our remediation efforts.
Our research and development involves the controlled use of hazardous materials, chemicals and various radioactive compounds. We are subject to
federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and some waste products. Accidental
contamination or injury from these materials could occur. In the event of an accident, we could be liable for any damages that result, and any liabilities
could exceed our resources. Compliance with environmental laws and regulations or a violation of such environmental laws and regulations could require
us to incur substantial unexpected costs, which would materially and adversely affect our results of operations.
Intellectual Property Risks
If we fail to adequately protect or enforce our intellectual property rights or secure rights to patents of others, the value of those rights would
diminish.
Our success will depend in part on our ability and the abilities of our partners to obtain, protect and enforce viable intellectual property rights
including but not limited to trade name, trademark and patent protection for our Company and its products, methods, processes and other technologies we
may license or develop, to preserve our trade secrets, and to operate without infringing the proprietary rights of third parties both domestically and abroad.
The patent position of biotechnology and pharmaceutical companies is generally highly uncertain, involves complex legal and factual questions and has
recently been the subject of much litigation. Neither the United States Patent and Trademark Office (“USPTO”), the Patent Cooperation Treaty offices, nor
the courts of the United States and other jurisdictions have consistent policies nor predictable rulings regarding the breadth of claims allowed or the degree
of protection afforded under many biotechnology and pharmaceutical patents. Further, we may not have worldwide patent protection for all of our product
candidates and our intellectual property rights may not be legally protected or enforceable in all countries throughout the world. In some jurisdictions, some
of our product candidates in certain programs, including our HAE program, may have short or no composition of matter patent life and we may therefore
rely on orphan drug exclusivity or data exclusivity. There can be no assurance that we will obtain orphan drug exclusivity or data exclusivity in every
jurisdiction. Further, in some jurisdictions, we may rely on formulation patents or method of use patents. Both the ability to achieve issuance and the
enforcement of formulation and method of use patents can be highly uncertain and can vary from jurisdiction to jurisdiction, and such patents may
therefore not adequately prevent competitors and potential infringers in some jurisdictions. The validity, scope, enforceability and commercial value of the
rights protected by such patents, therefore, is highly uncertain.
We also rely on trade secrets to protect technology in cases when we believe patent protection is not appropriate or obtainable. However, trade secrets
are difficult to protect. If we cannot maintain the confidentiality of our technology and other confidential information in connection with our collaborators
and advisors, our ability to receive patent protection or protect our proprietary information may be imperiled.
We may be involved in legal proceedings to protect or enforce our patents, the patents of our partners or our other intellectual property rights, which
could be expensive, time consuming and unsuccessful.
Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter
infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming and unsuccessful. An adverse result
in any legal proceeding could put one or more of our patents at risk. Our success depends in part on avoiding the infringement of other parties’ patents and
other intellectual property rights as well as avoiding the breach of any licenses relating to our technologies and products. In the United States, patent
applications filed in recent years are confidential for 18 months, while older applications are not published until the patent issues. As a result, avoiding
patent infringement may be difficult and we may inadvertently infringe third-party patents or proprietary rights. These third parties could bring claims
against us, our partners or our licensors that even if resolved in our favor, could cause us to incur substantial expenses and, if resolved against us, could
additionally cause us to pay substantial damages. Further, if a patent infringement suit were brought against us, our partners or our licensors, we or they
could be forced to stop or delay research, development, manufacturing or sales of any infringing product in the country or countries covered by the patent
we infringe, unless we can obtain a license from the patent holder. Such a license may not be available on acceptable terms, or at all, particularly if the third
party is developing or marketing a product competitive with the infringing product. Even if we, our partners or our licensors were able to obtain a license,
the rights may be nonexclusive, which would give our competitors access to the same intellectual property.
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If we or our partners are unable or fail to adequately initiate, protect, defend or enforce our intellectual property rights in any area of commercial
interest or in any part of the world where we wish to seek regulatory approval for our products, methods, processes and other technologies, the value of our
products and product candidates to produce revenue would diminish. Additionally, if our products, methods, processes, and other technologies or our
commercial use of such products, processes, and other technologies, including but not limited to any trade name, trademark or commercial strategy infringe
the proprietary rights of other parties, we could incur substantial costs. The USPTO and the patent offices of other jurisdictions have issued to us a number
of patents for our various inventions, and we have in-licensed several patents from various institutions. We have filed additional patent applications and
provisional patent applications with the USPTO. We have filed a number of corresponding foreign patent applications and intend to file additional foreign
and U.S. patent applications, as appropriate. We have also filed certain trademark and trade name applications worldwide. We cannot assure you as to:
● the degree and range of protection any patents will afford against competitors with similar products;
● if and when patents will issue;
● if patents do issue, we cannot be sure that we will be able to adequately defend such patents and whether or not we will be able to adequately
enforce such patents; or
● whether or not others will obtain patents claiming aspects similar to those covered by our patent applications.
If the USPTO or other foreign patent office upholds patents issued to others or if the USPTO grants patent applications filed by others, we may have
to:
● obtain licenses or redesign our products or processes to avoid infringement;
● stop using the subject matter claimed in those patents; or
● pay damages.
We may initiate, or others may bring against us, litigation or administrative proceedings related to intellectual property rights, including proceedings
before the USPTO or other foreign patent office. Any judgment adverse to us in any litigation or other proceeding arising in connection with a patent or
patent application could materially and adversely affect our business, financial condition and results of operations. In addition, the costs of any litigation or
administrative proceeding may be substantial whether or not we are successful.
Our success is also dependent upon the skills, knowledge and experience, none of which is patentable, of our scientific and technical personnel. To
help protect our rights, we require all employees, consultants, advisors and partners to enter into confidentiality agreements that prohibit the disclosure of
confidential information to anyone outside of our company and require disclosure and assignment to us of their ideas, developments, discoveries and
inventions. These agreements may not provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any
unauthorized use or disclosure or the lawful development by others of such information, and if any of our proprietary information is disclosed, our business
will suffer because our revenues depend upon our ability to license or commercialize our products and product candidates and any such events would
significantly impair the value of such products and product candidates.
Product Liability Risks
We face an inherent risk of liability in the event that the use or misuse of our products or product candidates results in personal injury or death and
our product liability insurance coverage may be insufficient.
If the use or misuse of any products we sell, or a partner sells, harms people, we may be subject to costly and damaging product liability claims
brought against us by consumers, healthcare providers, pharmaceutical companies, third-party payors or others. The use of our product candidates in
clinical trials, including post-marketing clinical studies, could also expose us to product liability claims. We cannot predict all of the possible harms or side
effects that may result from the use of our products or the testing of product candidates, and therefore, the amount of insurance coverage we currently have
may not be adequate to cover all liabilities or defense costs we might incur. A product liability claim or series of claims brought against us could give rise
to a substantial liability that could exceed our resources. Even if claims are not successful, the costs of defending such claims and potential adverse
publicity could be harmful to our business.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and will face even
greater risks upon any commercialization by us of our products or product candidates. We have product liability insurance covering our clinical trials.
Clinical trial and product liability insurance is becoming increasingly expensive. As a result, we may be unable to obtain sufficient insurance or increase
our existing coverage at a reasonable cost to protect us against losses that could have a material adverse effect on our business. An individual may bring a
product liability claim against us if one of our products or product candidates causes, or is claimed to have caused, an injury or is found to be unsuitable for
consumer use. Any product liability claim brought against us, with or without merit, could result in:
● liabilities that substantially exceed our product liability insurance, which we would then be required to pay from other sources, if available;
● an increase of our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, or at all;
● withdrawal of clinical trial volunteers or patients;
● damage to our reputation and the reputation of our products, resulting in lower sales;
● regulatory investigations that could require costly recalls or product modifications;
● litigation costs; and
● the diversion of management’s attention from managing our business.
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Risks Relating to Contractual Arrangements
We face risks related to our government-funded programs and are subject to various U.S. Government contract requirements, which may create a
disadvantage and additional risks to us.
We have contracts with BARDA/HHS and NIAID/HHS for the development of galidesivir as a treatment for diseases caused by RNA pathogens,
including Marburg virus disease, Yellow Fever and Ebola virus disease. In contracting with these government agencies, we are subject to various U.S.
Government contract requirements, including general clauses for a cost-reimbursement research and development contract, which may limit our
reimbursement or, if we are found to be in violation, could result in contract termination. If the U.S. Government terminates any of its contracts with us for
its convenience, or if we default by failing to perform in accordance with the contract schedule and terms, this could have an adverse impact on the
programs associated with such funding and could also adversely impact our cash flows and operations.
U.S. Government contracts typically contain a number of extraordinary provisions that would not typically be found in commercial contracts and
which may create a disadvantage and additional risks to us as compared to competitors that do not rely on U.S. Government contracts. These risks include
the ability of the U.S. Government to unilaterally:
● terminate or reduce the scope of our contract with or without cause;
● interpret relevant regulations (federal acquisition regulation clauses);
● require performance under circumstances which may not be favorable to us;
● require an in-process review where the U.S. Government will review the project and its options under the contract;
● control the timing and amount of funding, which impacts the development progress of our programs; and
● audit and object to our contract-related costs and fees, including allocated indirect costs.
The U.S. Government may terminate its contracts with us either for its convenience or if we default by failing to perform in accordance with the
contract schedule and terms. Termination for convenience provisions generally enable us to recover only our costs incurred or committed, and settlement
expenses and profit on the work completed prior to termination. Termination does not permit these recoveries under default provisions. In the event of
termination or upon expiration of a contract, the U.S. Government may dispute wind-down and termination costs and may question prior expenses under
the contract and deny payment of those expenses. Should we choose to challenge the U.S. Government for denying certain payments under a contract, such
a challenge could subject us to substantial additional expenses which we may or may not recover. Further, if the U.S. Government terminates its contracts
with us for its convenience, or if we default by failing to perform in accordance with the contract schedule and terms, this could have an adverse impact on
our cash flows and operations.
As a U.S. Government contractor, we are required to comply with applicable laws, regulations and standards relating to our accounting practices and
are subject to periodic audits and reviews. As part of any such audit or review, the U.S. Government may review the adequacy of, and our compliance with,
our internal control systems and policies, including those relating to our purchasing, property, estimating, compensation and management information
systems. Audits under the active BARDA/HHS and NIAID/HHS galidesivir contracts may occur at the election of the U.S. Government and have been
concluded through fiscal 2019; all subsequent fiscal years are still open and auditable. Based on the results of its audits, the U.S. Government may adjust
our contract-related costs and fees, including allocated indirect costs. This adjustment could impact the amount of revenues reported on a historic basis and
could impact our cash flows under the contracts prospectively. In addition, in the event BARDA/HHS or NIAID/HHS determines that certain costs and fees
were unallowable or determines that the allocated indirect cost rate was higher than the actual indirect cost rate, BARDA/HHS or NIAID/HHS would be
entitled to recoup any overpayment from us as a result. In addition, if an audit or review uncovers any improper or illegal activity, we may be subject to
civil and criminal penalties and administrative sanctions, including termination of our contracts, forfeiture of profits, suspension of payments, fines and
suspension or prohibition from doing business with the U.S. Government. We could also suffer serious harm to our reputation if allegations of impropriety
were made against us. In addition, under U.S. Government purchasing regulations, some of our costs may not be reimbursable or allowed under our
contracts. Further, as a U.S. Government contractor, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower
lawsuits and other legal actions and liabilities as compared to private sector commercial companies.
There are risks related to the potential government use or sale of our antivirals.
Government use or sale, in emergency situations or otherwise, of our antivirals (including peramivir for the treatment of influenza) may result in
risks to us or our collaborative partners. There can be no assurance that government use of our antivirals (whether as indicated or outside of their current
indications) will prove to be generally safe, well-tolerated and effective. Any government sale or use (on an emergency basis or otherwise) of our antivirals
in any country may create liabilities for us or our partners.
In September 2018, we entered into a contract with the U.S. Government for the procurement of up to 50,000 doses of RAPIVAB (peramivir
injection) over a five-year period. In addition, we are working with NIAID/HHS to further develop galidesivir. There can be no assurance that we or our
manufacturers will be able to fully meet the demand for such antivirals with respect to these or future arrangements. Further, we may not receive a
favorable purchase price for future orders, if any, of our antivirals by governmental entities. Our competitors may develop products that could compete with
or replace any antivirals selected for government sale or use. We may face competition in markets where we have no existing intellectual property
protection or are unable to successfully enforce our intellectual property rights.
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There can be no assurance that the non-U.S. partnerships that we have entered into for peramivir will result in any order for peramivir in those
countries or that peramivir will be approved for any use or will achieve market approval in additional countries. There can be no assurance that galidesivir
will be approved for use in any countries. In the event that any emergency use or market approval is granted in any country, there can be no assurance that
any government order or commercialization of the applicable product or product candidate in such countries will be substantial or will be profitable to us.
If we fail to reach milestones or to make annual minimum payments or otherwise breach our obligations under our license agreements, our
licensors may terminate our agreements with them and seek additional remedies.
If we are unable or fail to meet payment obligations, performance milestones relating to the timing of regulatory filings, product supply obligations,
post-approval commitments, or development and commercial diligence obligations; are unable or fail to make milestone payments or material data use
payments in accordance with applicable provisions; or fail to pay the minimum annual payments under any of our in-licenses relating to our products or
product candidates, our licensors may terminate the applicable license or seek other available remedies. As a result, our development of the respective
product candidate or commercialization of the product would cease.
Royalties and milestone payments, if any, from Shionogi under the Shionogi Agreement are required to be used by Royalty Sub to satisfy its
obligations under its PhaRMA Notes, and generally will not be available to us for other purposes unless and until Royalty Sub has repaid in full its
obligations under the PhaRMA Notes.
In March 2011, our wholly-owned subsidiary, Royalty Sub, issued $30.0 million in aggregate principal amount of PhaRMA Notes. The PhaRMA
Notes are secured principally by (i) certain royalty and milestone payments under the Shionogi Agreement, pursuant to which Shionogi licensed from us
the rights to market peramivir in Japan and Taiwan and (ii) the pledge by us of our equity interest in Royalty Sub. Payments, if any, from Shionogi to us on
non-governmental sales under the Shionogi Agreement will generally not be available to us for other purposes unless and until Royalty Sub has repaid in
full its obligations under the PhaRMA Notes. Accordingly, these funds have been and will continue to be required to be dedicated to Royalty Sub’s debt
service and not available to us for product development or other purposes. Since September 1, 2014, payments from Shionogi have been insufficient for
Royalty Sub to service its obligations under the PhaRMA Notes, resulting in a continuing event of default with respect to the PhaRMA Notes since that
time. As a result of the continuing event of default, the holders of the PhaRMA Notes may be able to foreclose on the collateral securing the PhaRMA
Notes and our equity interest in Royalty Sub and may exercise other remedies available to them under the indenture or other documents related to the
PhaRMA Notes. In such event, we may not realize the benefit of future royalty payments, if any, that might otherwise accrue to us following repayment of
the PhaRMA Notes, we may incur legal costs, and we might otherwise be adversely affected.
The PhaRMA Notes had a final legal maturity date of December 1, 2020, at which time the outstanding principal amount of the PhaRMA Notes of
$30.0 million, together with accrued and unpaid interest of $20.6 million, was due in full. The failure by Royalty Sub to repay in full the outstanding
principal amount of the PhaRMA Notes, together with any accrued and unpaid interest, at the December 1, 2020 final maturity date constituted an
additional event of default under the PhaRMA Notes. We cannot predict whether holders of PhaRMA Notes will seek to pursue any remedies as a result of
the continuing events of default with respect to the PhaRMA Notes. The PhaRMA Notes are the obligation of Royalty Sub. As a result, we do not currently
expect the continuing events of default on the PhaRMA Notes to have a significant impact on our future results of operations or cash flows. However, we
cannot assure you that this will be the case or that we will not otherwise be adversely affected as a result the continuing events of default under the
PhaRMA Notes or the failure by Royalty Sub to repay the PhaRMA Notes at maturity.
We wrote off the balance due under the PhaRMA Notes to other income as a debt extinguishment as of December 31, 2021. See “Note 8−Royalty
Monetizations−RAPIACTA−Non-Recourse Notes Payable−Debt Extinguishment” in the Notes to Consolidated Financial Statements in Part II, Item 8 of
this report for additional information about the write-off.
Because continuing events of default exist under the PhaRMA Notes, the holders of the PhaRMA Notes may be able to foreclose on the collateral
securing the PhaRMA Notes and our equity interest in Royalty Sub. As a result, we may not realize the benefit of future royalty payments, if any,
that might otherwise accrue to us following repayment of the PhaRMA Notes and we could otherwise be adversely affected.
As Royalty Sub has been unable to service its obligations under the PhaRMA Notes and continuing events of default exist under the PhaRMA Notes,
the holders of the PhaRMA Notes may be able to foreclose on the collateral securing the PhaRMA Notes and our equity interest in Royalty Sub and may
exercise other remedies available to them under the indenture or other documents related to the PhaRMA Notes. In such event, we may not realize the
benefit of future royalty payments, if any, that might otherwise accrue to us following repayment of the PhaRMA Notes, we may incur legal costs, and we
might otherwise be adversely affected. In addition, the PhaRMA Notes had a final legal maturity date of December 1, 2020, at which time the outstanding
principal amount of the PhaRMA Notes of $30.0 million, together with accrued and unpaid interest of $20.6 million, was due in full. The failure by
Royalty Sub to repay in full the outstanding principal amount of the PhaRMA Notes, together with any accrued and unpaid interest, at the December 1,
2020 final maturity date constituted an additional event of default under the PhaRMA Notes. We cannot predict whether holders of PhaRMA Notes will
seek to pursue any remedies as a result of the continuing events of default with respect to the PhaRMA Notes. The PhaRMA Notes are the obligation of
Royalty Sub. As a result, we do not currently expect the continuing events of default on the PhaRMA Notes to have a significant impact on our future
results of operations or cash flows. However, we cannot assure you that this will be the case or that we will not otherwise be adversely affected as a result
the continuing events of default under the PhaRMA Notes or the failure by Royalty Sub to repay the PhaRMA Notes at maturity.
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We wrote off the balance due under the PhaRMA Notes to other income as a debt extinguishment as of December 31, 2021. See “Note 8−Royalty
Monetizations−RAPIACTA−Non-Recourse Notes Payable−Debt Extinguishment” in the Notes to Consolidated Financial Statements in Part II, Item 8 of
this report for additional information about the write-off.
We have incurred significant indebtedness, which could adversely affect our business. Additionally, our Credit Agreement contains conditions and
restrictions that limit our flexibility in operating our business. We may be required to make a prepayment or repay our outstanding indebtedness
earlier than we expect if a prepayment event or an event of default occurs, including a material adverse change with respect to us, which could have
a material adverse effect on our business.
As of December 31, 2021, we had an outstanding principal balance under our Credit Agreement of $142.1 million, inclusive of the quarterly PIK
Interest Payments. We have also committed to draw another $75.0 million in aggregate principal amount under the Term B Loan and the Term C Loan
(each as defined in the Credit Agreement) under the Credit Agreement. If we do not draw these Term Loans by the end of the applicable period available to
draw them, we will be required to pay to Athyrium, for the account of the lenders, a make-whole premium plus certain fees set forth in the Credit
Agreement, subject to certain exceptions set forth in the Credit Agreement. We will also be required to pay to Athyrium, for the account of the lenders, a
make-whole premium plus certain fees set forth in the Credit Agreement in the event that we either (x) terminate the commitments in respect of the Term B
Loan or the Term C Loan on or prior to the end of the applicable period available to draw such Term Loans, or (y) prepay or repay, or are required to
prepay or repay, voluntarily or pursuant to a mandatory prepayment obligation under the Credit Agreement (e.g., with the proceeds of certain asset sales,
certain ORLADEYO out-licensing or royalty monetization transactions (excluding the Royalty Sales), extraordinary receipts, debt issuances, or upon a
change of control of the Company and specified other events, subject to certain exceptions), all of the then-outstanding Term Loans under the Credit
Agreement, in each case, subject to certain exceptions set forth in the Credit Agreement.
Our indebtedness could have important consequences to our stockholders. For example, it:
● increases our vulnerability to adverse general economic or industry conditions;
● limits our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;
● makes us more vulnerable to increases in interest rates, as borrowings under our Credit Agreement are at variable rates;
● requires us to dedicate a portion of our cash flow from operations to interest payments, limiting the availability of cash for other purposes;
● limits our ability to obtain additional financing or refinancing in the future for working capital or other purposes; and
● places us at a competitive disadvantage compared to our competitors that have less indebtedness.
Furthermore, our Credit Agreement contains various covenants that limit our ability to engage in specified types of transactions. Subject to certain
exceptions, these covenants limit our ability to, among other things, grant certain types of liens on our assets; make certain investments; incur or assume
certain debt, including accessing additional tranches of debt under the Credit Agreement; engage in certain mergers, acquisitions, and similar transactions;
dispose of assets; license certain property; distribute dividends; make certain restricted payments; change the nature of our business; engage in transactions
with affiliates and insiders; prepay other indebtedness; or engage in sale and leaseback transactions.
The Credit Agreement also contains certain financial covenants, including a minimum liquidity covenant that requires us to maintain at all times, as
applicable, at least $15.0 million of unrestricted cash and cash equivalents if only the Term A Loan (as defined in the Credit Agreement) has been drawn; at
least $20.0 million of unrestricted cash and cash equivalents if the Term B Loan has been drawn but the Term C Loan has not been drawn; and at least
$15.0 million (or, in certain circumstances, $20.0 million) of unrestricted cash and cash equivalents if the Term C Loan has been drawn, subject to certain
exceptions. In addition, when we draw upon the Term C Loan, we will be required to achieve certain minimum targets for consolidated net revenues from
ORLADEYO sales in the U.S.
The covenants contained in the Credit Agreement could cause us to be unable to pursue business opportunities that we or our stockholders may
consider beneficial without the lenders’ permission or without repaying all outstanding obligations under the Credit Agreement.
A breach of any of these covenants could result in an event of default under the Credit Agreement. An event of default will also occur if, among
other things, we fail to pay amounts due under the Credit Agreement, we fail to repay certain other indebtedness having an aggregate principal amount in
excess of one percent of our borrowings under the Credit Agreement, a material adverse change in our business, assets, properties, liabilities, or condition
occurs, or a material impairment of our ability to perform our obligations under the Credit Agreement occurs, we experience a change of control, certain
negative regulatory events occur, including without limitation the loss of a required permit or a recall of a product, or we fail to make required payments
under our Royalty Purchase Agreements. In the case of a continuing event of default under the Credit Agreement, the lenders under the Credit Agreement
could elect to declare all amounts outstanding to be immediately due and payable, proceed against the collateral in which we granted to the lenders a
security interest, or otherwise exercise the rights of a secured creditor. Amounts outstanding under the Credit Agreement are secured by a security interest
in, subject to certain exceptions, substantially all of our assets. Because substantially all of our assets are pledged to secure the Credit Agreement
obligations, our ability to incur additional secured indebtedness or to sell or dispose of assets to raise capital may be impaired, which could have an adverse
effect on our financial flexibility.
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Risks Relating to International Operations
International expansion of our business exposes us to business, regulatory, political, operational, financial, and economic risks.
Our business strategy includes international expansion, including the commercialization of products outside of the United States. We currently
conduct clinical studies and regulatory activities and have hired, and expect to continue hiring, employees outside of the United States. Doing business
internationally involves a number of risks, including but not limited to:
● multiple, conflicting, and changing laws and regulations such as privacy and data regulations, transparency regulations, tax laws, export and
import restrictions, employment laws, regulatory requirements, and other governmental approvals, permits, and licenses;
● introduction of new health authority requirements and/or changes in health authority expectations;
● failure by us or our partners to obtain and maintain regulatory approvals for the use of our products in various countries;
● complexities and difficulties in obtaining and maintaining protection for, and enforcing, our intellectual property;
● difficulties in staffing and managing foreign operations;
● complexities associated with managing multiple payor reimbursement regimes, government payors, or patient self-pay systems;
● limits on our ability to penetrate international markets;
● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on
demand and payment for our products, and exposure to foreign currency exchange rate fluctuations;
● natural disasters and political and economic instability, including wars, terrorism, political unrest, results of certain elections and votes, actual
or threatened public health emergencies and outbreak of disease (including for example, the recent coronavirus outbreak), boycotts, adoption
or expansion of government trade restrictions, and other business restrictions;
● certain expenses including, among others, expenses for travel, translation, and insurance;
● regulatory and compliance risks that relate to maintaining accurate information and control over commercial operations and activities that
may fall within the purview of the U.S. Foreign Corrupt Practices Act, including its books and records provisions or anti-bribery provisions,
or the U.K. Bribery Act and similar foreign laws and regulations; and
● regulatory and compliance risks relating to doing business with any entity that is subject to sanctions administered by the Office of Foreign
Assets Control of the U.S. Department of the Treasury.
Any of these factors could significantly harm our future international expansion of operations and, consequently, our business and results of
operations.
Additionally, in some countries, such as Japan and the countries of the EU, the pricing of prescription pharmaceuticals is subject to governmental
control and access. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval
for a product. To obtain reimbursement or pricing approval in some countries, we or our partners may be required to conduct a clinical trial that compares
the cost-effectiveness of our product to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if
pricing is set at unsatisfactory levels, our business could be materially harmed.
Our actual or perceived failure to comply with European governmental regulations and other legal obligations related to privacy, data protection
and information security could harm our business.
EU member states, the U.K., Switzerland and other countries have adopted data protection laws and regulations, which impose significant
compliance obligations. For example, the General Data Protection Regulation (“GDPR”) imposes strict requirements on controllers and processors of
personal data, including special protections for “special category data,” which includes health, biometric and genetic information of data subjects located in
the EEA and, through incorporation in national legislation, the U.K. Further, the GDPR provides a broad right for EU member states to create supplemental
national laws, for example relating to the processing of health, genetic and biometric data, which could further limit our ability to use and share such data
or could cause our costs to increase and harm our business and financial condition. The GDPR and similar national legislation grant individuals the
opportunity to object to the processing of their personal information, allows them to request deletion of personal information in certain circumstances, and
provides the individual with an express right to seek legal remedies in the event the individual believes his or her rights have been violated. Further, the
GDPR and similar national legislation impose strict rules on the transfer of personal data out of the EEA, the U.K., Switzerland, and other countries to the
United States or other regions that have not been deemed to offer “adequate” privacy protections.
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Failure to comply with the requirements of the GDPR or related national data protection laws, which may deviate from the GDPR, may result in
significant fines of up to 4% of global revenues, or €20.0 million, whichever is greater, and in addition to such fines, our failure to comply with the
requirements of GDPR or similar national legislation may subject us to litigation and/or adverse publicity, which could have material adverse effects on our
reputation and business. As a result of the implementation of the GDPR, we are required to put in place additional mechanisms to ensure compliance with
the new data protection rules. For example, the GDPR requires us to make more detailed disclosures to data subjects, requires disclosure of the legal basis
on which we can process personal data, makes it harder for us to obtain valid consent for processing, will require the appointment of a data protection
officer where sensitive personal data (i.e., health data) is processed on a large scale, introduces mandatory data breach notification throughout the EU,
imposes additional obligations on us when we are contracting with service providers and requires us to adopt appropriate privacy governance including
policies, procedures, training and data audit.
We are subject to the supervision of local data protection authorities in those jurisdictions where we undertake clinical trials. We depend on a number
of third parties in relation to the provision of our services, a number of which process personal data of EU individuals on our behalf. With each such
provider we are required to enter into contractual arrangements under which they are contractually obligated to only process personal data according to our
instructions, and conduct diligence to ensure that they have sufficient technical and organizational security measures in place.
We are also subject to evolving European privacy laws on electronic marketing and cookies. The EU is in the process of replacing the e-Privacy
Directive (2002/58/EC) with a new set of rules taking the form of a regulation that will be directly implemented in the laws of each EU member state.
While this e-Privacy Regulation was originally intended to be adopted on May 25, 2018, it is still going through the European legislative process and the
timing of its adoption remains unclear.
The United Kingdom’s decision to withdraw from the EU could result in increased regulatory and legal complexity, which may make it more
difficult for us to do business in Europe and impose additional challenges in securing regulatory approval of our product candidates in Europe.
The United Kingdom’s exit from the EU, or Brexit, has caused political and economic uncertainty, including in the regulatory framework applicable
to our operations and product candidates, and this uncertainty may persist for years. Brexit could, among other outcomes, disrupt the free movement of
goods, services and people between the United Kingdom and the EU, and result in increased legal and regulatory complexities, as well as potential higher
costs of conducting business in Europe. The long-term effects of Brexit will depend in part on how the current and future trade agreements between the
United Kingdom and the EU take effect in practice. Changes in United Kingdom or EU regulations may cause disruption or delays in granting clinical trial
authorization or opinions for marketing authorization, disruption of importation and export of active substance and other components of new drug
formulations, and disruption of the supply chain for clinical trial product and final authorized formulations.
The cumulative effects of the disruption to the regulatory framework may add considerably to the development lead time to marketing authorization
and commercialization of products in the EU and/or the United Kingdom. It is possible that there will be increased regulatory complexities, which can
disrupt the timing of our clinical trials and regulatory approvals. In addition, changes in, and legal uncertainty with regard to, national and international
laws and regulations may present difficulties for our clinical and regulatory strategy. Any delay in obtaining, or an inability to obtain, any marketing
approvals, as a result of Brexit or otherwise, would prevent us from commercializing our product candidates in the United Kingdom and/or the EU and
restrict our ability to generate revenues and achieve and sustain profitability.
In addition, as a result of Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the EU.
Given these possibilities and others we may not anticipate, as well as the absence of comparable precedent, it is unclear what financial, regulatory and legal
implications the withdrawal of the United Kingdom from the EU will have and how such withdrawal will affect us, and the full extent to which our
business could be adversely affected.
Risks Relating to Technology
If our facilities, or the facilities of our third-party vendors, incur damage or power is lost for a significant length of time, our business will suffer.
We and our third-party vendors store commercial product, clinical and stability samples at our facilities that could be damaged if the facilities incur
physical damage or in the event of an extended power failure. We have backup power systems in addition to backup generators to maintain power to all
critical functions, but any loss of these products or samples could result in significant delays in our commercialization or drug development process.
In addition, we store most of our preclinical and clinical data at our facilities. Duplicate copies of most critical data are secured off-site. Any
significant degradation or failure of our computer systems could cause us to inaccurately calculate or lose our data. Loss of data could result in significant
delays in our drug development process and any system failure could harm our business and operations.
39
A significant disruption in our information technology systems or a cybersecurity breach could adversely affect our business.
We are increasingly dependent on information technology systems to operate our business. In addition, the FDA and comparable foreign regulatory
authorities regulate, among other things, the record keeping and storage of data pertaining to potential pharmaceutical products. We currently store most of
our preclinical research data, our clinical data and our manufacturing data at our facilities. While we do store duplicate copies of most of our clinical data
offsite and a significant portion of our data is included in regular backups of our systems, we could lose important data if our facilities incur damage, or if
our vendor data systems fail, suffer damage or are destroyed.
Like other companies in our industry, our networks and infrastructure may be vulnerable to cyber-attacks or intrusions, including by computer
hackers, foreign governments, foreign companies, or competitors, or may be breached by employee error, malfeasance or other disruption. A breakdown,
invasion, corruption, destruction, or interruption of critical information technology systems could negatively impact operations. If our systems are
damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them, and we may experience loss
of critical data and interruptions or delays in our ability to perform critical functions, which could adversely affect our business, financial condition or
results of operations. Any compromise of our data security could also result in a violation of applicable privacy and other laws, significant legal and
financial exposure, damage to our reputation, loss or misuse of the information and a loss of confidence in our data security measures, which could harm
our business. There can be no assurance that our efforts to protect our data and information technology systems will prevent breakdowns or breaches in our
systems, or those of third parties with which we do business, and any such events could adversely affect our business.
Risks Relating to Investing in Our Common Stock
Our existing principal stockholders hold a substantial amount of our common stock and may be able to influence significant corporate decisions,
which may conflict with the interest of other stockholders.
Several of our stockholders own greater than 5% of our outstanding common stock. Our top ten stockholders own close to 50% of our common stock
and can individually, and as a group, influence our operations based upon their concentrated ownership and may also be able to influence the outcome of
matters requiring approval of the stockholders, including the election of our directors and other corporate actions.
Our stock price has been, and is likely to continue to be, highly volatile, which could cause the value of an investment in our common stock to
decline significantly.
The market prices for securities of biotechnology companies in general have been highly volatile and may continue to be highly volatile in the future.
Moreover, our stock price has fluctuated frequently, and these fluctuations are often not related to our financial results. For the twelve months ended
December 31, 2021, the 52-week range of the market price of our stock was from $7.27 to $18.48 per share. The following factors, in addition to other risk
factors described in this section, may have a significant impact on the market price of our common stock:
● announcements of technological innovations or new products by us or our competitors;
● developments or disputes concerning patents or proprietary rights;
● additional dilution through sales of our common stock or other derivative securities;
● status of new or existing licensing or collaborative agreements and government contracts;
● announcements relating to the status of our programs;
● developments and announcements regarding new and virulent strains of influenza;
● we or our partners achieving or failing to achieve development milestones;
● publicity regarding actual or potential medical results relating to products under development by us or our competitors;
● publicity regarding certain public health concerns for which we are or may be developing treatments;
● regulatory developments in both the United States and foreign countries;
● public concern as to the safety of pharmaceutical products;
● actual or anticipated fluctuations in our operating results;
● changes in financial estimates or recommendations by securities analysts;
● changes in the structure of healthcare payment systems, including developments in price control legislation;
● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
● additions or departures of key personnel or members of our board of directors;
● purchases or sales of substantial amounts of our stock by existing stockholders, including officers or directors;
● economic and other external factors or other disasters or crises; and
● period-to-period fluctuations in our financial results.
40
Future sales and issuances of securities may dilute the ownership interests of our current stockholders and cause our stock price to decline.
Future sales of our common stock by us or our current stockholders into the public market could cause the market price of our stock to fall. As of
January 31, 2022, there were 184,661,799 shares of our common stock outstanding. We may from time to time issue securities in relation to a license
arrangement, collaboration, merger or acquisition. We may also sell, for our own account, shares of common stock or other equity securities, from time to
time at prices and on terms to be determined at the time of sale.
As of January 31, 2022, there were 30,321,597 stock options and restricted stock units outstanding and 3,683,617 shares available for issuance under
our Amended and Restated Stock Incentive Plan, 4,624,409 stock options and restricted stock units outstanding and 672,882 shares available for issuance
under our Amended and Restated Inducement Equity Incentive Plan, and 5,937,390 shares available for issuance under our Amended and Restated
Employee Stock Purchase Plan. In addition, we could also make equity grants outside of our Amended and Restated Stock Incentive Plan or Amended and
Restated Inducement Equity Incentive Plan. The shares underlying existing stock options, restricted stock units and possible future stock options, stock
appreciation rights and stock awards have been registered pursuant to registration statements on Form S-8.
If some or all of such shares are sold or otherwise issued into the public market over a short period of time, our current stockholders’ ownership
interests may be diluted and the value of all publicly traded shares is likely to decline, as the market may not be able to absorb those shares at then-current
market prices. Additionally, such sales and issuances may make it more difficult for us to sell equity securities or equity-related securities in the future at a
time and price that our management deems acceptable, or at all.
In March 2017, we entered into a Registration Rights Agreement with entities affiliated with Baker Bros. Advisors LP (the “Baker Entities”) to
provide that, if requested, we will register the shares of our common stock beneficially owned by the Baker Entities for resale under the Securities Act. Our
registration obligations pursuant to the Registration Rights Agreement cover all shares then held or thereafter acquired by the Baker Entities, for up to ten
years, and include our obligation to facilitate certain underwritten public offerings of our common stock by the Baker Entities in the future. On May 10,
2017, we filed a registration statement on Form S-3 with respect to 11,710,951 shares of common stock held by the Baker Entities. Subsequently, on
November 21, 2019, certain of the Baker Entities acquired pre-funded warrants to purchase 11,764,706 shares of our common stock at a price of $1.69 per
warrant. In addition, on June 1, 2020, we issued to certain of the Baker Entities pre-funded warrants to purchase 3,511,111 shares of our common stock at a
price of $4.49 per warrant. Each warrant has an exercise price of $0.01 per share. If the Baker Entities, by exercising their underwriting rights or otherwise,
sell a large number of our shares, or the market perceives that the Baker Entities intend to sell a large number of our shares, this could adversely affect the
market price of our common stock.
We have anti-takeover provisions in our corporate charter documents that may result in outcomes with which you do not agree.
Our board of directors has the authority to issue up to 5,000,000 shares of undesignated preferred stock and to determine the rights, preferences,
privileges and restrictions of those shares without further vote or action by our stockholders. The rights of the holders of any preferred stock that may be
issued in the future may adversely affect the rights of the holders of common stock. The issuance of preferred stock could make it more difficult for third
parties to acquire a majority of our outstanding voting stock.
In addition, our Certificate of Incorporation provides for staggered terms for the members of the board of directors and supermajority approval of the
removal of any member of the board of directors and prevents our stockholders from acting by written consent. Our Certificate of Incorporation also
requires supermajority approval of any amendment of these provisions. These provisions and other provisions of our bylaws and of Delaware law
applicable to us could delay or make more difficult a merger, tender offer or proxy contest involving us.
We have never paid dividends on our common stock and do not anticipate doing so in the foreseeable future.
We have never paid cash dividends on our stock. We currently intend to retain all future earnings, if any, for use in the operation of our business.
Accordingly, we do not anticipate paying cash dividends on our common stock in the foreseeable future.
Our Amended and Restated Bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain
litigation that may be initiated by our stockholders, which may limit a stockholder’s ability to obtain a favorable judicial forum for such disputes
with us or our directors, officers or employees.
Our Amended and Restated Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of
breach of a fiduciary duty owed by any of our directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a
claim against us or any of our directors, officers, stockholders, employees or agents arising out of or relating to any provision of the General Corporation
Law of Delaware or our Certificate of Incorporation or Amended and Restated Bylaws or (iv) any action against us or any of our directors, officers,
stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware. This exclusive forum provision does not apply to
establish the Delaware Court of Chancery as the forum for actions or proceedings brought to enforce a duty or liability created by the Securities Act of
1933, as amended, or the Exchange Act, or any other claim for which the federal courts have exclusive jurisdiction.
This exclusive forum provision may limit a stockholder’s ability to choose its preferred judicial forum for disputes with us or our directors, officers,
employees or agents, which may discourage the filing of lawsuits with respect to such claims. If a court were to find this exclusive forum provision to be
inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another jurisdiction, which could
adversely affect our business and financial condition.
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General Risk Factors
Natural disasters, epidemic or pandemic disease outbreaks, trade wars, political unrest or other events could disrupt our business or operations or
those of our development partners, manufacturers, regulators or other third parties with whom we conduct business now or in the future.
A wide variety of events beyond our control, including natural disasters, epidemic or pandemic disease outbreaks (such as the ongoing COVID-19
pandemic), trade wars, political unrest or other events could disrupt our business or operations or those of our development partners (such as Torii),
manufacturers, regulatory authorities, or other third parties with whom we conduct business. These events may cause businesses and government agencies
to be shut down, supply chains to be interrupted, slowed, or rendered inoperable, and individuals to become ill, quarantined, or otherwise unable to work
and/or travel due to health reasons or governmental restrictions. If our operations or those of third parties with whom we have business are impaired or
curtailed as a result of these events, the development and commercialization of our products and product candidates could be impaired or halted, which
could have a material adverse impact on our business. See “Risk Factors—Risks Relating to Our Business—Risks Relating to COVID-19(cid:0)Our business,
operations, clinical development or commercialization plans and timelines, and access to capital could be adversely affected by the effects of the ongoing
COVID-19 pandemic on us or on third parties with whom we conduct business, including without limitation our development partners, manufacturers,
clinical research organizations (“CROs”), and others, as well as on the regulatory and government agencies with whom we work.” In addition, other events,
such as the armed conflict between Russia and Ukraine, could adversely impact our business. Furthermore, the conflict could lead to sanctions,
embargoes, supply shortages, regional instability, geopolitical shifts, cyberattacks, other retaliatory actions, and adverse effects on macroeconomic
conditions, currency exchange rates, and financial markets, which could adversely impact our operations and financial results, as well as those of third
parties with whom we conduct business.
We are subject to legal proceedings, which could harm our reputation or result in other losses or unexpected expenditure of time and resources.
From time to time, we may be involved in disputes, including, without limitation, disputes with our employees, collaborative partners, and third-
party vendors. We may be called upon to initiate legal proceedings or to defend ourselves in such legal proceedings relating to our relationships with these
parties, our decisions and actions or omissions with respect thereto, and our business. In addition, if our stock price is volatile, we may become involved in
securities class action lawsuits in the future. Due to the inherent uncertainties in legal proceedings, we cannot accurately predict the ultimate outcome of
any such proceedings. An unfavorable outcome in any such proceedings could have an adverse impact on our business, financial condition and results of
operations. Any current or future dispute resolution or legal proceeding, regardless of the merits of any such proceeding, could harm our reputation and
result in substantial costs and a diversion of management’s attention and resources that are needed to successfully run our business.
Insurance coverage is increasingly more costly and difficult to obtain or maintain.
While we currently have insurance for our business, property, directors and officers, and our products, insurance is increasingly more costly and
narrower in scope, and we may be required to assume more risk in the future. If we are subject to claims or suffer a loss or damage in excess of our
insurance coverage, we will be required to bear any loss in excess of our insurance limits. If we are subject to claims or suffer a loss or damage that is
outside of our insurance coverage, we may incur significant uninsured costs associated with loss or damage that could have an adverse effect on our
operations and financial position. Furthermore, any claims made on our insurance policies may impact our ability to obtain or maintain insurance coverage
at reasonable costs or at all.
If we fail to retain our existing key personnel or fail to attract and retain additional key personnel, the development of our product candidates, the
commercialization of our products, and the related expansion of our business will be delayed or stopped.
We are highly dependent upon our senior management and scientific team, the unexpected loss of whose services might impede the achievement of
our development and commercial objectives. This risk has been heightened in the current environment as a result of the ongoing COVID-19 pandemic.
Competition for key personnel with the experience that we require is intense and is expected to continue to increase. Our inability to attract and retain the
required number of skilled and experienced management, commercial, operational and scientific personnel will harm our business because we rely upon
these personnel for many critical functions of our business.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We lease property in both Durham, North Carolina and Birmingham, Alabama. Our headquarters, including our clinical and regulatory operations,
are based in Durham, while our principal research facility is located in Birmingham. We currently lease approximately 24,500 square feet in Durham
through leases expiring December 31, 2023 and June 30, 2024, and we lease approximately 34,000 square feet in Birmingham through October 31, 2026.
We also contract for smaller offices in Ireland, Germany, France, and the United Kingdom. We believe that our facilities are adequate for our current and
planned future operations.
42
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
PART II
EQUITY SECURITIES
Market Information
Our common stock trades on the Nasdaq Global Select Market under the symbol BCRX.
Holders
As of January 31, 2022, there were approximately 162 holders of record of our common stock.
Dividends
We have never paid cash dividends and do not anticipate paying cash dividends in the foreseeable future.
Stock Performance Graph
This performance graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us
under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any
such filing. The stock price performance shown on the graph is not necessarily indicative of future price performance.
PERFORMANCE GRAPH FOR BIOCRYST
Indexed Comparison Since 2016
43
Beginning
Investment at
12/31/16
Investment at
12/31/17
Investment at
12/31/18
Investment at
12/31/19
Investment at
12/31/20
Investment at
12/31/21
BioCryst Pharmaceuticals, Inc.
Nasdaq Stock Market (U.S.)
Nasdaq Pharmaceutical Stocks
$
100.00 $
100.00
100.00
77.57 $
121.38
119.12
127.49 $
114.77
128.60
54.50 $
150.55
147.25
117.69 $
182.57
162.74
218.80
229.84
202.43
The above graph measures the change in a $100 investment in our common stock based on its closing price of $6.33 on December 31, 2016 and its
year-end closing price thereafter. Our relative performance is then compared with the CRSP Total Return Indexes for the Nasdaq Stock Market (U.S.) and
Nasdaq Pharmaceutical Stocks.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
There were no repurchases of our common stock during the fourth quarter of 2021.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis (“MD&A”) is intended to help the reader understand our results of operations and financial
condition. MD&A is provided as a supplement to, and should be read in conjunction with, our audited financial statements and the accompanying notes to
the financial statements and other disclosures included in this report (including the “Cautionary Note Regarding Forward-Looking Statements” at the
beginning of this report and the “Risk Factors” section in Part I, Item 1A of this report).
Overview
We are a commercial-stage biotechnology company that discovers novel, oral, small-molecule medicines. We focus on oral treatments for rare
diseases in which significant unmet medical needs exist and an enzyme plays the key role in the biological pathway of the disease. We integrate the
disciplines of biology, crystallography, medicinal chemistry, and computer modeling to discover and develop small molecule pharmaceuticals through the
process known as structure-guided drug design. In addition to these discovery and development efforts, our business strategy includes the efficient
commercialization of these drugs in the U.S. and certain other regions upon regulatory approval. By focusing on rare disease markets, we believe that we
can more effectively control the costs of, and our strategic allocation of financial resources toward, post-approval commercialization.
Our marketed products include oral, once-daily ORLADEYO® for the prevention of hereditary angioedema (“HAE”) attacks and RAPIVAB®
(peramivir injection) for the treatment of acute uncomplicated influenza in the United States. ORLADEYO received regulatory approval in the United
States in December 2020. During 2021, ORLADEYO received regulatory approvals in the European Union, Japan, the United Arab Emirates, and the
United Kingdom. We are commercializing ORLADEYO in each of these territories directly or through distributors, except in Japan where Torii, our
collaborative partner, has the exclusive right to commercialize ORLADEYO for the prevention of HAE attacks in exchange for certain milestone and
royalty payments to us. In addition to its approval in the United States, peramivir injection has received regulatory approvals in Canada, Australia, Japan,
Taiwan and Korea.
Our revenues are difficult to predict and depend on several factors, including those discussed in the “Risk Factors” section in Part I, Item 1A of this
report. For example, our revenues depend, in part, on regulatory approval decisions for our products and product candidates, the effectiveness of our and
our collaborative partners’ commercialization efforts, market acceptance of our products, particularly ORLADEYO, the resources dedicated to our products
by us and our collaborative partners, and ongoing discussions with government agencies regarding contract awards for development and procurement, as
well as entering into, or modifying, licensing agreements for our product candidates. Furthermore, revenues related to our collaborative development
activities are dependent upon the progress toward and the achievement of developmental milestones by us or our collaborative partners.
Our operating expenses are also difficult to predict and depend on several factors, including research and development expenses (and whether these
expenses are reimbursable under government contracts), drug manufacturing, and clinical research activities, the ongoing requirements of our development
programs, the costs of commercialization, the availability of capital and direction from regulatory agencies, which are difficult to predict, and the factors
discussed in the “Risk Factors” section in Part I, Item 1A of this report. Management may be able to control the timing and level of research and
development and selling, general and administrative expenses, but many of these expenditures will occur irrespective of our actions due to contractually
committed activities and/or payments.
44
As a result of these factors, we believe that period-to-period comparisons are not necessarily meaningful, and you should not rely on them as an
indication of future performance. Due to the foregoing factors, it is possible that our operating results will be below the expectations of market analysts and
investors. In such event, the prevailing market price of our common stock could be materially adversely affected.
Critical Accounting Policies and Estimates
The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements
and the related disclosures, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and
liabilities. We evaluate our estimates, judgments and the policies underlying these estimates on a periodic basis, as situations change, and regularly discuss
financial events, policies, and issues with members of our audit committee and our independent registered public accounting firm. In particular, we
routinely evaluate our estimates and policies regarding revenue recognition, administration, inventory and manufacturing, taxes, stock-based compensation,
research and development, consulting and other expenses and any associated liabilities. Our estimates are based on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances. The results of our estimates form the basis for making judgments about the
carrying values of assets and liabilities that are not readily apparent from other sources. See “Critical Accounting Policies” at the end of this
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a description of accounting policies that we believe are the
most critical to aid you in fully understanding and evaluating our reported financial results and that affect the more significant judgments and estimates that
we use in the preparation of our financial statements.
Recent Corporate Highlights
COVID-19
The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility in financial markets. To date, our
financial condition, results of operations, and liquidity have not been materially impacted by the direct effects of the COVID-19 pandemic. Please refer to
“Risk Factors(cid:0)Risks Relating to Our Business(cid:0)Risks Relating to COVID-19” in Part I, Item 1A of this report for a discussion of COVID-19 risks as they
relate to our business. We are continuing to monitor developments with respect to the COVID-19 pandemic and to make adjustments as needed to assist in
protecting the safety of our employees and communities while continuing our business activities. Our remote working arrangements continue to be flexible
where it is both practical and possible for the business. Business-related travel has increased, and we will continue to monitor developments with respect to
COVID-19 going forward. To date, implementation of specific COVID-19 measures has not required material expenditures or significantly impacted our
ability to operate our business or our internal control over financial reporting and disclosure controls and procedures. We continue to monitor the potential
impacts of COVID-19 on our operations and those of our partners, suppliers, customers, and regulators.
ORLADEYO (berotralstat)
ORLADEYO is an oral, once-daily therapy discovered and developed by us for the prevention of HAE attacks. Approved first by the FDA in the
U.S. in December 2020, ORLADEYO is also approved in the European Union, Japan, the United Kingdom, and the United Arab Emirates for the
prevention of HAE attacks in adults and pediatric patients 12 years and older.
On January 10, 2022, we announced that ORLADEYO is now covered by all major payors and national and regional pharmacy benefit managers in
the U.S.
We built out our U.S. commercial infrastructure in 2020 to support the launch of ORLADEYO in the U.S. and are continuing to build our
commercial infrastructure to support launches in Europe and elsewhere. Based on proprietary analyses of HAE prevalence and market research studies
with HAE patients, physicians, and payors in the U.S. and Europe, and our first full year of experience with the ORLADEYO launch in 2021, we anticipate
the commercial market for ORLADEYO has the potential to reach a global peak of more than $1 billion in annual sales. We expect at least 70 to 80
percent of our revenue at peak to come from the U.S. These expectations are subject to numerous risks and uncertainties that may cause our actual results,
performance, or achievements to be materially different. There can be no assurance that our commercialization methods and strategies will succeed, or that
the market for ORLADEYO will develop in line with our current expectations. See “Risk Factors(cid:0)Risks Relating to Our Business(cid:0)Risks Relating to Drug
Development and Commercialization(cid:0)There can be no assurance that our commercialization efforts, methods, and strategies for our products or
technologies will succeed, and our future revenue generation is uncertain” in Part I, Item 1A of this report for further discussion of these risks.
Revenue from sales of ORLADEYO in 2021, which was our first full year of ORLADEYO sales, is discussed under “Results of Operations.”
Revenue from sales of ORLADEYO in future periods is subject to uncertainties and will depend on several factors, including the success of our and our
partners’ commercialization efforts in the U.S. and elsewhere, the number of new patients switching to ORLADEYO, patient retention and demand, the
number of physicians prescribing ORLADEYO, the rate of monthly prescriptions, reimbursement from third-party and government payors, the conversion
of patients from our clinical trials and early access programs to commercial customers, and market trends. We are continuing to monitor and analyze this
data as we continue to commercialize ORLADEYO.
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Complement-Mediated Diseases
BCX9930 is a novel, oral, potent, and selective small molecule inhibitor of Factor D discovered by the Company and currently in clinical
development for the treatment of complement-mediated diseases. Based on the safety and proof-of-concept (“PoC”) data generated to date in patients with
PNH, the program has advanced to pivotal studies of oral BCX9930 (500 mg twice-daily) in PNH and to a proof-of-concept trial of oral BCX9930 (500 mg
twice-daily) in renal complement-mediated diseases. We are working closely with key opinion leaders in hematology and nephrology to map the advanced
development strategy across a broad set of indications. Our goal is to develop BCX9930 as a monotherapy for complement-mediated diseases.
On November 29, 2021, we announced the enrollment of the first patient in the REDEEM-2 pivotal trial with BCX9930 in patients with PNH.
REDEEM-2 is a randomized, placebo-controlled trial evaluating the efficacy and safety of BCX9930 (500 mg twice-daily) as monotherapy versus placebo
in PNH patients not currently receiving complement inhibitor therapy. In part 1 of this trial, patients will be randomized 2:1 to receive BCX9930 or placebo
under double-blind conditions for 12 weeks. All patients will receive BCX9930 in part 2 (weeks 13-52) to assess the long-term safety, tolerability, and
effectiveness of BCX9930, with patients randomized to placebo in part 1 switching to BCX9930 at the week 12 visit. The primary endpoint of REDEEM-2
is change from baseline in hemoglobin, as assessed at week 12.
On January 7, 2022, we announced the enrollment of the first patient in the REDEEM-1 pivotal trial with BCX9930 in patients with PNH.
REDEEM-1 is a randomized, open-label, active comparator-controlled comparison of the efficacy and safety of BCX9930 (500 mg twice-daily)
monotherapy in PNH patients with an inadequate response to a C5 inhibitor. In part 1 of this trial, patients who have not had an adequate response to a C5
inhibitor will be randomized 2:1 to discontinue their C5 inhibitor and receive BCX9930 as monotherapy or to continue receiving their C5 inhibitor for 24
weeks. All patients will receive BCX9930 in part 2 (weeks 25-52) to assess the long-term safety, tolerability, and effectiveness of BCX9930. Patients who
are randomized to C5 inhibitor therapy in part 1 will discontinue that therapy at the week 24 visit and start BCX9930 for part 2. The primary endpoint of
REDEEM-1 is change from baseline in hemoglobin, as assessed at weeks 12 to 24.
On February 22, 2022, we announced the enrollment of the first patient in the RENEW proof-of-concept basket study with BCX9930 in patients
with C3 glomerulopathy (C3G), IgA nephropathy (IgAN), and primary membranous nephropathy (PMN). RENEW is an open-label, multicenter, proof-of-
concept study designed to evaluate the safety, tolerability, and therapeutic potential of BCX9930 (twice-daily) administered for 24 weeks in patients with
either C3G, IgAN, or PMN. All patients will be enrolled into one of three parallel study cohorts, based on confirmation of diagnosis and disease activity in
a recent kidney biopsy, and will receive BCX9930 for the 24-week treatment period. The primary endpoint of RENEW is percent change from baseline in
24-hour urine protein-to-creatinine ratio (uPCR), as assessed at week 24.
Financing Transactions
Royalty Monetizations. On November 19, 2021, we entered into (i) the 2021 RPI Royalty Purchase Agreement, pursuant to which we sold to RPI the
right to receive certain royalty payments from the Company for a purchase price of $150 million in cash; and (ii) the OMERS Royalty Purchase
Agreement, pursuant to which we sold to OMERS the right to receive certain royalty payments from the Company for a purchase price of an additional
$150 million in cash. Under the Royalty Purchase Agreements, RPI and OMERS are entitled to receive tiered, sales-based royalties on net product sales of
ORLADEYO in the Key Territories and on other Direct Sales. In addition, RPI and OMERS are entitled to receive a tiered revenue share on amounts
generally received by us on account of ORLADEYO sublicense revenue or net sales by licensees outside of the Key Territories. Under the 2021 RPI
Royalty Purchase Agreement, RPI will also be entitled to receive tiered, sales-based royalties on net product sales, if any, of BCX9930 and another earlier
stage Factor D inhibitor, as well as tiered, profit share amounts of up to 3.0% from certain other permitted sales in certain other markets. See “Note 8(cid:0)
Royalty Monetizations(cid:0)ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for
additional information about our obligations under the Royalty Purchase Agreements.
Sales of Common Stock. On November 19, 2021, concurrent with the 2021 RPI Royalty Purchase Agreement, we entered into a Common Stock
Purchase Agreement (the “Stock Purchase Agreement”) with RPI, pursuant to which we issued to RPI 3,846,154 shares of our common stock for an
aggregate purchase price of approximately $50 million, at a price of $13.00 per share, calculated based on the 20-day volume weighted average price.
These shares were offered and sold without registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions
provided by Section 4(a)(2) of the Securities Act as transactions not involving a public offering and Rule 506 promulgated under the Securities Act as sales
to an accredited investor.
Amendment to Credit Agreement. On November 19, 2021, we entered into an amendment to our Credit Agreement with Athyrium Opportunities III
Co-Invest 1 LP (“Athyrium” and such agreement, as amended, the “Credit Agreement”), as lender and as administrative agent for the lenders. BioCryst
Ireland Limited and BioCryst US Sales Co., LLC, each of which is a wholly-owned subsidiary of ours, and BioCryst UK Limited, a wholly-owned
subsidiary of BioCryst Ireland Limited, are guarantors to the Credit Agreement. The amendment amended the original Credit Agreement (i) to permit the
Company to enter into the 2021 RPI Royalty Purchase Agreement, the OMERS Royalty Purchase Agreement, and the other definitive documentation
related thereto and to perform its obligations thereunder; (ii) to require the Company to pay to Athyrium, for the account of the lenders, a make-whole
premium plus certain fees set forth in the Credit Agreement in the event that the Company does not draw the Term B Loan or the Term C Loan available
under the Credit Agreement, as applicable, by the end of the applicable period available to draw the Term B Loan or the Term C Loan, subject to certain
exceptions set forth in the Credit Agreement; and (iii) to require the Company to pay to Athyrium, for the account of the lenders, a make-whole premium
plus certain fees set forth in the Credit Agreement in the event that the Company either (x) terminates the commitments in respect of the Term B Loan or
the Term C Loan, as applicable, on or prior to the end of the applicable period available to draw the Term B Loan or the Term C Loan, or (y) prepays or
repays, or is required to prepay or repay, voluntarily or pursuant to a mandatory prepayment obligation under the Credit Agreement (e.g., with the proceeds
of certain asset sales, certain ORLADEYO out-licensing or royalty monetization transactions (excluding the Royalty Sales), extraordinary receipts, debt
issuances, or upon a change of control of the Company and specified other events, subject to certain exceptions), all of the then-outstanding Term Loans
under the Credit Agreement, in each case, subject to certain exceptions set forth in the Credit Agreement. See “Note 9(cid:0)Debt(cid:0)Credit Agreement” in the
Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about our obligations under the Credit Agreement.
46
Results of Operations
The discussion below presents a summary of our results of operations for fiscal years 2021 and 2020. See Part II, Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations(cid:0)Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended
December 31, 2020, filed with the Securities and Exchange Commission on March 1, 2021, for a summary of our results of operations for the fiscal year
ended December 31, 2019.
Year Ended December 31, 2021 Compared to 2020
For the year ended December 31, 2021, total revenues were $157.2 million as compared to $17.8 million for the year ended December 31, 2020.
This increase of $139.4 million was primarily due to an increase of $122.5 million of ORLADEYO net revenue following our commercial launch in
December 2020. Additionally, RAPIVAB revenues, primarily from sales to HHS, increased by $6.7 million and peramivir product revenue from inventory
sales to our partners increased by $4.6 million. The Company also recognized a $15.0 million milestone payment related to the NHI approval of
ORLADEYO in Japan. These increases in revenue were partially offset by a reduction in royalty revenue (excluding those associated with ORLADEYO
sales) of $4.2 million, a reduction in contract revenue of $3.3 million and the recognition of $1.9 million of deferred revenue in the prior year period
compared to none in the current year period. The decrease in royalty revenue was due to peramivir product replacement under Green Cross’s supply
agreement with the Korean government.
Cost of product sales for the years ended December 31, 2021 and 2020 was $7.2 million and $1.6 million, respectively, and was primarily associated
with the peramivir product sales to our partners in 2021.
R&D expenses increased to $208.8 million for the year ended December 31, 2021 from $123.0 million for the year ended December 31, 2020,
primarily due to increased investment in the development of our Factor D program, including BCX9930, as well as other research, preclinical and
development costs, which were partially offset by a reduction in spend on the ORLADEYO program following our commercial launch in December 2020.
The following table summarizes our R&D expenses for the periods indicated (amounts are in thousands). Certain prior period amounts have been
reclassified for consistency with the current year presentation. These reclassifications had no effect on the total R&D expenses.
R&D expenses by program:
Berotralstat
Factor D Program
FOP
Galidesivir
Peramivir
Other research, preclinical and development costs
Total R&D expenses
2021
2020
2019
$
$
30,559 $
132,267
2,840
5,740
1,245
36,157
208,808 $
44,329 $
35,265
2,583
9,705
1,613
29,469
122,964 $
57,059
26,640
6,167
4,680
2,143
10,379
107,068
R&D expenses include all direct and indirect expenses and are allocated to specific programs at the point of development of a lead product
candidate. Direct expenses are charged directly to the program to which they relate, and indirect expenses are allocated based upon internal direct labor
hours dedicated to each respective program. Direct expenses consist of compensation for R&D personnel and costs of outside parties to conduct laboratory
studies, develop manufacturing processes, manufacture the product candidates, conduct and manage clinical trials, as well as other costs related to our
clinical and preclinical studies. Indirect R&D expenses consist of lab supplies and services, facility expenses, depreciation of development equipment and
other overhead of our research and development efforts. R&D expenses vary according to the number of programs in clinical development and the stage of
development of our clinical programs. Later stage clinical programs tend to cost more than earlier stage programs due to the longer length of time of the
clinical trials and the higher number of patients enrolled in these clinical trials.
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SG&A expenses for the year ended December 31, 2021 were $118.8 million compared to $67.9 million in the year ended December 31, 2020. The
increase was primarily due to increased investment to support the commercial launch of ORLADEYO in the U.S. and elsewhere and our expanded
international operations, particularly in the EU. Additionally, SG&A expenses for 2021 included non-cash stock compensation charges of $8.9 million on
the accelerated vesting of certain outstanding stock options and severance costs of $1.1 million.
Interest expense for the year ended December 31, 2021 was $59.3 million as compared to $14.5 million for the year ended December 31, 2020. The
increase in interest expense was primarily associated with the royalty financing obligations and the $125.0 million Term A Loan under the Credit
Agreement. Interest expense for the year ended December 31, 2021 included $37.7 million of non-cash interest expense due to the amortization of interest
associated with the royalty financing obligations and $15.5 million of interest expense, net of deferred financing amortization, associated with the Term A
Loan under the Credit Agreement. Additionally, we recognized $6.1 million in interest expense on the non-recourse PhaRMA Notes issued in March 2011.
Interest expense for the year ended December 31, 2020 consisted of $6.6 million associated with the non-recourse PhaRMA Notes and $4.9 million
associated with the borrowings under our secured credit facility with MidCap, which terminated in December 2020 when we repaid the outstanding
indebtedness under the facility. Additionally, 2020 interest expense included $2.1 million of non-cash interest expense due to the amortization of interest
associated with the royalty financing obligation and $0.9 million of interest expense, net of deferred financing amortization, associated with the Term A
Loan under the Credit Agreement.
A gain of $55.8 million on extinguishment of debt was recognized for the year ended December 31, 2021 related to the write-off of the non-recourse
PhaRMA Notes and related accrued interest payable. See “Note 8(cid:0)Royalty Monetizations(cid:0)RAPIACTA(cid:0) Non-Recourse Notes Payable – Debt
Extinguishment ” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information. This gain compares to a loss
on extinguishment of debt of $2.0 million for the year ended December 31, 2020, which is comprised of the write-off of unamortized deferred financing
costs and original issue discount of $1.2 million and a prepayment fee of $0.8 million associated with the repayment of the outstanding indebtedness under
our secured credit facility with MidCap in December 2020.
For the year ended December 31, 2021, other expense of $0.6 million was primarily related to foreign currency losses as compared to other income
of $8.4 million for the year ended December 31, 2020. Other income in 2020 consisted of $8.9 million related to recognition of income from the partial
arbitration award related to our Seqirus arbitration proceedings and $0.5 million of interest income, partially offset by foreign currency losses of $1.0
million.
For the year ended December 31, 2021, we incurred a tax expense of $2.3 million, primarily related to U.S. state taxes. This liability was driven
predominantly by the recognition as upfront taxable income of $300.0 million received from the RPI Royalty Purchase Agreement and the OMERS
Royalty Purchase Agreement, increased sales of ORLADEYO and increased nexus in multiple states where historically we had none.
Liquidity and Capital Resources
Our operations have principally been funded through public offerings and private placements of equity securities; cash from collaborative and other
research and development agreements, including U.S. Government contracts for RAPIVAB and galidesivir; to a lesser extent, the PhaRMA Notes financing
and our credit facilities; and more recently, the Royalty Sales. To date, we have been awarded a BARDA/HHS RAPIVAB development contract totaling
$234.8 million, which expired on June 30, 2014, a NIAID/HHS galidesivir development contract totaling $47.3 million, which is in the process of being
closed out, a second NIAID/HHS galidesivir development contract with a potential value totaling $43.9 million, which is ongoing, and a BARDA/HHS
galidesivir development contract totaling $39.1 million, which is also ongoing. The total amount of funding obligated under awarded options under the
active NIAID/HHS and BARDA/HHS galidesivir contracts is $53.6 million and $20.6 million, respectively. In addition to the above, we have previously
received funding from other sources, including other collaborative and other research and development agreements, government grants, equipment lease
financing, facility leases, research grants, and interest income on our investments.
On November 19, 2021, we entered into the 2021 RPI Royalty Purchase Agreement, the OMERS Royalty Purchase Agreement, and the Stock
Purchase Agreement, pursuant to which we received $350.0 million in new funding for the Company, with all funds immediately available at closing. See
“Note 8(cid:0)Royalty Monetizations(cid:0)ORLADEYO and Factor D Inhibitors” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report
for additional information about these financing transactions.
Our Credit Agreement with Athyrium provides for three term loans. We received the proceeds from the $125.0 million Term A Loan in December
2020. We have committed to draw the two additional term loans available under the Credit Agreement, in the respective principal amounts of $25.0 million
for the Term B Loan and $50.0 million for the Term C Loan. The maturity date of the Credit Agreement is December 7, 2025. See “Note 9(cid:0)Debt(cid:0)Credit
Agreement” in the Notes to Consolidated Financial Statements in Part II, Item 8 of this report for additional information about the Credit Agreement.
48
As of December 31, 2021, we had net working capital of $462.4 million, an increase of approximately $244.3 million from $218.1 million at
December 31, 2020. The increase in working capital was primarily the result of the $300.0 million of new funding associated with the royalty monetization
transactions and the related $50.0 million from the sale of common stock in the fourth quarter of 2021. Working capital was also impacted by the write-off
of the non-recourse PhaRMA Notes including associated accrued interest payable, which were previously recorded in current liabilities. Our principal
sources of liquidity at December 31, 2021 were approximately $504.4 million in cash and cash equivalents and approximately $10.0 million in investments
considered available-for-sale.
We intend to contain costs and cash flow requirements by closely managing our third-party costs and headcount, leasing scientific equipment and
facilities, contracting with other parties to conduct certain research and development projects, and using consultants. We expect to incur additional
expenses, potentially resulting in significant losses, as we continue to pursue our research and development activities, commercialize ORLADEYO, and
hire additional personnel. We may incur additional expenses related to the filing, prosecution, maintenance, defense, and enforcement of patent and other
intellectual property claims and additional regulatory costs as our clinical programs advance through later stages of development. The objective of our
investment policy is to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. We
place our excess cash with high credit quality financial institutions, commercial companies, and government agencies in order to limit the amount of our
credit exposure. We have not realized any significant losses on our investments.
We plan to finance our needs principally from the following:
● lease, royalty, or loan financing and future public or private equity and/or debt financing;
● our existing capital resources and interest earned on that capital;
● revenues from product sales;
● payments under existing, and executing new, contracts with the U.S. Government; and
● payments under current or future collaborative and licensing agreements with corporate partners.
As our commercialization activities and research and development programs continue to advance, our costs will increase. Our current and planned
clinical trials, plus the related development, manufacturing, regulatory approval process requirements, and additional personnel resources and testing
required for the continuing development of our product candidates and the commercialization of our products will consume significant capital resources
and will increase our expenses.
Our expenses, revenues and cash utilization rate could vary significantly depending on many factors, including our ability to raise additional capital,
the development progress of our collaborative agreements for our product candidates, the amount and timing of funding we receive from existing U.S.
Government contracts for galidesivir, the amount of funding or assistance, if any, we receive from new U.S. Government contracts or other new
partnerships with third parties for the development and/or commercialization of our products and product candidates, the progress and results of our current
and proposed clinical trials for our most advanced product candidates, the progress made in the manufacturing of our lead product candidates, the success
of our commercialization efforts for, and market acceptance of, our products, and the overall progression of our other programs. The impact of the ongoing
COVID-19 pandemic on one or more of the foregoing factors could negatively affect our expenses, revenues, and cash utilization rate.
Based on our expectations for revenue, operating expenses and the additional $75 million available to us under the Credit Agreement, we believe our
financial resources will be sufficient to fund our operations for at least the next 12 months. However, we have sustained operating losses for the majority of
our corporate history and expect that our 2022 expenses will exceed our 2022 revenues. We expect to continue to incur operating losses and negative cash
flows until revenues reach a level sufficient to support ongoing operations. Our liquidity needs will be largely determined by the success of operations in
regard to the successful commercialization of our products and the future progression of our product candidates. We regularly evaluate other opportunities
to fund future operations, including: (1) securing or increasing U.S. Government funding of our programs, including obtaining procurement contracts; (2)
out-licensing rights to certain of our products or product candidates, pursuant to which we would receive cash milestone payments; (3) raising additional
capital through equity or debt financings or from other sources, including royalty or other monetization transactions; (4) obtaining additional product
candidate regulatory approvals, which would generate revenue, milestone payments and cash flow; (5) reducing spending on one or more research and
development programs, including by discontinuing development; and/or (6) restructuring operations to change our overhead structure. We may issue
securities, including common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities, and units, through private placement
transactions or registered public offerings. Our future liquidity needs, and our ability to address those needs, will largely be determined by the success of
our products and product candidates; the timing, scope, and magnitude of our commercial expenses; and key development and regulatory events and our
decisions in the future.
Our long-term capital requirements and the adequacy of our available funds will depend upon many factors, including:
● market acceptance of approved products and successful commercialization of such products by either us or our partners;
● our ability to perform under our government contracts and to receive reimbursement and stockpiling procurement contracts;
49
● the magnitude of work under our government contracts;
● the progress and magnitude of our research, drug discovery and development programs;
● changes in existing collaborative relationships or government contracts;
● our ability to establish additional collaborative relationships with academic institutions, biotechnology or pharmaceutical companies and
governmental agencies or other third parties;
● the extent to which our partners, including governmental agencies, will share in the costs associated with the development of our programs or
run the development programs themselves;
● our ability to negotiate favorable development and marketing strategic alliances for certain products and product candidates;
● any decision to build or expand internal development and commercial capabilities;
● the scope and results of preclinical studies and clinical trials to identify and develop product candidates;
● our ability to engage sites and enroll subjects in our clinical trials;
● the scope of manufacturing of our products to support our commercial operations and of our product candidates to support our preclinical
research and clinical trials;
● increases in personnel and related costs to support the development and commercialization of our products and product candidates;
● the scope of manufacturing of our drug substance and product candidates required for future NDA filings;
● competitive and technological advances;
● the time and costs involved in obtaining regulatory approvals;
● post-approval commitments for ORLADEYO, RAPIVAB, and other products that receive regulatory approval; and
● the costs involved in all aspects of intellectual property strategy and protection, including the costs involved in preparing, filing, prosecuting,
maintaining, defending, and enforcing patent claims.
We expect that we will be required to raise additional capital to complete the development and commercialization of our current products and
product candidates, and we may seek to raise capital in the future, including to take advantage of favorable opportunities in the capital markets. Additional
funding, whether through additional sales of equity or debt securities, collaborative or other arrangements with corporate partners or from other sources,
including governmental agencies in general and existing government contracts specifically, may not be available when needed or on terms acceptable to us.
The issuance of preferred or common stock or convertible securities, with terms and prices significantly more favorable than those of the currently
outstanding common stock, could have the effect of diluting or adversely affecting the holdings or rights of our existing stockholders. In addition,
collaborative arrangements may require us to transfer certain material rights to such corporate partners. Insufficient funds may require us to delay, scale
back or eliminate certain of our research and development programs. Our future working capital requirements, including the need for additional working
capital, will be largely determined by the advancement of our portfolio of product candidates and the commercialization of ORLADEYO, as well as the
rate of reimbursement by U.S. Government agencies of our galidesivir expenses and any future decisions regarding the future of the RAPIVAB and
galidesivir programs, including those relating to stockpiling procurement. More specifically, our working capital requirements will be dependent on the
number, magnitude, scope and timing of our development programs; regulatory approval of our product candidates; obtaining funding from collaborative
partners; the cost, timing and outcome of regulatory reviews, regulatory investigations, and changes in regulatory requirements; the costs of obtaining
patent protection for our product candidates; the timing and terms of business development activities; the rate of technological advances relevant to our
operations; the efficiency of manufacturing processes developed on our behalf by third parties; the timing, scope and magnitude of commercial spending,
and the level of required administrative support for our daily operations.
The restrictive covenants contained in our Credit Agreement could cause us to be unable to pursue business opportunities that we or our stockholders
may consider beneficial without the lender’s permission or without repaying all obligations outstanding under the Credit Agreement. These covenants limit
our ability to, among other things, grant certain types of liens on our assets; make certain investments; incur or assume certain debt, including accessing
additional tranches of debt under the Credit Agreement; engage in certain mergers, acquisitions, and similar transactions; dispose of assets; license certain
property; distribute dividends; make certain restricted payments; change the nature of our business; engage in transactions with affiliates and insiders;
prepay other indebtedness; or engage in sale and leaseback transactions. A breach of any of these covenants could result in an event of default under the
Credit Agreement. As of December 31, 2021, we were in compliance with the covenants under the Credit Agreement.
Financial Outlook for 2022
Based on the strength of the ORLADEYO launch, and continued growth from new patient demand anticipated throughout the year, we expect full
year 2022 net ORLADEYO revenue to be no less than $250 million. We expect operating expenses for full year 2022, not including non-cash stock
compensation, to be in the range of $440 million to $480 million, with the year-over-year increase predominantly driven by additional investment in
advancing our Factor D program across multiple indications. Based on our expectations for revenue, operating expenses, and the additional $75 million
available under our existing credit facility, we believe our current cash funds our planned operations for at least the next 12 months.
50
Critical Accounting Policies
We have established various accounting policies that govern the application of U.S. GAAP, which were utilized in the preparation of our
consolidated financial statements. Certain accounting policies involve significant judgments and assumptions by management that have a material impact
on the carrying value of certain assets and liabilities. Management considers such accounting policies to be critical accounting policies. The judgments and
assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances.
Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates, which could
have a material impact on the carrying values of assets and liabilities and the results of operations.
While our significant accounting policies are more fully described in “Note 1−Significant Accounting Policies and Concentrations of Risk” to the
Consolidated Financial Statements in Part I, Item 1 of this report, we believe that the following accounting policies are the most critical to aid you in fully
understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we use in the preparation of our
financial statements.
Revenue Recognition
Pursuant to Accounting Standards Codification (“ASC”) Topic 606, we recognize revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this
core principle, Topic 606 includes provisions within a five step model that includes (i) identifying the contract with a customer, (ii) identifying the
performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations, and (v)
recognizing revenue when, or as, an entity satisfies a performance obligation.
At contract inception, we identify the goods or services promised within each contract, assess whether each promised good or service is distinct, and
determine those that are performance obligations. We recognize as revenue the amount of the transaction price that is allocated to the respective
performance obligation when the performance obligation is satisfied.
Product Sales, Net
Our principal sources of product sales are sales of ORLADEYO, which we began shipping to patients in December 2020, sales of peramivir to our
licensing partners and sales of RAPIVAB to the U.S. Department of Health and Human Services under our procurement contract. In the United States, we
ship ORLADEYO directly to patients through a single specialty pharmacy, which is considered our customer. In the European Union, United Kingdom and
elsewhere, we sell ORLADEYO to specialty distributors as well as hospitals and pharmacies, which collectively are considered our customers.
We recognize revenue for sales when our customers obtain control of the product, which generally occurs upon delivery. For ORLADEYO, we
classify payments to our specialty pharmacy customer for certain services provided by our customer as selling, general and administrative expenses to the
extent such services provided are determined to be distinct from the sale of our product.
Net revenue from sales of ORLADEYO is recorded at net selling price (transaction price), which includes estimates of variable consideration for
which reserves are established for (i) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care
rebates, (ii) estimated chargebacks, (iii) estimated costs of co-payment assistance programs and (iv) product returns. These reserves are based on the
amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable or as a current liability. Overall, these reserves
reflect our best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of variable
consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a
significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately
received may differ from our estimates. If actual results in the future vary from estimates, we adjust these estimates, which would affect net product
revenue and earnings in the period such variances become known.
Government and Managed Care Rebates. We contract with government agencies and managed care organizations or, collectively, third-party payors,
so that ORLADEYO will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. We estimate the rebates we will
provide to third-party payors and deduct these estimated amounts from total gross product revenues at the time the revenues are recognized. We estimate
the rebates that we will provide to third-party payors based upon (i) our contracts with these third-party payors, (ii) the government mandated discounts
applicable to government-funded programs, (iii) a range of possible outcomes that are probability-weighted for the estimated payor mix, and (iv) product
distribution information obtained from our specialty pharmacy.
Chargebacks. Chargebacks are discounts that occur when certain contracted customers, pharmacy benefit managers, insurance companies and
government programs purchase directly from our specialty pharmacy. These customers purchase our products under contracts negotiated between them and
our specialty pharmacy. The specialty pharmacy, in turn, charges back to us the difference between the price the specialty pharmacy paid and the negotiated
price paid by the contracted customers, which may be higher or lower than the specialty pharmacy purchase price with us. We estimate chargebacks and
adjust gross product revenues and accounts receivable based on the estimates at the time revenues are recognized.
51
Co-payment assistance and patient assistance programs. Patients who have commercial insurance and meet certain eligibility requirements may
receive co-payment assistance. Based upon the terms of the program and co-payment assistance utilization reports received from the specialty pharmacy,
we are able to estimate the co-payment assistance amounts, which are recorded in the same period in which the related revenue is recognized, resulting in a
reduction of product revenue. We also offer a patient assistance program that provides free drug product, for a limited period of time, to allow a patient’s
insurance coverage to be established. Based on patient assistance program utilization reports provided by the specialty pharmacy, we record gross revenue
of the product provided and a full reduction of the revenue amount for the free drug discount.
Product returns. We do not provide contractual return rights to our customer, except in instances where the product is damaged or defective. Non-
acceptance by the patient of shipped drug product by the specialty pharmacy is reflected as a reversal of sales in the period in which the sales were
originally recorded. Reserves for estimated non-acceptances by patients are recorded as a reduction of revenue in the period that the related revenue is
recognized, as well as a reduction to accounts receivable. Estimates of non-acceptance are based on quantitative information provided by the specialty
pharmacy.
Collaborative and Other Research and Development Arrangements and Royalties
We recognize revenue when we satisfy a performance obligation by transferring promised goods or services to a customer. Revenue is measured at
the transaction price that is based on the amount of consideration that we expect to receive in exchange for transferring the promised goods or services to
the customer. The transaction price includes estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized
will not occur.
We have collaboration and license agreements with a number of third parties as well as research and development agreements with certain
government entities.
Our primary sources of revenue from these collaborative and other research and development arrangements are license, service and royalty revenues.
Revenue from license fees, royalty payments, milestone payments, and research and development fees are recognized as revenue when the earnings
process is complete and we have no further continuing performance obligations or we have completed the performance obligations under the terms of the
agreement.
Arrangements that involve the delivery of more than one performance obligation are initially evaluated as to whether the intellectual property
licenses granted by us represent distinct performance obligations. If they are determined to be distinct, the value of the intellectual property licenses would
be recognized up-front while the research and development service fees would be recognized as the performance obligations are satisfied. For performance
obligations based on services performed, we measure progress using an input method based on the effort we expend or costs we incur toward the
satisfaction of the performance obligation in relation to the total estimated effort or costs. Variable consideration is assessed at each reporting period as to
whether it is not subject to significant future reversal and, therefore, should be included in the transaction price at the inception of the contract. If a contract
includes a fixed or minimum amount of research and development support, this also would be included in the transaction price. Changes to collaborations,
such as the extensions of the research term or increasing the number of targets or technology covered under an existing agreement, are assessed for whether
they represent a modification or should be accounted for as a new contract. For contracts with multiple performance obligations, revenue is allocated to
each performance obligation based on its relative standalone selling price. Standalone selling prices are based on observable prices at which we separately
sell the products or services. If a standalone selling price is not directly observable, then we estimate the standalone selling price using either an adjusted
market assessment approach or an expected cost plus margin approach, representing the amount that we believe the market is willing to pay for the product
or service. Analyzing the arrangement to identify performance obligations requires the use of judgment, and each may be an obligation to deliver services,
a right or license to use an asset, or another performance obligation.
Milestone payments are recognized as licensing revenue upon the achievement of specified milestones if (i) the milestone is substantive in nature
and the achievement of the milestone was not probable at the inception of the agreement; and (ii) we have a right to payment. Any milestone payments
received prior to satisfying these revenue recognition criteria are recorded as deferred revenue.
Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated
Statements of Comprehensive Loss rather than as a reduction in expenses. Under our contracts with BARDA/HHS and NIAID/HHS, revenue is recognized
as reimbursable direct and indirect costs are incurred.
Under certain of our license agreements, we receive royalty payments based upon our licensees’ net sales of covered products. Royalties are
recognized at the later of when (i) the subsequent sale or usage occurs; or (ii) the performance obligation to which some or all of the sales-based or usage-
based royalty has been satisfied.
Inventory
Our inventories primarily relate to ORLADEYO. Additionally, our inventory includes RAPIVAB and peramivir, which are manufactured for the
Company’s partners.
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We value our inventories at the lower of cost or estimated net realizable value. We determine the cost of our inventories, which includes amounts
related to materials, labor, manufacturing overhead and shipping and handling costs on a first-in, first-out (FIFO) basis. Raw materials and work-in-process
includes all inventory costs prior to packaging and labeling, including raw material, active product ingredient, and drug product. Finished goods include
packaged and labeled products.
Our inventories are subject to expiration dating. We regularly evaluate the carrying value of our inventories and provide valuation reserves for any
estimated obsolete, short-dated or unmarketable inventories. In addition, we may experience spoilage of our raw materials and supplies. Our determination
that a valuation reserve might be required, in addition to the quantification of such reserve, requires us to utilize significant judgment.
We expense costs related to the production of inventories as research and development expenses in the period incurred until such time it is believed
that future economic benefit is expected to be recognized, which generally is upon receipt of regulatory approval. Upon regulatory approval, we capitalize
subsequent costs related to the production of inventories.
Accrued Expenses
We enter into contractual agreements with third-party vendors who provide research and development, manufacturing, distribution, and other
services in the ordinary course of business. Some of these contracts are subject to milestone-based invoicing, and services are completed over an extended
period of time. We record liabilities under these contractual commitments when we determine an obligation has been incurred. This accrual process
involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed and
estimating the level of service performed and the associated cost when we have not yet been invoiced or otherwise notified of actual cost. The majority of
our service providers invoice us monthly in arrears for services performed. We make estimates of our accrued expenses as of each balance sheet date based
on the facts and circumstances known to us. We periodically confirm the accuracy of our estimates with the service providers and make adjustments if
necessary. Examples of estimated accrued expenses include (i) fees paid to clinical research organizations (“CROs”) in connection with preclinical and
toxicology studies and clinical trials; (ii) fees paid to investigative sites in connection with clinical trials; (iii) fees paid to contract manufacturers in
connection with the production of our raw materials, drug substance, drug products, and product candidates; and (iv) professional fees.
We base our expenses related to clinical trials on our estimates of the services received and efforts expended pursuant to contracts with multiple
research institutions and CROs that conduct and manage clinical trials on our behalf. The financial terms of these agreements are subject to negotiation,
vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful
enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be
performed and the level of effort expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate,
we will adjust the accrual accordingly. If we do not identify costs that we have begun to incur or if we underestimate or overestimate the level of these
costs, our actual expenses could differ from our estimates.
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and
deferred revenue and billings in excess of revenue recognized (contract liabilities) on the Consolidated Balance Sheets.
Contract assets. Our long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic
intervals or upon achievement of certain milestones. Often this results in billing occurring subsequent to revenue recognition, resulting in contract assets.
Contract assets are generally classified as current assets in the Consolidated Balance Sheets.
Contract liabilities. We often receive cash payments from customers in advance of our performance, resulting in contract liabilities. These contract
liabilities are classified as either current or long-term in the Consolidated Balance Sheets based on the timing of when we expect to recognize the revenue.
Contract Costs
We may incur direct and indirect costs associated with obtaining a contract. Incremental contract costs that we expect to recover are capitalized and
amortized over the expected term of the contract. Non-incremental contract costs and costs that we expect to recover are expensed as incurred.
Research and Development Expenses
Our research and development costs are charged to expense when incurred. Advance payments for goods or services that will be used or rendered for
future research and development activities are deferred and capitalized. Such amounts are recognized as expense when the related goods are delivered or
the related services are performed. Research and development expenses include, among other items, personnel costs, including salaries and benefits,
manufacturing costs, clinical, regulatory, and toxicology services performed by CROs, materials and supplies, and overhead allocations consisting of
various administrative and facilities related costs. Most of our manufacturing and clinical and preclinical studies are performed by third-party CROs. Costs
for studies performed by CROs are accrued by us over the service periods specified in the contracts and estimates are adjusted, if required, based upon our
ongoing review of the level of services actually performed.
53
Additionally, we have license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University (“AECOM”),
Industrial Research, Ltd. (“IRL”), and the University of Alabama (“UAB”), which require fees related to sublicense agreements or maintenance fees. We
expense sublicense payments as incurred unless they are related to revenues that have been deferred, in which case the expenses are deferred and
recognized over the related revenue recognition period. We expense maintenance payments as incurred.
Deferred collaboration expenses represent sub-license payments paid to our academic partners upon receipt of consideration from various
commercial partners, and other consideration to our academic partners for modification to existing license agreements. These deferred expenses would not
have been incurred without receipt of such payments or modifications from our commercial partners and are being expensed in proportion to the related
revenue being recognized. We believe that this accounting treatment appropriately matches expenses with the associated revenue.
We group our R&D expenses into two major categories: direct external expenses and indirect expenses. Direct expenses consist of compensation for
R&D personnel and costs of outside parties to conduct laboratory studies, develop manufacturing processes and manufacture the product candidate,
conduct and manage clinical trials, as well as other costs related to our clinical and preclinical studies. These costs are accumulated and tracked by active
program. Indirect expenses consist of lab supplies and services, facility expenses, depreciation of development equipment and other overhead of our
research and development efforts. These costs apply to work on non-active product candidates and our discovery research efforts.
Stock-Based Compensation
All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in our Consolidated Statements
of Comprehensive Loss based on their fair values. Stock-based compensation cost is estimated at the grant date based on the fair value of the award and is
recognized as expense on a straight-line basis over the requisite service period of the award. Determining the appropriate fair value model and the related
assumptions for the model requires judgment, including estimating the life of an award, the stock price volatility, and the expected term. We utilize the
Black-Scholes option-pricing model to value our awards and recognize compensation expense on a straight-line basis over the vesting periods. The
estimation of share-based payment awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from our
current estimates, such amounts will be recorded as a cumulative adjustment in the period estimates are revised. In addition, we have outstanding
performance-based stock options for which no compensation expense is recognized until “performance” has occurred. Significant management judgment is
also required in determining estimates of future stock price volatility and forfeitures to be used in the valuation of the options. Actual results, and future
changes in estimates, may differ substantially from our current estimates.
Interest Expense and Royalty Financing Obligations
The royalty financing obligations are eligible to be repaid based on royalties from net sales of ORLADEYO, BCX9930, and another earlier stage
Factor D inhibitor. Interest expense is accrued using the effective interest rate method over the estimated period each of the related liabilities will be paid.
This requires us to estimate the total amount of future royalty payments to be generated from product sales over the life of the agreement. We impute
interest on the carrying value of each of the royalty financing obligations and record interest expense using an imputed effective interest rate. We reassess
the expected royalty payments each reporting period and account for any changes through an adjustment to the effective interest rate on a prospective basis.
The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance costs requires that we make
estimates that could impact the carrying value of each of the liabilities, as well as the periods over which associated issuance costs will be amortized. A
significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest expense and the time periods for
repayment.
Foreign Currency Hedge
In connection with our issuance of the PhaRMA Notes, we entered into a foreign Currency Hedge Agreement to hedge certain risks associated with
changes in the value of the Japanese yen relative to the U.S. dollar. The final tranche of the options under the Currency Hedge Agreement expired in
November 2020. The Currency Hedge Agreement did not qualify for hedge accounting treatment and therefore mark-to-market adjustments were
recognized in our Consolidated Statements of Comprehensive Loss.
Tax
We account for uncertain tax positions in accordance with U.S. GAAP. Significant management judgment is required in determining our provision
for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. We have recorded a valuation
allowance against substantially all potential tax assets, due to uncertainties in our ability to utilize deferred tax assets, primarily consisting of certain net
operating losses carried forward, before they expire. The valuation allowance is based on estimates of taxable income in each of the jurisdictions in which
we operate and the period over which our deferred tax assets will be recoverable.
54
Recent Accounting Pronouncements
“Note 1(cid:0)Significant Accounting Policies and Concentrations of Risk” to the Consolidated Financial Statements included in Part II, Item 8 of this
report discusses accounting pronouncements recently issued or proposed but not yet required to be adopted.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Interest Rate Risk
We are subject to interest rate risk on our investment portfolio and borrowings under our Credit Agreement. The Term A Loan under the Credit
Agreement bears interest each quarter at a rate equal to the three-month LIBOR rate, which is capped to be no less than 1.75% and no more than 3.50%
(“LIBOR”), plus 8.25% or, for each quarterly interest period in which a PIK Interest Payment is made, the LIBOR plus 10.25%. Accordingly, increases in
interest rates could increase the associated interest payments that we are required to make on the term loans. As of December 31, 2021, interest was accrued
at 12.2% on the $125.0 million Term A Loan under the Credit Agreement.
We invest in marketable securities in accordance with our investment policy. The primary objectives of our investment policy are to preserve capital,
maintain proper liquidity to meet operating needs and maximize yields. Our investment policy specifies credit quality standards for our investments and
limits the amount of credit exposure to any single issue, issuer or type of investment. We place our excess cash with high credit quality financial
institutions, commercial companies, and government agencies in order to limit the amount of credit exposure. Some of the securities we invest in may have
market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to fluctuate.
Our investment exposure to market risk for changes in interest rates relates to the increase or decrease in the amount of interest income we can earn
on our portfolio, changes in the market value due to changes in interest rates and other market factors as well as the increase or decrease in any realized
gains and losses. Our investment portfolio includes only marketable securities and instruments with active secondary or resale markets to help ensure
portfolio liquidity. A hypothetical 100 basis point increase or decrease in interest rates along the entire interest rate yield curve would not significantly
affect the fair value of our interest sensitive financial instruments, including our borrowings, but may affect our future earnings and cash flows. We
generally have the ability to hold our fixed-income investments to maturity and therefore do not expect that our operating results, financial position or cash
flows will be materially impacted due to a sudden change in interest rates. However, our future investment income may fall short of expectations due to
changes in interest rates, or we may suffer losses in principal if forced to sell securities which have declined in market value due to changes in interest rates
or other factors, such as changes in credit risk related to the securities’ issuers. To minimize this risk, we schedule our investments to have maturities that
coincide with our expected cash flow needs, thus avoiding the need to redeem an investment prior to its maturity date. Accordingly, we do not believe that
we have material exposure to interest rate risk arising from our investments. Generally, our investments are not collateralized. We have not realized any
significant losses from our investments.
We do not use interest rate derivative instruments to manage exposure to interest rate changes. We ensure the safety and preservation of invested
principal funds by limiting default risk, market risk and reinvestment risk. We reduce default risk by investing in investment grade securities.
Foreign Currency Risk
Most of our revenues and expenses are denominated in U.S. dollars, and as a result, we have not experienced significant foreign currency transaction
gains and losses to date. Our commercial sales in Europe are primarily denominated in Euros and the British Pound. We also had other transactions
denominated in foreign currencies during the year ended December 31, 2021, primarily related to operations in Europe, contract manufacturing and ex-U.S.
clinical trial activities, and we expect to continue to do so. Our royalties from Torii are derived from Torii’s sales of ORLADEYO in Japan. Those sales are
denominated in Japanese yen and converted into U.S. dollars for purposes of determining the royalty owed to us. Our limited foreign currency exposure
relative to our European operations is to fluctuations in the Euro, British Pound, Swiss Franc, Danish Krone, and Swedish Krona. We do not anticipate that
foreign currency transaction gains or losses will be significant at our current level of operations. However, transaction gains or losses may become
significant in the future as we continue to expand our operations internationally. We have not engaged in foreign currency hedging during 2021; however,
we may do so in the future.
55
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BIOCRYST PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
ASSETS
December 31,
2021
2020
Cash and cash equivalents
Restricted cash
Investments
Trade receivables
Inventory
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Long-term investments
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Accounts payable
Accrued expenses
Interest payable
Deferred revenue
Lease financing obligation
Non-recourse notes payable
Total current liabilities
Royalty financing obligations
Lease financing obligation
Secured term loan
Stockholders’ deficit:
Preferred stock, $0.01 par value; shares authorized — 5,000; no shares outstanding
Common stock, $0.01 par value; shares authorized — 450,000 Issued and outstanding – 184,350 and
176,883 at December 31, 2021 and 2020, respectively
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders’ deficit
Total liabilities and stockholders’ deficit
See accompanying notes to consolidated financial statements.
56
$
$
$
$
504,389 $
3,345
3,212
29,413
15,791
9,986
566,136
8,714
6,829
6,472
588,151 $
27,808 $
72,670
−
1,421
1,819
−
103,718
449,375
5,962
136,082
272,127
2,221
28,239
8,646
7,039
5,528
323,800
7,113
−
3,802
334,715
18,713
33,942
21,670
150
1,179
30,000
105,654
124,717
3,871
119,735
−
−
1,843
1,098,498
177
(1,207,504)
(106,986)
588,151 $
1,769
1,002,408
3
(1,023,442)
(19,262)
334,715
BIOCRYST PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands, except per share amounts)
Revenues
Product sales, net
Royalty revenue
Milestone revenue
Collaborative and other research and development
Total revenues
Expenses
Cost of products sold
Research and development
Selling, general and administrative
Royalty
Total operating expenses
Loss from operations
Interest and other income
Interest expense
Gain (loss) on extinguishment of debt
Foreign currency (losses) gains, net
Loss before income taxes
Income tax expense
Net loss
Foreign currency translation adjustment
Unrealized (loss) gain on available for sale investments
Net comprehensive loss
Basic and diluted net loss per common share
Weighted average shares outstanding
2021
Years Ended December 31,
2020
2019
136,350 $
(100)
15,000
5,920
157,170
7,229
208,808
118,818
35
334,890
(177,720)
62
(59,294)
55,838
(695)
(181,809) $
2,253
(184,062) $
189
(15)
(183,888) $
(1.03) $
179,117
3,301 $
3,381
−
11,130
17,812
1,550
122,964
67,929
126
192,569
(174,757)
9,420
(14,501)
(2,011)
(965)
(182,814) $
−
(182,814) $
−
(36)
(182,850) $
(1.09) $
167,267
17,533
6,303
−
24,999
48,835
3,726
107,068
37,121
375
148,290
(99,455)
1,933
(11,892)
−
517
(108,897)
−
(108,897)
−
336
(108,561)
(0.94)
115,600
$
$
$
$
$
See accompanying notes to consolidated financial statements.
57
BIOCRYST PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except per share amounts)
2021
Years Ended December 31,
2020
2019
$
(184,062) $
(182,814) $
(108,897)
Cash flows from operating activities:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Stock-based compensation expense
Non-cash interest expense on royalty financing obligations and secured term loan
and amortization of debt issuance costs
Amortization of premium/discount on investments
Change in fair value of foreign currency derivative
(Gain) loss on extinguishment of debt
Changes in operating assets and liabilities:
Receivables
Inventory
Prepaid expenses and other assets
Accounts payable and accrued expenses
Interest payable
Deferred revenue
Net cash used in operating activities
Cash flows from investing activities:
Acquisition of property and equipment
Purchases of investments
Sales and maturities of investments
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Sale of common stock, net
Sale of pre-funded warrants
Net proceeds from common stock issued under stock-based compensation plans
Proceeds from senior credit facility
Payment of senior credit facility
Net proceeds from secured term loan
Net proceeds from royalty financing obligations
Net cash provided by financing activities
Effects of exchange rates on cash, cash equivalents and restricted cash
Increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year
$
777
34,640
54,204
(2)
−
(55,838)
(20,817)
(8,767)
(7,155)
39,412
4,168
1,283
(142,157)
(2,385)
(10,012)
28,201
15,804
50,000
−
15,794
−
−
−
293,874
359,668
71
233,386
274,348
507,734 $
748
14,794
3,325
121
632
1,211
13,903
(7,039)
(2,140)
17,355
6,766
(1,970)
(135,108)
(514)
(49,818)
43,476
(6,856)
93,279
14,817
2,446
−
(52,420)
119,867
122,600
300,589
−
158,625
115,723
274,348 $
724
17,719
1,278
117
347
−
(17,853)
1,649
(1,364)
11,741
3,056
1,899
(89,584)
(343)
(3,018)
81,295
77,934
58,500
19,882
1,239
19,477
−
−
−
99,098
−
87,448
28,275
115,723
See accompanying notes to consolidated financial statements.
58
BIOCRYST PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands, except per share amounts)
Additional
Common
Stock
Paid-In
Capital
Accumulated
Other
Comprehensive Accumulated
(Loss) Income
Deficit
Total
Stockholders’
Equity
(Deficit)
Balance at December 31, 2018
Impact to retained earnings from adoption of ASC 842
Net loss
Other comprehensive income
Exercise of stock options, 283 shares, net
Employee stock purchase plan sales, 115 shares, net
Issuance of common stock, 43,621 shares, net
Issuance of pre-funded warrants, 11,765 warrants
Stock-based compensation expense
Balance at December 31, 2019
Net loss
Other comprehensive loss
Exercise of stock options, 510 shares, net
Employee stock purchase plan sales, 246 shares, net
Issuance of common stock, 22,044 shares, net
Issuance of pre-funded warrants, 3,511 warrants
Stock-based compensation expense
Balance at December 31, 2020
Net loss
Other comprehensive income
Exercise of stock options, 3,299 shares, net
Employee stock purchase plan sales, 321 shares, net
Issuance of common stock associated with royalty financing
agreement, 3,846 shares, net
Stock-based compensation expense
Balance at December 31, 2021
$
$
$
$
1,101 $
−
−
−
3
1
436
−
−
1,541 $
−
−
5
3
220
−
−
1,769 $
−
−
33
3
38
−
1,843 $
780,400 $
−
−
−
832
403
58,064
19,882
17,719
877,300 $
−
−
1,809
629
93,059
14,817
14,794
1,002,408 $
−
−
13,772
1,986
45,692
34,640
1,098,498 $
(297) $
−
−
336
−
−
−
−
−
39 $
−
(36)
−
−
−
−
−
3 $
−
174
−
−
(731,969) $
238
(108,897)
−
−
−
−
−
−
(840,628) $
(182,814)
−
−
−
−
−
−
(1,023,442) $
(184,062)
−
−
−
−
−
177 $
−
−
(1,207,504) $
49,235
238
(108,897)
336
835
404
58,500
19,882
17,719
38,252
(182,814)
(36)
1,814
632
93,279
14,817
14,794
(19,262)
(184,062)
174
13,805
1,989
45,730
34,640
(106,986)
See accompanying notes to consolidated financial statements.
59
BIOCRYST PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Note 1 — Significant Accounting Policies and Concentrations of Risk
The Company
BioCryst Pharmaceuticals, Inc. (the “Company”) is a commercial-stage biotechnology company that discovers novel, oral, small-molecule
medicines. The Company focuses on the treatment of rare diseases in which significant unmet medical needs exist and an enzyme plays the key role in the
biological pathway of the disease. The Company was founded in 1986 and incorporated in Delaware in 1991, and its headquarters is located in Durham,
North Carolina. The Company integrates the disciplines of biology, crystallography, medicinal chemistry and computer modeling to discover and develop
small molecule pharmaceuticals through the process known as structure-guided drug design.
The Company’s marketed products include oral, once-daily ORLADEYO® for the prevention of hereditary angioedema (“HAE”) attacks and
RAPIVAB® (peramivir injection) for the treatment of acute uncomplicated influenza in the United States. ORLADEYO received regulatory approval in
the United States in December 2020. During 2021, ORLADEYO received regulatory approvals in the European Union, Japan, the United Arab Emirates
and the United Kingdom. The Company is commercializing ORLADEYO in each of these territories directly or through distributors, except in Japan
where Torii Pharmaceuticals Co., Ltd. (“Torii”), the Company’s collaborative partner, has the exclusive right to commercialize ORLADEYO for the
prevention of HAE attacks in exchange for certain milestone and royalty payments to us. In addition to its approval in the United States, peramivir
injection has received regulatory approvals in Canada, Australia, Japan, Taiwan and Korea.
Based on the Company’s expectations for revenue, operating expenses, and the additional $75 million available to the Company under its existing
credit facility, the Company believes its financial resources available at December 31, 2021 will be sufficient to fund its operations for at least the next 12
months. The Company has sustained operating losses for the majority of its corporate history and expects that its 2022 expenses will exceed its 2022
revenues. The Company expects to continue to incur operating losses and negative cash flows until revenues reach a level sufficient to support ongoing
operations. The Company’s liquidity needs will be largely determined by the success of operations in regard to the successful commercialization of its
products and the progression of its product candidates in the future. The Company regularly evaluates other opportunities to fund future operations,
including: (1) securing or increasing U.S. Government funding of its programs, including obtaining procurement contracts; (2) out-licensing rights to
certain of its products or product candidates, pursuant to which the Company would receive cash milestone payments; (3) raising additional capital through
equity or debt financings or from other sources, including royalty or other monetization transactions; (4) obtaining additional product candidate regulatory
approvals, which would generate revenue, milestone payments and cash flow; (5) reducing spending on one or more research and development programs,
including by discontinuing development; and/or (6) restructuring operations to change its overhead structure. The Company may issue securities, including
common stock, preferred stock, depositary shares, purchase contracts, warrants, debt securities and units, through private placement transactions or
registered public offerings in the future. The Company’s future liquidity needs, and ability to address those needs, will largely be determined by the success
of its products and product candidates, timing, scope and magnitude of its commercial expenses and key development and regulatory events and its
decisions in the future.
Basis of Presentation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances among
the consolidated entities have been eliminated from the consolidated financial statements.
The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States (“U.S. GAAP”). Such consolidated financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all
material respects, the Company’s consolidated financial position, results of operations, and cash flows. There were no adjustments other than normal
recurring adjustments.
Reclassifications/Revisions
The Company has reclassified certain non-cash expense amounts on the Consolidated Statement of Cash Flows for the year ended December 31,
2020, to conform with the current year presentation. Additionally, the Company revised its Consolidated Statement of Cash Flows for the year ended
December 31, 2020 to reflect an immaterial correction whereby net cash used in operating activities was revised from $(137,216) to $(135,108) and net
cash provided by financing activities was revised from $302,697 to $300,589. The reclassifications and correction had no effect on net cash flows and no
impact on the Consolidated Balance Sheet, Consolidated Statement of Comprehensive Loss, Consolidated Statement of Stockholders’ Equity (Deficit), or
the net loss or loss per share for the year ended December 31, 2020.
60
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The most significant estimates in
the Company’s consolidated financial statements relate to the valuation of stock options, the ORLADEYO royalty financing obligations and the valuation
allowance for deferred tax assets resulting from net operating losses. These estimates are based on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.
Revenue Recognition
Pursuant to Accounting Standards Codification (“ASC”) Topic 606, the Company recognizes revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To
achieve this core principle, Topic 606 includes provisions within a five step model that includes i) identifying the contract with a customer, ii) identifying
the performance obligations in the contract, iii) determining the transaction price, iv) allocating the transaction price to the performance obligations, and v)
recognizing revenue when, or as, an entity satisfies a performance obligation.
At contract inception, the Company identifies the goods or services promised within each contract, assesses whether each promised good or service
is distinct and determines those that are performance obligations. The Company recognizes as revenue the amount of the transaction price that is allocated
to the respective performance obligation when the performance obligation is satisfied.
Product Sales, Net
The Company’s principal sources of product sales are sales of ORLADEYO, which the Company began shipping to patients in December 2020,
sales of peramivir to the Company’s licensing partners and sales of RAPIVAB to the U.S. Department of Health and Human Services under the Company’s
procurement contract. In the United States, the Company ships ORLADEYO directly to patients through a single specialty pharmacy, which is considered
its customer. In the European Union, United Kingdom and elsewhere, the Company sells ORLADEYO to specialty distributors as well as hospitals and
pharmacies, which collectively are considered its customers.
The Company recognizes revenue for sales when its customers obtain control of the product, which generally occurs upon delivery. For
ORLADEYO, the Company classifies payments to its specialty pharmacy customer for certain services provided by its customer as selling, general and
administrative expenses to the extent such services provided are determined to be distinct from the sale of its product.
Net revenue from sales of ORLADEYO is recorded at net selling price (transaction price), which includes estimates of variable consideration for
which reserves are established for (i) estimated government rebates, such as Medicaid and Medicare Part D reimbursements, and estimated managed care
rebates, (ii) estimated chargebacks, (iii) estimated costs of co-payment assistance programs and (iv) product returns. These reserves are based on the
amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable or as a current liability. Overall, these reserves
reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the applicable contract. The amount of
variable consideration included in the transaction price may be constrained and is included in the net sales price only to the extent that it is probable that a
significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately
received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these estimates, which would
affect net product revenue and earnings in the period such variances become known.
Government and Managed Care Rebates. The Company contracts with government agencies and managed care organizations or, collectively,
third-party payors, so that ORLADEYO will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. The Company
estimates the rebates it will provide to third-party payors and deducts these estimated amounts from total gross product revenues at the time the revenues
are recognized. These reserves are recorded in the same period in which the revenue is recognized, resulting in a reduction of product revenue and the
establishment of a current liability. The Company estimates the rebates that it will provide to third-party payors based upon (i) the Company's contracts
with these third-party payors, (ii) the government mandated discounts applicable to government-funded programs, (iii) a range of possible outcomes that
are probability-weighted for the estimated payor mix, and (iv) product distribution information obtained from the Company's specialty pharmacy.
Chargebacks. Chargebacks are discounts that occur when certain contracted customers, pharmacy benefit managers, insurance companies and
government programs purchase directly from the Company’s specialty pharmacy. These customers purchase the Company’s product under contracts
negotiated between them and the Company’s specialty pharmacy. The specialty pharmacy, in turn, charges back to the Company the difference between the
price the specialty pharmacy paid and the negotiated price paid by the contracted customers, which may be higher or lower than the specialty pharmacy’s
purchase price from the Company. The Company estimates chargebacks and adjusts gross product revenues and accounts receivable based on the estimates
at the time revenues are recognized.
61
Co-payment assistance and patient assistance programs. Patients who have commercial insurance and meet certain eligibility requirements may
receive co-payment assistance. Based upon the terms of the program and co-payment assistance utilization reports received from the specialty pharmacy,
the Company is able to estimate the co-payment assistance amounts, which are recorded in the same period in which the related revenue is recognized,
resulting in a reduction of product revenue. The Company also offers a patient assistance program that provides free drug product, for a limited period of
time, to allow a patient’s insurance coverage to be established. Based on patient assistance program utilization reports provided by the specialty pharmacy,
the Company records gross revenue of the product provided and a full reduction of the revenue amount for the free drug discount.
Product returns. The Company does not provide contractual return rights to its customer, except in instances where the product is damaged or
defective. Non-acceptance by the patient of shipped drug product by the specialty pharmacy is reflected as a reversal of sales in the period in which the
sales were originally recorded. Reserves for estimated non-acceptances by patients are recorded as a reduction of revenue in the period that the related
revenue is recognized, as well as a reduction to accounts receivable. Estimates of non-acceptance are based on quantitative information provided by the
specialty pharmacy.
Collaborative and Other Research and Development Arrangements and Royalties
The Company has collaboration and license agreements with a number of third parties, as well as research and development agreements with certain
government entities. The Company’s primary sources of revenue from these collaborative and other research and development arrangements are license,
service and royalty revenues.
Revenue from license fees, royalty payments, milestone payments, and research and development fees are recognized as revenue when the earnings
process is complete and the Company has no further continuing performance obligations or the Company has completed the performance obligations under
the terms of the agreement.
Arrangements that involve the delivery of more than one performance obligation are initially evaluated as to whether the intellectual property licenses
granted by the Company represent distinct performance obligations. If they are determined to be distinct, the value of the intellectual property licenses
would be recognized up front while the research and development service fees would be recognized as the performance obligations are satisfied. For
performance obligations based on services performed, the Company measures progress using an input method based on the effort it expends or costs it
incurs toward the satisfaction of the performance obligation in relation to the total estimated effort or costs. Variable consideration is assessed at each
reporting period as to whether it is not subject to significant future reversal and, therefore, should be included in the transaction price at the inception of the
contract. If a contract includes a fixed or minimum amount of research and development support, this also would be included in the transaction price.
Changes to collaborations, such as the extensions of the research term or increasing the number of targets or technology covered under an existing
agreement, are assessed for whether they represent a modification or should be accounted for as a new contract. For contracts with multiple performance
obligations, revenue is allocated to each performance obligation based on its relative standalone selling price. Standalone selling prices are based on
observable prices at which the Company separately sells the products or services. If a standalone selling price is not directly observable, then the Company
estimates the standalone selling price using either an adjusted market assessment approach or an expected cost plus margin approach, representing the
amount that the Company believes the market is willing to pay for the product or service. Analyzing the arrangement to identify performance obligations
requires the use of judgment, and each may be an obligation to deliver services, a right or license to use an asset, or another performance obligation.
Milestone payments are recognized as licensing revenue upon the achievement of specified milestones if (i) the milestone is substantive in nature and
the achievement of the milestone was not probable at the inception of the agreement; and (ii) the Company has a right to payment. Any milestone payments
received prior to satisfying these revenue recognition criteria are recorded as deferred revenue.
Reimbursements received for direct out-of-pocket expenses related to research and development costs are recorded as revenue in the Consolidated
Statements of Comprehensive Loss rather than as a reduction in expenses. Under the Company’s contracts with the Biomedical Advanced Research and
Development Authority within the United States Department of Health and Human Services (”BARDA/HHS”) and the National Institute of Allergy and
Infectious Diseases (“NIAID/HHS”), revenue is recognized as reimbursable direct and indirect costs are incurred.
Under certain of the Company’s license agreements, the Company receives royalty payments based upon its licensees’ net sales of covered products.
Royalties are recognized at the later of when (i) the subsequent sale or usage occurs, or (ii) the performance obligation to which some or all of the sales-
based or usage-based royalty has been satisfied.
62
Cash and Cash Equivalents
The Company generally considers cash equivalents to be all cash held in commercial checking accounts, certificates of deposit, money market
accounts or investments in debt instruments with maturities of three months or less at the time of purchase. The carrying value of cash and cash equivalents
approximates fair value due to the short-term nature of these items.
Restricted Cash
Restricted cash as of December 31, 2021 and 2020 reflects $1,924 and $796, respectively, in royalty revenue paid by Shionogi & Co., Ltd.
(“Shionogi”) designated for interest on the PhaRMA Notes (defined in Note 8) and $1,421 and $1,425, respectively, the Company is required to maintain as
collateral for a letter of credit associated with the lease execution and build-out of its new Birmingham research facilities.
Investments
The Company invests in high credit quality investments in accordance with its investment policy, which is designed to minimize the possibility of
loss. The objective of the Company’s investment policy is to ensure the safety and preservation of invested funds, as well as maintaining liquidity sufficient
to meet cash flow requirements. The Company places its excess cash with high credit quality financial institutions, commercial companies, and government
agencies in order to limit the amount of its credit exposure. In accordance with its policy, the Company is able to invest in marketable debt securities that
may consist of U.S. Government and government agency securities, money market and mutual fund investments, certificates of deposits, municipal and
corporate notes and bonds, and commercial paper, among others. The Company’s investment policy requires it to purchase high-quality marketable
securities with a maximum individual maturity of three years and requires an average portfolio maturity of no more than 12 months. Some of the securities
the Company invests in may have market risk. This means that a change in prevailing interest rates may cause the principal amount of the investment to
fluctuate. To minimize this risk, the Company schedules its investments with maturities that coincide with expected cash flow needs, thus avoiding the need
to redeem an investment prior to its maturity date. Accordingly, the Company does not believe it has a material exposure to interest rate risk arising from its
investments. Generally, the Company’s investments are not collateralized. The Company has not realized any significant losses from its investments.
The Company classifies all of its investments as available-for-sale. Unrealized gains and losses on investments are recognized in comprehensive
loss, unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company
periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines
primarily resulting from interest rate changes. Realized gains and losses are reflected in interest and other income in the Consolidated Statements of
Comprehensive Loss and are determined using the specific identification method with transactions recorded on a settlement date basis. Investments with
original maturities at date of purchase beyond three months and which mature at or less than 12 months from the balance sheet date are classified as
current. Investments with a maturity beyond 12 months from the balance sheet date are classified as long-term. At December 31, 2021, the Company
believes that the cost of its investments is recoverable in all material respects.
Trade Receivables
The majority of the Company’s trade receivables arise from product sales and primarily represent amounts due from our specialty pharmacy
customer in the U.S. and other third-party distributors, hospitals and pharmacies in the European Union, United Kingdom and elsewhere and have standard
payment terms that generally require payment within 30 to 90 days.
Receivables from collaborations are recorded for amounts due to the Company related to reimbursable research and development costs from the U.S.
Department of Health and Human Services, and royalty receivables from our partners, including Shionogi, Green Cross, and Torii.
Monthly invoices are submitted to the U.S. Department of Health and Human Services related to reimbursable research and development costs. The
Company is also entitled to monthly reimbursement of indirect costs based on rates stipulated in the underlying contract. The Company’s calculations of its
indirect cost rates are subject to audit by the U.S. Government.
The Company does not adjust its receivables for the effects of a significant financing component at contract inception if it expects to collect the
receivables in one year or less from the time of sale.
The Company provides reserves against trade receivables for estimated losses that may result from a customer's inability to pay. Receivables are
evaluated to determine if any reserve or allowance should be recorded based on consideration of the current economic environment, expectations of future
economic conditions, specific circumstances and the Company’s own historical collection experience. Amounts determined to be uncollectible are charged
or written-off against the reserve.
63
Inventory
The Company values its inventories at the lower of cost or estimated net realizable value. The Company determines the cost of its inventories, which
includes amounts related to materials, labor, manufacturing overhead, and shipping and handling costs on a first-in, first-out (FIFO) basis. Raw materials
and work-in-process include all inventory costs prior to packaging and labelling, including raw material, active product ingredient, and the drug product.
Finished goods include packaged and labelled products.
The Company’s inventories are subject to expiration dating. The Company regularly evaluates the carrying value of its inventories and provides
valuation reserves for any estimated obsolete, short-dated or unmarketable inventories. In addition, the Company may experience spoilage of its raw
materials and supplies. The Company’s determination that a valuation reserve might be required, in addition to the quantification of such reserve, requires it
to utilize significant judgement.
The Company expenses costs related to the production of inventories as research and development expenses in the period incurred until such time it
is believed that future economic benefit is expected to be recognized, which generally is reliant upon receipt of regulatory approval. Upon regulatory
approval, the Company capitalizes subsequent costs related to the production of inventories.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
Computer equipment is depreciated over a life of three years. Laboratory equipment, office equipment, and software are depreciated over a life of five
years. Furniture and fixtures are depreciated over a life of seven years. Leasehold improvements are amortized over their estimated useful lives or the
expected lease term, whichever is less.
In accordance with U.S. GAAP, the Company periodically reviews its property and equipment for impairment when events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of
undiscounted future cash flows resulting from the use of the asset and its eventual disposition. In the event that such cash flows are not expected to be
sufficient to recover the carrying amount of the assets, the assets are written down to their estimated fair values. Property and equipment to be disposed of
are reported at the lower of carrying amount or fair value less cost to sell.
Accrued Expenses
The Company generally enters into contractual agreements with third-party vendors who provide research and development, manufacturing,
distribution, and other services in the ordinary course of business. Some of these contracts are subject to milestone-based invoicing, and services are
completed over an extended period of time. The Company records liabilities under these contractual commitments when it determines an obligation has
been incurred, regardless of the timing of the invoice. This process involves reviewing open contracts and purchase orders, communicating with applicable
Company personnel to identify services that have been performed on its behalf and estimating the level of service performed and the associated cost
incurred for the service when the Company has not yet been invoiced or otherwise notified of actual cost. The majority of service providers invoice the
Company monthly in arrears for services performed. The Company makes estimates of accrued expenses as of each balance sheet date in its financial
statements based on the facts and circumstances. The Company periodically confirms the accuracy of its estimates with the service providers and makes
adjustments if necessary. Examples of estimated accrued expenses include (i) fees paid to clinical research organizations (“CROs”) in connection with
preclinical and toxicology studies and clinical trials; (ii) fees paid to investigative sites in connection with clinical trials; (iii) fees paid to contract
manufacturers in connection with the production of the Company’s raw materials, drug substance, drug products, and product candidates; and (iv)
professional fees.
The Company bases its expenses related to clinical trials on its estimates of the services received and efforts expended pursuant to contracts with
multiple research institutions and CROs that conduct and manage clinical trials on the Company’s behalf. The financial terms of these agreements are
subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors
such as the successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, the Company estimates the time
period over which services will be performed and the level of effort expended in each period. If the actual timing of the performance of services or the level
of effort varies from the estimate, the Company will adjust the accrual accordingly. As of December 31, 2021 and December 31, 2020, the carrying value of
accrued expenses approximates their fair value due to their short-term settlement.
Cost of Product Sales
Cost of product sales includes the cost of producing and distributing inventories that are related to product revenue during the respective period,
including freight. In addition, shipping and handling costs for product shipments are recorded as incurred. Finally, cost of product sales may also include
costs related to excess or obsolete inventory adjustment charges.
Research and Development Expenses
The Company’s research and development costs are charged to expense when incurred. Research and development expenses include all direct and
indirect development costs related to the development of the Company’s portfolio of product candidates. Advance payments for goods or services that will
be used or rendered for future research and development activities are deferred and capitalized. Such amounts are recognized as expense when the related
goods are delivered or the related services are performed. Research and development expenses include, among other items, personnel costs, including
salaries and benefits, manufacturing costs, clinical, regulatory, and toxicology services performed by CROs, materials and supplies, and overhead
allocations consisting of various administrative and facilities related costs. Most of the Company’s manufacturing and clinical and preclinical studies are
performed by third-party CROs. Costs for studies performed by CROs are accrued by the Company over the service periods specified in the contracts, and
estimates are adjusted, if required, based upon the Company’s ongoing review of the level of services actually performed.
64
Additionally, the Company has license agreements with third parties, such as Albert Einstein College of Medicine of Yeshiva University
(“AECOM”), Industrial Research, Ltd. (“IRL”), and the University of Alabama at Birmingham (“UAB”), which require fees related to sublicense
agreements or maintenance fees. The Company expenses sublicense payments as incurred unless they are related to revenues that have been deferred, in
which case the expenses are deferred and recognized over the related revenue recognition period. The Company expenses maintenance payments as
incurred.
Deferred collaboration expenses represent sub-license payments, paid to the Company’s academic partners upon receipt of consideration from
various commercial partners, and other consideration paid to the Company’s academic partners for modification to existing license agreements. These
deferred expenses would not have been incurred without receipt of such payments or modifications from the Company’s commercial partners and are being
expensed in proportion to the related revenue being recognized. The Company believes that this accounting treatment appropriately matches expenses with
the associated revenue.
Selling, General and Administrative Expenses
Selling, general and administrative expense is primarily comprised of compensation and benefits associated with sales and marketing, finance,
human resources, legal, information technology and other administrative personnel. Additionally, selling, general and administrative expenses are
comprised of market research, marketing, advertising and legal expenses, including patent costs, licenses and other general and administrative costs,
Advertising expenses related to ORLADEYO were $5,705 and $6,567 for the years ended December 31, 2021 and 2020, respectively. The
Company did not incur advertising and product promotion expenses in 2019.
The Company seeks patent protection on all internally developed processes and products. All patent related costs are expensed to selling, general
and administrative expenses when incurred as recoverability of such expenditures is uncertain.
Leases
The Company leases certain assets under operating leases, which primarily consisted of real estate leases, laboratory equipment leases and office
equipment leases as of December 31, 2021. The Company accounts for lease obligations in accordance with ASU 2016-02: Leases (Topic 842), which
requires a lessee to recognize a right-of-use asset and a lease liability on its balance sheet for most operating leases.
Certain of the Company’s operating leases provide for renewal options, which can vary by lease. The right-of-use asset and lease liabilities on the
Company’s Consolidated Balance Sheet represent payments over the lease term, which includes renewal options for certain real estate leases that we are
likely to exercise. As part of the Company’s assessment of the lease term, the Company elected the hindsight practical expedient, which allows companies
to use current knowledge and expectations when determining the likelihood to extend lease options. Certain operating leases include rent escalation
provisions, which the Company recognizes as expense on a straight-line basis. Lease expense for leases with an initial term of twelve months or less was
not material.
The discount rate used in the calculation of the Company’s right-of-use asset and lease liability was determined based on the stated rate within each
contract when available, or the Company’s collateralized borrowing rate from lending institutions.
The Company has not made any residual value guarantees related to its operating leases; therefore, the Company has no corresponding liability
recorded on its Consolidated Balance Sheets.
Stock-Based Compensation
All share-based payments, including grants of stock option awards and restricted stock unit awards, are recognized in the Company’s Consolidated
Statements of Comprehensive Loss based on their fair values. The fair value of stock option awards is estimated using the Black-Scholes option pricing
model. The fair value of restricted stock unit awards is based on the grant date closing price of the common stock. Stock-based compensation cost is
recognized as expense on a straight-line basis over the requisite service period of the award. In addition, we have outstanding performance-based stock
options for which no compensation expense is recognized until “performance” is deemed to have occurred.
65
Interest Expense and Deferred Financing Costs
Interest expense for the years ended December 31, 2021, 2020 and 2019 was $59,294, $14,501 and $11,892, respectively, and primarily relates to
the royalty financing obligations and PhaRMA Notes (Note 8), the secured term loan borrowing from the Credit Agreement and the senior credit facility
(Note 9). Costs directly associated with the borrowings have been capitalized and are netted against the corresponding debt liabilities on the Consolidated
Balance Sheets. These costs are being amortized to interest expense over the terms of the corresponding borrowings using the effective interest rate
method. Amortization of deferred financing costs included in interest expense was $(531), $1,217 and $1,278 for the years ended December 31, 2021, 2020
and 2019, respectively.
In December 2021, the PhaRMA Notes and associated accrued interest payable was written-off into other income as a debt extinguishment (Refer to
Note 8, Non-Recourse Notes Payable – Debt Extinguishment for additional information regarding the debt extinguishment). In December 2020, the
outstanding principal balance of the senior credit facility was repaid and related unamortized deferred financing costs and original issue discount of $1,211
were fully expensed as part of loss on debt extinguishment.
Interest Expense and Royalty Financing Obligations
The royalty financing obligations are eligible to be repaid based on royalties from net sales of ORLADEYO, BCX9930, and another earlier stage
Factor D inhibitor. Interest expense is accrued using the effective interest rate method over the estimated period each of the related liabilities will be paid.
This requires the Company to estimate the total amount of future royalty payments to be generated from product sales over the life of the agreement. The
Company imputes interest on the carrying value of each of the royalty financing obligations and records interest expense using an imputed effective interest
rate. The Company reassesses the expected royalty payments each reporting period and accounts for any changes through an adjustment to the effective
interest rate on a prospective basis. The assumptions used in determining the expected repayment term of the debt and amortization period of the issuance
costs requires that the Company make estimates that could impact the carrying value of each of the liabilities, as well as the periods over which associated
issuance costs will be amortized. A significant increase or decrease in forecasted net sales could materially impact each of the liability balances, interest
expense and the time periods for repayment.
Currency Hedge Agreement
In connection with the issuance by JPR Royalty Sub LLC of the PhaRMA Notes, the Company entered into a Currency Hedge Agreement to hedge
certain risks associated with changes in the value of the Japanese yen relative to the U.S. dollar. The final tranche of the options under the Currency Hedge
Agreement expired in November 2020. The Currency Hedge Agreement did not qualify for hedge accounting treatment; therefore mark-to-market
adjustments were recognized in the Company’s Consolidated Statements of Comprehensive Loss.
Cumulative mark-to-market adjustments for the years ended December 31, 2020 and 2019 resulted in losses of $632 and $347, respectively. Mark-
to-market adjustments were determined by a third-party pricing model which uses quoted prices in markets that are not actively traded and for which
significant inputs are observable directly or indirectly, representing Level 2 in the fair value hierarchy as defined by U.S. GAAP. In addition, realized
currency exchange gains of $662 and $863 were recognized in 2020 and 2019, respectively, related to the exercise of a U.S. dollar/Japanese yen currency
option under the Company’s foreign currency hedge.
Income Taxes
The liability method is used in the Company’s accounting for income taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Net Loss Per Share
Net loss per share is based upon the weighted average number of common shares outstanding during the period. Diluted loss per share is equivalent
to basic net loss per share for all periods presented herein because common equivalent shares from unexercised stock options, warrants and common shares
expected to be issued under the Company’s equity compensation plans were anti-dilutive. The calculation of diluted earnings per share for the years ended
December 31, 2021, 2020, and 2019 does not include 26,034, 14,957, and 2,805, respectively, of potential common shares as their impact would be anti-
dilutive.
Accumulated Other Comprehensive Income
Accumulated other comprehensive income is comprised of cumulative foreign currency translation adjustments and unrealized gains and losses on
available-for-sale investments and is disclosed as a separate component of stockholders’ equity. Realized gain and loss amounts on available-for-sale
investments are reclassified from accumulated other comprehensive loss and recorded as interest and other income on the Consolidated Statements of
Comprehensive Loss. For both the years ended December 31, 2021 and 2020, realized gains of $1 were reclassified out of accumulated other
comprehensive income.
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Significant Customers and Other Risks
Significant Customers
The Company’s primary sources of revenue and cash flow are the sales of ORLADEYO to a specialty pharmacy, the reimbursement of galidesivir
(formerly BCX4430) development expenses earned under cost-plus-fixed-fee contracts with BARDA/HHS and NIAID/HHS and sales of RAPIVAB
(peramivir injection) under our procurement contract with the Assistant Secretary for Preparedness and Response within the United States Department of
Health and Human Services.
ORLADEYO is distributed through an arrangement with a single specialty pharmacy in the U.S. The specialty pharmacy subsequently sells
ORLADEYO to its customers (pharmacy benefit managers, insurance companies, government programs and group purchasing organizations) and
dispenses product to patients. The specialty pharmacy’s inability or unwillingness to continue these distribution activities could adversely impact the
Company’s business, results of operations and financial condition.
The Company relies on BARDA/HHS and NIAID/HHS to reimburse predominantly all of the development costs for its galidesivir program and
stockpiling sales of RAPIVAB to HHS. Accordingly, reimbursement of these expenses represents a significant portion of the Company’s collaborative and
other research and development revenues. Additionally, HHS is the primary customer for RABIVAB. The completion or termination of the NIAID/HHS
and BARDA/HHS galidesivir contracts or the reduction or stoppage of purchases of RAPIVAB by HHS could adversely impact the Company’s business,
results of operations and financial condition.
Further, the Company’s drug development activities are performed by a limited group of third-party vendors. If any of these vendors were unable to
perform its services, this could significantly impact the Company’s ability to complete its drug development activities.
Risks from Third-Party Manufacturing and Distribution Concentration
The Company relies on single source manufacturers for active pharmaceutical ingredient and finished drug product manufacturing of product
candidates in development and on a single specialty pharmacy for distribution of approved drug product in the US. Delays in the manufacture or
distribution of any product could adversely impact the commercial revenue and future procurement stockpiling of the Company’s product candidates.
Credit Risk
Cash equivalents and investments are financial instruments that potentially subject the Company to concentration of risk to the extent recorded on
the Consolidated Balance Sheets. The Company deposits excess cash with major financial institutions in the United States. Balances may exceed the
amount of insurance provided on such deposits. The Company believes it has established guidelines for investment of its excess cash relative to
diversification and maturities that maintain safety and liquidity. To minimize the exposure due to adverse shifts in interest rates, the Company maintains a
portfolio of investments with an average maturity of approximately 12 months or less.
The Company’s receivables from sales of ORLADEYO are primarily due from one customer, resulting in a concentration of credit risk. Sales of
ORLADEYO from the Company to the specialty pharmacy only occur once an order of product has been received by the specialty pharmacy from one of
its customers, which include pharmacy benefit managers, insurance companies, government programs and group purchasing organizations.
The majority of the Company’s receivables from collaborations are due from the U.S. Government, for which there is no assumed credit risk.
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12 (ASC Topic 740), Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies
accounting for income taxes by removing certain exceptions to the general principles and clarifying existing guidance. This standard is effective for fiscal
years, and interim periods within those years, beginning after December 15, 2020. The adoption of this standard did not have a material impact to the
Company’s financial position, results of operations or cash flows.
The Company has reviewed other new accounting pronouncements that were issued as of December 31, 2021 and does not believe that these
pronouncements are either applicable to the Company, or that they will have a material impact on its financial position or results of operations.
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Note 2 - Revenue
The Company recorded the following revenues for the years ended December 31:
Product sales, net:
ORLADEYO
RAPIVAB
Peramivir
Total product sales, net
Royalty revenue
Milestone revenue
Collaborative and other research and development revenues:
U.S. Department of Health and Human Services
Torii Pharmaceutical Co., Ltd.
Total collaborative and other research and development revenues
Total revenues
Note 3 - Investments
2021
2020
2019
$
$
121,865 $
7,231
7,254
136,350
(100)
15,000
5,920
−
5,920
157,170 $
133 $
483
2,685
3,301
3,381
−
9,231
1,899
11,130
17,812 $
−
13,864
3,669
17,533
6,303
−
4,898
20,101
24,999
48,835
The following tables summarize the fair value of the Company’s investments by type. The estimated fair values of the Company’s fixed income
investments are classified as Level 2 in the fair value hierarchy as defined in U.S. GAAP. These valuations are based on observable direct and indirect
inputs, primarily quoted prices of similar, but not identical, instruments in active markets or quoted prices for identical or similar instruments in markets
that are not active. These fair values are obtained from independent pricing services which utilize Level 2 inputs.
Obligations of U.S. Government and its agencies
Corporate debt securities
Certificates of deposit
Total Investments
Obligations of U.S. Government and its agencies
Certificates of deposit
Total Investments
Amortized
Cost
Accrued
Interest
December 31, 2021
Gross
Unrealized
Gains
Gross
Unrealized
Losses
4,043 $
4,294
1,652
9.989 $
17 $
40
8
65 $
- $
-
-
- $
(7) $
(5)
(1)
(13) $
Amortized
Cost
Accrued
Interest
December 31, 2020
Gross
Unrealized
Gains
Gross
Unrealized
Losses
24,986 $
3,225
28,211 $
14 $
11
25 $
3 $
3
6 $
(3) $
−
(3) $
$
$
$
$
Estimated
Fair Value
4,053
4,329
1,659
10,041
Estimated
Fair Value
25,000
3,239
28,239
The following table summarizes the scheduled maturity for the Company’s investments at December 31, 2021 and 2020.
Maturing in one year or less
Maturing after one year through two years
Total investments
Note 4 – Trade Receivables
Product Sales
2021
2020
3,212 $
6,829
10,041 $
28,239
−
28,239
$
$
Receivables from product sales are recorded for amounts due to the Company related to sales of ORLADEYO® and RAPIVAB®. At December 31,
2021 and 2020, receivables related to sales of ORLADEYO were $27,384 and $149, respectively. At December 31, 2021 and 2020, receivables related to
sales of RAPIVAB were $49 and $254, respectively. No reserve or allowance amounts were recorded as of December 31, 2021 and December 31, 2020,
respectively.
68
Collaborations
At December 31, 2021 and 2020, the Company had the following receivables from collaborations:
U.S. Department of Health and Human Services, net
Royalty receivables from partners
Total receivables from collaborators
U.S. Department of Health and Human Services, net
Royalty receivables from partners
Total receivables from collaborators
Billed
December 31, 2021
Unbilled
Total
5 $
305
310 $
1,670 $
−
1,670 $
Billed
December 31, 2020
Unbilled
Total
− $
2,816
2,816 $
5,402 $
25
5,427 $
1,675
305
1,980
5,402
2,841
8,243
$
$
$
$
As of December 31, 2021, the Company maintained a reserve of $701 related to royalties associated with Green Cross. No reserve was recorded at
December 31, 2020.
Note 5 – Inventory
At December 31, 2021 and 2020, the Company’s inventory primarily related to ORLADEYO. Additionally, inventory included RAPIVAB and
peramivir, which is manufactured for the Company’s partners.
The Company’s inventories consisted of the following:
Raw materials
Work-in-process
Finished goods
Total inventory
Reserves
Total inventory, net
Note 6 — Property and Equipment
Property and equipment consisted of the following at December 31:
Furniture and fixtures
Office equipment
Software
Laboratory equipment
Leasehold improvements
Total property and equipment
Less accumulated depreciation and amortization
Property and equipment, net
December 31,
2021
2020
5,658 $
9,669
709
16,036 $
(245)
15,791 $
December 31,
2021
2020
1,122 $
467
1,159
4,247
9,832
16,827 $
(8,113)
8,714 $
206
2,555
4,548
7,309
(270)
7,039
722
211
1,159
3,774
8,583
14,449
(7,336)
7,113
$
$
$
$
$
$
Depreciation and amortization expense for the years ended December 31, 2021, 2020, and 2019 was $777, $748, and $724, respectively.
69
Note 7 – Accrued Expenses
Accrued expenses consisted of the following:
Compensation and benefits
Development costs
Revenue-related reserves for discounts and allowances
Royalties payable
Inventory
Professional fees
Duties and taxes
Other
Total accrued expenses
Note 8 — Royalty Monetizations
RAPIACTA
Overview
December 31,
2021
2020
20,674 $
30,215
5,957
4,426
3,793
1,305
2,622
3,678
72,670 $
11,030
15,150
2
−
2,453
333
80
4,894
33,942
$
$
On March 9, 2011, the Company completed a $30,000 financing transaction to monetize certain future royalty and milestone payments under the
Company’s agreement with Shionogi (the “Shionogi Agreement”), pursuant to which Shionogi licensed from the Company the rights to market
RAPIACTA in Japan and Taiwan. The Company received net proceeds of $22,691 from the transaction after transaction costs of $4,309 and the
establishment of a $3,000 interest reserve account by Royalty Sub, available to help cover interest shortfalls in the future. All of the interest reserve account
has been fully utilized with the September 2012 interest payment.
As part of the transaction, the Company entered into a purchase and sale agreement dated as of March 9, 2011 with JPR Royalty Sub, LLC, a
wholly-owned subsidiary of the Company (“Royalty Sub”), whereby the Company transferred to Royalty Sub, among other things, (i) its rights to receive
certain royalty and milestone payments from Shionogi arising under the Shionogi Agreement, and (ii) the right to receive payments under a Japanese
yen/US dollar foreign currency hedge arrangement (as further described below, the “Currency Hedge Agreement”) put into place by the Company in
connection with the transaction. Royalty payments are paid by Shionogi in Japanese yen, and any milestone payments will be paid in U.S. dollars. The
Company’s collaboration with Shionogi was not impacted as a result of this transaction.
Non-Recourse Notes Payable
On March 9, 2011, Royalty Sub completed a private placement to institutional investors of $30,000 in aggregate principal amount of its PhaRMA
Senior Secured 14.0% Notes due on December 1, 2020 (the “PhaRMA Notes”). The PhaRMA Notes were issued by Royalty Sub under an Indenture, dated
as of March 9, 2011 (the “Indenture”), by and between Royalty Sub and U.S. Bank National Association, as Trustee. Principal and interest on the PhaRMA
Notes issued are payable from, and are secured by, the rights to royalty and milestone payments under the Shionogi Agreement transferred by the Company
to Royalty Sub and payments, if any, made to Royalty Sub under the Currency Hedge Agreement. The PhaRMA Notes bear interest at 14% per annum,
payable annually in arrears on September 1st of each year. The Company remains entitled to receive any royalties and milestone payments related to sales
of peramivir by Shionogi following repayment of the PhaRMA Notes.
Royalty Sub’s obligations to pay principal and interest on the PhaRMA Notes are obligations solely of Royalty Sub and are without recourse to any
other person, including the Company, except to the extent of the Company’s pledge of its equity interests in Royalty Sub in support of the PhaRMA Notes.
The Company may, but is not obligated to, make capital contributions to a capital account that may be used to redeem, or on up to one occasion pay any
interest shortfall on, the PhaRMA Notes.
In September 2014, Royalty Sub was unable to pay the accrued interest obligation due September 3, 2013. Under the terms of the Indenture, Royalty
Sub’s inability to pay the full amount of interest payable in September 2013 by the next succeeding payment date for the PhaRMA Notes, which was
September 1, 2014, constituted an event of default. Accordingly, the PhaRMA Notes and related accrued interest have been classified as current liabilities
on the December 31, 2014 balance sheet, and thereafter. As a result of the event of default under the PhaRMA Notes, the holders of the PhaRMA Notes
may foreclose on the collateral securing the PhaRMA Notes and the equity interest in Royalty Sub and exercise other remedies available to them under the
Indenture in respect of the PhaRMA Notes. In such event, the Company may not realize the benefit of future royalty payments that might otherwise accrue
to it following repayment of the PhaRMA Notes and it might otherwise be adversely affected. Due to the non-recourse nature of the PhaRMA Notes, in the
event of any potential foreclosure, the primary impact to the Company would be the loss of future royalty payments, if any, from Shionogi and legal costs
associated with retiring the PhaRMA Notes. The PhaRMA Notes had a final legal maturity date of December 1, 2020, at which time the outstanding
principal amount of the PhaRMA Notes of $30,000, together with accrued and unpaid interest of $20,614, was due in full.
70
Non-Recourse Notes Payable – Debt Extinguishment
During 2021, the royalty-bearing patents associated with RAPIACTA in Japan expired. Accordingly, the Company evaluated the current
circumstances of the PhaRMA Notes, including (i) their non-recourse nature relative to the Company, (ii) the current state of default since September 1,
2014 and the legal maturity on December 1, 2020 and (iii) the loss of patent protection relative to RAPIACTA in Japan, upon which any significant
repayment of the PhaRMA Notes is predicated. As a result, the Company determined that it was no longer the financial obligor, and as a result, the
principal balance of $30,000 and associated accrued interest payable balance of $25,838 were written off, resulting in a gain on extinguishment recorded in
other income (expense) for the year ended December 31, 2021.
ORLADEYO and Factor D Inhibitors
On December 7, 2020, the Company and RPI 2019 Intermediate Finance Trust (“RPI”) entered into a Purchase and Sale Agreement (the “2020 RPI
Royalty Purchase Agreement”), pursuant to which the Company sold to RPI the right to receive certain royalty payments from the Company for a purchase
price of $125,000 in cash (the “2020 RPI Royalty Sale”). Under the 2020 RPI Royalty Purchase Agreement, RPI is entitled to receive tiered, sales-based
royalties on net product sales of ORLADEYO in the United States and certain key European markets (collectively, the “Key Territories”), and other
markets where the Company sells ORLADEYO directly or through distributors (collectively, the “Direct Sales”) in an amount equal to: (i) 8.75% of
aggregate annual net sales of ORLADEYO for annual net sales up to $350,000 and (ii) 2.75% of annual net sales for annual net sales between $350,000
and $550,000. No royalty payments are payable on annual Direct Sales over $550,000. In addition, RPI will be entitled to receive 1.0% of global net sales,
if any, of BCX9930.
Under the 2020 RPI Royalty Purchase Agreement, RPI is also entitled to receive a tiered revenue share on ORLADEYO sublicense revenue or net
sales by licensees outside of the Key Territories (the “Other Markets”) equal to: (i) 20% of the proceeds received by the Company for upfront license fees
and development milestones for ORLADEYO in the Other Markets; (ii) 20% of proceeds received on annual net sales of up to $150,000 in the Other
Markets; and (iii) 10% of proceeds received by the Company on annual net sales between $150,000 and $230,000 in the Other Markets. No royalty
payments are payable on annual net sales above $230,000 in the Other Markets.
On November 19, 2021, the Company and RPI entered into (i) a Purchase and Sale Agreement (the “2021 RPI Royalty Purchase Agreement” and
together with the 2020 RPI Royalty Purchase Agreement, the “RPI Royalty Purchase Agreements”), pursuant to which the Company sold to RPI the right
to receive certain royalty payments from the Company for a purchase price of $150,000 in cash, and (ii) a Purchase and Sale Agreement with OCM IP
Healthcare Holdings Limited, an affiliate of OMERS Capital Markets (“OMERS”) (the “OMERS Royalty Purchase Agreement” and collectively with the
RPI Royalty Purchase Agreements, the “Royalty Purchase Agreements”), pursuant to which the Company sold to OMERS the right to receive certain
royalty payments from the Company for a purchase price of an additional $150,000 in cash.
Under the 2021 RPI Royalty Purchase Agreement, RPI is entitled to receive tiered, sales-based royalties on Direct Sales in an amount equal to: (i)
0.75% of aggregate annual net sales of ORLADEYO for annual net sales up to $350,000 and (ii) 1.75% of annual net sales of ORLADEYO for annual net
sales between $350,000 and $550,000. No royalty payments are payable on Direct Sales over $550,000. RPI is also entitled to receive a tiered revenue
share on ORLADEYO sublicence revenue or net sales by licensees in the Other Markets in an amount equal to 3.0% of proceeds received by the Company
on annual net sales of up to $150,000 in the Other Markets, and (iii) 2.0% of proceeds received by the Company on annual net sales between $150,000 and
$230,000 in the Other Markets. No royalty payments are payable on annual net sales above $230,000 in the Other Markets.
Under the 2021 RPI Royalty Purchase Agreement, RPI is also entitled to receive tiered, sales-based royalties on net product sales of BCX9930 and
another earlier stage Factor D inhibitor in an amount equal to: (i) 3.0% of worldwide aggregate annual net sales up to $1.5 billion and (ii) 2.0% of
worldwide aggregate annual net sales between $1.5 billion and $3.0 billion. No royalty payments are payable on annual net sales above $3.0 billion. RPI is
also entitled to receive tiered profit share amounts of up to 3.0% from certain other permitted sales in certain other markets.
The royalties payable under the 2021 RPI Royalty Purchase Agreement are in addition to the royalties payable to RPI under the 2020 RPI Royalty
Purchase Agreement.
Under the OMERS Royalty Purchase Agreement, commencing with the calendar quarter beginning October 1, 2023, OMERS will be entitled to
receive tiered, sales-based royalties on Direct Sales in an amount equal to: (i) 7.5% of aggregate annual net sales of ORLADEYO for annual net sales up to
$350,000 and (ii) 6.0% of annual net sales of ORLADEYO for annual net sales between $350,000 and $550,000 (with no royalty payments payable on
annual Direct Sales over $550,000) (the “Regime A Royalty Rate”). If annual Direct Sales for calendar year 2023 reach a specified amount set forth in the
OMERS Royalty Purchase Agreement, then for each calendar quarter beginning on or after January 1, 2024, OMERS will be entitled to receive the Regime
A Royalty Rate. If annual Direct Sales for calendar year 2023 are less than the specified amount, OMERS will be entitled to receive tiered, sales-based
royalties on Direct Sales in an amount equal to: (i) 10.0% of aggregate annual net sales of ORLADEYO for annual net sales up to $350,000 and (ii) 3.0%
of annual net sales of ORLADEYO for annual net sales between $350,000 and $550,000 (with no royalty payments payable on annual Direct Sales over
$550,000) (the “Regime B Royalty Rate”).
71
Under the OMERS Royalty Purchase Agreement, OMERS is also entitled to receive a tiered revenue share on ORLADEYO sublicense revenue or
net sales by licensees in the Other Markets in an amount equal to: (i) 20.0% of the proceeds received by the Company for upfront license fees and
development milestones for ORLADEYO in the Other Markets, (ii) 20.0% of proceeds received by the Company on annual net sales of up to $150,000 in
the Other Markets, and (iii) 10.0% of proceeds received by the Company on annual net sales between $150,000 and $230,000 in the Other Markets. No
royalty payments are payable on annual net sales above $230,000 in the Other Markets. OMERS is also entitled to receive profit share amounts of up to
10% from certain other permitted sales in certain other markets.
Under the 2020 RPI Royalty Purchase Agreement, the Company is required to make royalty payments of amounts owed to RPI each calendar
quarter following the first commercial sale of ORLADEYO in any country. Under the 2021 RPI Royalty Purchase Agreement, the Company is required to
make payments to RPI in respect of net sales or sublicense revenue in each calendar quarter from and after October 1, 2021. Under the OMERS Royalty
Purchase Agreement, the Company will be required to make payments to OMERS is respect of net sales or sublicense revenue in each calendar quarter
from and after October 1, 2023. OMERS will no longer be entitled to receive any payments on the date in which aggregate payments actually received by
OMERS equals either 142.5% or 155.0% of the $150,000 purchase price, depending on sales levels in calendar year 2023.
The transactions contemplated by each of the Royalty Purchase Agreements are referred to herein as the “Royalty Sales.”
Under the Royalty Purchase Agreements, the Company has agreed to specified affirmative and negative covenants, including covenants regarding
periodic reporting of information by the Company to RPI and OMERS, third-party audits of royalties paid under the Royalty Purchase Agreements, and
restrictions on the ability of the Company or any of its subsidiaries to incur indebtedness other than certain royalty sales and as is permitted to be incurred
under the terms of the Company’s Credit Agreement with Athyrium Opportunities III Co-Invest 1 LP. Refer to Note 9 for further details on the Credit
Agreement. The restrictions on the ability of the Company or any of its subsidiaries to incur indebtedness are eliminated after the achievement of certain
specified milestones in the Royalty Purchase Agreements.
The cash consideration obtained pursuant to the Royalty Purchase Agreements is recorded in “Royalty financing obligations” on the Company’s
consolidated balance sheet. The fair value for the royalty financing obligations at the time of the transactions was based on the Company’s estimates of
future royalties expected to be paid to the counterparty over the life of the arrangement. The Company subsequently records the obligations at its carrying
value using the effective interest method. In order to amortize the royalty financing obligation, the Company utilizes the prospective method to estimate the
future royalties to be paid by the Company to the counterparty over the life of the arrangement. Under the prospective method, a new effective interest rate
is determined based on the revised estimate of remaining cash flows. The new rate is the discount rate that equates the present value of the revised estimate
of remaining cash flows with the carrying amount of the debt, and it will be used to recognize interest expense for the remaining periods. The Company
periodically assesses the amount and timing of expected royalty payments using a combination of internal projections and forecasts from external sources.
The estimates of future net product sales (and resulting royalty payments) are based on key assumptions including population, penetration, probability of
success, and sales price, among others. To the extent such payments are greater or less than the Company’s initial estimates or the timing of such payments
is materially different than its original estimates, the Company will prospectively adjust the amortization of the royalty financing obligations and the
effective interest rate.
The following table shows the activity within the Royalty financing obligations account (in thousands) as well as the effective interest rate as of
December 31, 2021:
2020 RPI
Royalty
Agreement
2021 RPI
Royalty
Agreement
OMERS
Royalty
Agreement
2020 Royalty sale: Royalty financing obligation, net of issuance costs
Non-cash Interest expense on Royalty financing obligation
Balance as of December 31, 2020
2021 Royalty sale: Royalty financing obligations, net of issuance costs
Non-cash Interest expense on Royalty financing obligations
Royalty revenues paid and payable
Balance as of December 31, 2021
$
$
$
$
$
122,609
2,108
124,717
−
33,308
(10,801)
$
147,224
$
$
−
−
−
150,833
2,897
(353)
$
153,377
−
−
−
147,309
1,465
−
148,774
$
$
$
Total
122,609
2,108
124,717
298,142
37,670
(11,154)
449,375
Effective interest rate
27.3%
16.5%
8.5%
Deferred issuance costs pursuant to the Royalty financing obligations, which consist primarily of advisory and legal fees, totaled $8,497 and $2,370
as of December 31, 2021 and 2020, respectively. The Royalty financing obligation liabilities and the associated deferred issuance costs are amortized
using the effective interest method over the term of the arrangement, in accordance with the respective guidance. Concurrent with entering into the 2021
RPI Royalty Purchase Agreement, the Company and RPI entered into a Common Stock Purchase Agreement, pursuant to which the Company sold
common stock to RPI for a premium of $4,269. This premium has been deferred and is being amortized using the effective interest method over the term
of the applicable arrangement. Refer to Note 11 for further details on the common stock sale premium.
72
Note 9 — Debt
Credit Agreement
On December 7, 2020, the Company entered into a $200,000 Credit Agreement with Athyrium Opportunities III Co-Invest 1 LP (“Athyrium”), as
lender and as administrative agent for the lenders. BioCryst Ireland Limited and BioCryst US Sales Co., LLC, each of which is a wholly-owned subsidiary
of the Company, and BioCryst UK Limited, a wholly-owned subsidiary of BioCryst Ireland Limited, are guarantors to the Credit Agreement. The Credit
Agreement provides for an initial term loan in the principal amount of $125,000 (the “Term A Loan”), which was received by the Company on December
7, 2020 and is recorded in “Secured term loan” on the Company’s balance sheet as of December 31, 2021. The Company used a portion of the proceeds
from the Term A Loan to repay $43,298 of outstanding indebtedness, including accrued interest, under its existing credit facility with MidCap Financial
Trust.
The Credit Agreement also provides for two additional term loans, at the Company's option, in the respective principal amounts of $25,000 (the
“Term B Loan”) and $50,000 (the “Term C Loan”). The Term B Loan and the Term C Loan may be drawn upon if, among other conditions, the Company
reaches defined revenue milestones and, with respect to a draw on the Term C Loan, the Term B Loan has been funded prior to or contemporaneously with
the Term C Loan. The maturity date of the Credit Agreement is December 7, 2025.
On November 19, 2021, the Company entered into an amendment to the Credit Agreement (i) to permit the Company to enter into the 2021 RPI
Royalty Purchase Agreement, the OMERS Royalty Purchase Agreement, and the other definitive documentation related thereto and to perform its
obligations thereunder; (ii) to require the Company to pay to Athyrium, for the account of the lenders, a make-whole premium plus certain fees set forth in
the Credit Agreement in the event that the Company does not draw the Term B Loan or the Term C Loan, as applicable, by the end of the applicable period
available to draw the Term B Loan or the Term C Loan, subject to certain exceptions set forth in the Credit Agreement; and (iii) to require the Company to
pay to Athyrium, for the account of the lenders, a make-whole premium plus certain fees set forth in the Credit Agreement in the event that the Company
either (x) terminates the commitments in respect of the Term B Loan or the Term C Loan, as applicable, on or prior to the end of the applicable period
available to draw the Term B Loan or the Term C Loan, or (y) prepays or repays, or is required to prepay or repay, voluntarily or pursuant to mandatory
prepayment obligation under the Credit Agreement (e.g., with the proceeds of certain asset sales, certain ORLADEYO out-licensing or royalty
monetization transactions (excluding the Royalty Sales), extraordinary receipts, debt issuances, or upon a change of control of the Company and specified
other events, subject to certain exceptions), all of the then-outstanding Term Loans, in each case, subject to certain exceptions set forth in the Credit
Agreement.
The Credit Agreement provides for quarterly interest-only payments until the maturity date, with the unpaid principal amount of the outstanding
Term Loans due and payable on the maturity date. For each of the first eight full fiscal quarters following December 7, 2020, the Company has the option
to make the applicable interest payment-in-kind (a “PIK Interest Payment”) by capitalizing the entire amount of interest accrued during the applicable
interest period with the unpaid original principal amount outstanding on the last day of such period. The Term Loans will bear interest at a rate equal to the
three-month LIBOR rate, which shall be no less than 1.75% and no more than 3.50% (“LIBOR”), plus 8.25%, or for each interest period in which a PIK
Interest Payment is made, the LIBOR plus 10.25%.
Subject to certain exceptions, the Company is required to make mandatory prepayments of the Term Loans with the proceeds of certain asset sales,
certain ORLADEYO out-licensing or royalty monetization transactions (excluding the Royalty Sale), extraordinary receipts, debt issuances, or upon a
change of control of the Company and specified other events, subject to certain exceptions. The Company may make voluntary prepayments in whole or in
part. Prepayments are subject to a premium equal to, (i) with respect to any voluntary prepayment and certain mandatory prepayments paid on or prior to
the second anniversary of the applicable Term Loan borrowing date, the amount, if any, by which (a) the sum of (1) 102.00% of the principal amount of the
Term Loan being prepaid plus (2) the present value of all interest that would have accrued on the principal amount of the Term Loan being prepaid through
and including the second anniversary of the date of the borrowing of such Term Loan, plus 0.50%, exceeds (b) the principal amount of the Term Loan being
prepaid; (ii) with respect to any prepayment made between the second and third anniversaries of the applicable Term Loan borrowing date, 2.00% of the
principal amount of the Term Loan being prepaid; (iii) with respect to any prepayment made between the third and fourth anniversaries of the applicable
Term Loan borrowing date, 1.00% of the principal amount of the Term Loan being prepaid; and (iv) with respect to any prepayment made after the fourth
anniversary of the applicable Term Loan borrowing date, 0.00% of the principal amount of the Term Loan being prepaid. Upon the prepayment or
repayment, including at maturity, of all or any of the Term Loans, the Company is obligated to pay an exit fee in an amount equal to 2.00% of the principal
amount of the Term Loans prepaid or repaid. In addition, each Term Loan is subject to a 1.00% commitment fee at its respective borrowing date.
The Credit Agreement also contains representations and warranties and affirmative and negative covenants customary for financings of this type, as
well as customary events of default. Certain of the customary negative covenants limit the ability of the Company and certain of its subsidiaries to, among
other things, grant liens, make investments, incur additional indebtedness, engage in mergers, acquisitions, and similar transactions, dispose of assets,
license certain property, distribute dividends, make certain restricted payments, change the nature of the Company's business, engage in transactions with
affiliates and insiders, prepay other indebtedness, or engage in sale and leaseback transactions, subject to certain exceptions. Additionally, as of the last day
of each fiscal quarter (a “Test Date”), beginning with the first Test Date occurring immediately after the Term C Loan is drawn, if applicable, the Company
may not permit consolidated net revenues from ORLADEYO sales in the United States for the four-fiscal quarter period ending on such Test Date to be
less than the specified amounts set forth in the Credit Agreement (collectively, the “Revenue Tests”). If the Company fails to satisfy the Revenue Tests as
of any Test Date, it will have a one-time right (the “Cure Right”) to repay in full the entire amount of the Term C Loans outstanding at such time together
with all accrued and unpaid interest thereon plus the prepayment premium, exit fee, and any other fees or amounts payable under the Credit Agreement at
such time. In addition, the Credit Agreement contains a minimum liquidity covenant requiring the Company to maintain at all times, as applicable, at least
$15,000 of unrestricted cash and cash equivalents if only the Term A Loan has been drawn; at least $20,000 of unrestricted cash and cash equivalents if the
Term B Loan has been drawn but the Term C Loan has not been drawn; and at least $15,000 (or, if the Cure Right has been exercised, $20,000) of
unrestricted cash and cash equivalents if the Term C Loan has been drawn, subject to certain exceptions.
73
A failure to comply with the covenants in the Credit Agreement could permit the Lenders under the Credit Agreement to declare the outstanding
principal as well as accrued interest and fees, to be immediately due and payable.
The Company's obligations under the Credit Agreement are secured by a security interest in, subject to certain exceptions, substantially all of the
Company's assets.
As of December 31, 2021, the Company had borrowings of $125,000 under the Credit Agreement. Quarterly interest payments under the Credit
Agreement for the years ended December 31, 2021 and 2020, totaled $16,009 and $1,056, respectively, and have been designated and accounted for as PIK
Interest Payments and added to the outstanding principal balance of the borrowing. As of December 31, 2021, borrowings, including the PIK Interest
Payments totaled $142,065. The principal balance of the borrowing, including PIK amounts are accruing interest at a rate of 12.17%. The fair value of the
debt approximates its carrying value based on prevailing interest rates as of the balance sheet date and is considered as Level 2 in the fair value hierarchy.
As of December 31, 2021 and 2020, deferred debt fees and issuance costs totaled $8,483 and $7,764, respectively and are being amortized as interest
expense on an effective interest rate method over the term of the Term A Loan. When utilizing the effective interest method, in periods in which PIK
interest is designated and those amounts are added to the outstanding principal balance of the borrowing, the amortization of the deferred debt fees and
issuance costs is accretive. Deferred financing amortization of ($531) and ($131), was recognized for the years ended December 31, 2021 and 2020,
respectively.
The Credit Agreement contains two provisions that, if deemed probable, would create the recognition of an embedded feature; however, at this time,
the Company does not believe either provision is probable.
Senior Credit Facility
On February 5, 2019, the Company entered into a $100,000 Senior Credit Facility with an affiliate of MidCap Financial Services, LLC, as
administrative agent (the “Second Amended and Restated Senior Credit Facility”). Borrowings under the Second Amended and Restated Senior Credit
Facility were available in three tranches, with (i) the first tranche comprised of $50,000 funded at closing, which included $30,000 of proceeds that were
deemed rolled over from the outstanding principal amount under the Company’s prior credit agreement, (ii) the second tranche comprised of $30,000, and
(iii) the third tranche comprised of $20,000, with the second and third tranches to have been funded upon the completion of certain contingencies related to
the Company’s development activities of its product candidates and the establishment of certain financial covenants. On September 10, 2019 the Company
executed the first amendment to the Second Amended and Restated Credit Facility which extended the commitment termination date for the second tranche
to November 30, 2019. On November 30, 2019, the Company’s access to the second tranche expired.
The Second Amended and Restated Senior Credit Facility refinanced and replaced the Amended and Restated Senior Credit Facility dated as of July
20, 2018 (the “Amended and Restated Senior Credit Facility”). The Second Amended and Restated Senior Credit Facility had a variable interest rate of
LIBOR (which was not to be less than 0.5%) plus 8%. The Second Amended and Restated Senior Credit Facility included an interest-only payment period
through June 2020 and scheduled monthly principal and interest payments for the subsequent 30 months. The Company used a portion of the proceeds of
the Second Amended and Restated Senior Credit Facility to pay off outstanding amounts under the Amended and Restated Senior Credit Facility and the
remainder was used for general corporate purposes.
In December 2020, the Company repaid the outstanding principal of the Second Amended and Restated Senior Credit Facility of $40,000 along with
exit fees and accrued interest through the payoff date that totaled $3,298. The unamortized deferred financing cost and original issue discount of $1,211
was expensed as a loss on debt extinguishment.
Note 10 — Lease Obligations
The Company leases certain assets under operating leases, which primarily consisted of real estate leases, laboratory equipment leases and office
equipment leases as of December 31, 2021. Renewal options for our leases range from 1 to 5 years in length and begin from 2023 through 2026. The
weighted average lease term for the Company’s operating leases was 9.2 years. The weighted average discount rate for the Company’s operating leases was
11.2%.
Aggregate lease expense under operating leases was $1,795 and $1,754 for the years ended December 31, 2021 and 2020, respectively.
74
All of the Company’s leases qualify as operating leases. The following table summarizes the presentation in the consolidated balance sheets of the
Company’s operating leases:
Assets:
Operating lease assets, net
Liabilities:
Current operating lease liabilities
Non-current operating lease liabilities
Total operating lease liabilities
Balance Sheet Location
2021
2020
Other Assets
Lease financing obligation – current liabilities
Lease financing obligation – long-term liabilities
$
$
$
6,472 $
1,819 $
5,962
7,781 $
3,802
1,179
3,871
5,050
Operating lease assets are recorded net of accumulated amortization of $2,626 and $2,641 as of December 31, 2021 and 2020, respectively. Cash
paid for amounts included in the measurement of lease liabilities was $1,615 and $1,696 for the years ended December 31, 2021 and 2020, respectively.
Maturities of operating lease liabilities as of December 31, 2021, are as follows (in thousands):
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less imputed interest
Total
Note 11 — Stockholders’ Equity
Sales of Common Stock
$
$
2,099
1,870
1,321
1,060
593
6,734
13,677
(5,896)
7,781
On November 18, 2019, the Company completed an underwritten public offering of 43,621 shares of its common stock, offered at a price to the
public of $1.45 per share, including shares issued pursuant to the underwriters’ 30-day option to purchase additional shares, which was exercised in full.
The net proceeds from this offering were approximately $58,500 after deducting underwriting discounts and commissions and estimated offering expenses.
On November 21, 2019, the Company completed an offering of pre-funded warrants to purchase up to 11,765 shares of its common stock at a price
of $1.69 per warrant. Each pre-funded warrant is exercisable subject to conditions in the warrant agreement into 1 share of common stock at an exercise
price of $0.01 per share. The net proceeds from this offering were $19,882, excluding any proceeds the Company may receive upon the subsequent
exercise of the pre-funded warrants. All warrants issued in this offering remain outstanding at December 31, 2021.
On April 24, 2020, the Company filed a $500,000 shelf registration statement on Form S-3 with the SEC. This shelf registration statement became
effective on May 14, 2020 and allows the Company to sell securities, including common stock, preferred stock, depositary shares, purchase contracts,
warrants, debt securities, and units, from time to time at prices and on terms to be determined at the time of sale.
On June 1, 2020, the Company issued 22,044 shares of common stock to the public at a purchase price of $4.50 per share and pre-funded warrants to
purchase 3,511 shares of common stock at a purchase of $4.49 per pre-funded warrant, for total net proceeds to the Company of $108,096 million after
deducting underwriting discounts and commissions and other offering expenses. Each pre-funded warrant is exercisable subject to conditions in the warrant
agreement into 1 share of common stock at an exercise price of $0.01 per share. All warrants issued in this offering remain outstanding at December 31,
2021.
On March 1, 2021, the Company filed an automatic shelf registration statement on Form S-3 with the SEC. This shelf registration statement became
effective automatically upon filing and allows the Company to sell an indeterminate number of securities, including common stock, preferred stock,
depositary shares, purchase contracts, warrants, debt securities, and units, from time to time at prices and on terms to be determined at the time of sale.
On November 19, 2021, concurrent with the Company entering into the 2021 RPI Royalty Purchase Agreement, the Company and RPI entered into
a Common Stock Purchase Agreement, pursuant to which the Company issued 3,846,154 shares of the Company’s common stock to RPI for an aggregate
purchase price of $50,000, at a price of $13.00 per share, calculated based on the 20-day volume weighted average price. The $13.00 per share price
represents a premium of $1.11 over the closing price of $11.89 of the Company’s common stock on November 17, 2021, the last trading day prior to the
execution of the Common Stock Purchase Agreement. The premium of $4,269 paid by RPI on the purchase of the Company’s common stock has been
deferred and is being amortized as a component of interest expense of the 2021 RPI royalty financing obligation.
75
Note 12 — Stock-Based Compensation
As of December 31, 2021, the Company had three stock-based employee compensation plans, the Amended and Restated Stock Incentive Plan
(“Incentive Plan”), the Amended and Restated Inducement Equity Incentive Plan (“Inducement Plan”) and the Employee Stock Purchase Plan (“ESPP”).
The Incentive Plan was most recently amended and restated on April 1, 2021 and approved by the Company’s stockholders on May 25, 2021. The
Inducement Plan was adopted by the Board of Directors on April 24, 2019 and was most recently amended and restated by the Board of Directors on July
23, 2021. The ESPP was most recently amended and restated on April 1, 2021 and approved by the Company’s stockholders on May 25, 2021.
Stock-based compensation expense of $34,640 ($27,062 of expense related to the Incentive Plan, $6,055 of expense related to the Inducement Plan,
$1,523 of expense related to the ESPP) was recognized during 2021, while $14,794 ($12,938 of expense related to the Incentive Plan, $1,494 of expense
related to the Inducement Plan, $362 of expense related to the ESPP) was recognized during 2020 and $17,719 ($17,164 of expense related to the Incentive
Plan, $323 of expense related to the Inducement Plan, $232 of expense related to the ESPP) was recognized during 2019.
The Company accounts for stock-based compensation in accordance with FASB authoritative guidance regarding share-based payments. Total stock-
based compensation was allocated as follows:
Research and development
Selling, general and administrative
Total stock-based compensation expense
Stock Incentive Plan
2021
Years Ended December 31,
2020
2019
$
$
20,179 $
14,461
34,640 $
10,222 $
4,572
14,794 $
13,977
3,742
17,719
The Company grants stock option awards, restricted stock and restricted stock units to its employees, directors, and consultants under the Incentive
Plan. Under the Incentive Plan, stock option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant.
Commencing March 1, 2011, stock option awards and restricted stock units granted to employees generally vest 25% each year until fully vested after four
years.
In August 2013, December 2014 and December 2019, the Company issued 1,032, 1,250 and 315 performance-based stock options, respectively.
These awards vest upon successful completion of specific development milestones. As of December 31, 2021, 100%, 85% and 100% of the August 2013,
December 2014 and December 2019 grants, respectively, have vested. During 2020, the Company recognized $1,768 and $684 of stock compensation
expense related to milestones within the August 2013 and December 2019 grants for which achievement became probable.
Stock option awards granted to non-employee directors of the Company generally vest over one year. Stock option awards granted to new non-
employee directors when they first join the Company’s Board of Directors generally vest, subject to the terms of the Incentive Plan, in 36 equal monthly
installments over a three-year period measured from the grant date.
All stock option awards have contractual terms of 10 years. The vesting exercise provisions of all awards granted under the Incentive Plan are
subject to acceleration in the event of certain stockholder-approved transactions, or upon the occurrence of a change in control as defined in the Incentive
Plan.
Related activity under the Incentive Plan is as follows:
Balance at December 31, 2018
Plan amendment
Restricted stock awards granted
Stock option awards granted
Stock option awards exercised
Stock option awards cancelled
Balance at December 31, 2019
Plan amendment
Restricted stock awards granted
Stock option awards granted
Stock option awards exercised
Stock option awards cancelled
Balance at December 31, 2020
Plan amendment
Restricted stock units granted
Stock option awards granted
Stock option awards exercised
Stock option awards cancelled
Balance at December 31, 2021
Awards
Available
Options
Outstanding
Weighted
Average
Exercise
Price
805
4,000
(27)
(4,511)
−
701
968
8,000
(31)
(7,469)
−
3,124
4,592
7,500
(1,936)
(6,753)
−
248
3,651
17,491 $
−
−
4,511
(251)
(701)
21,050 $
−
−
7,469
(510)
(3,124)
24,885 $
−
−
6,753
(2,705)
(248)
28,685 $
6.49
−
−
3.91
3.75
6.82
5.96
−
−
8.06
3.56
6.93
6.52
−
−
4.36
7.62
7.90
76
For stock option awards granted under the Incentive Plan during 2021, 2020, and 2019, the fair value was estimated on the date of grant using a
Black-Scholes option pricing model and the assumptions noted in the table below. The weighted average grant date fair value of these awards granted
during 2021, 2020, and 2019 was $7.93, $5.48, and $2.63, respectively. The fair value of the stock option awards is amortized to expense over the vesting
periods using a straight-line expense attribution method. For restricted stock units granted under the Incentive Plan, the fair value of the awards was
determined based on the market value of the Company’s shares on the grant date. The weighted average grant date fair value of these awards was $11.36.
The fair value of the restricted stock unit awards is amortized to expense over the vesting periods using a straight-line expense attribution method.
Inducement Equity Incentive Plan
The Company has the ability to grant stock option awards to newly-hired employees as inducements material to each employee entering employment
with the Company. Stock option awards granted to newly hired employees generally vest 25% each year until fully vested after four years. Each stock
option has a term of 10 years and is subject to the terms and conditions of the Inducement Plan. The vesting and exercise provisions of all awards granted
under the Inducement Plan are subject to acceleration in the event of certain stockholder-approved transactions, or upon the occurrence of a change in
control as defined in the Inducement Plan.
Related activity under the Inducement Plan is as follows:
Balance at December 31, 2020
Plan amendment
Stock option awards granted
Stock option awards exercised
Stock option awards cancelled
Balance at December 31, 2021
Awards
Available
Options
Outstanding
Weighted
Average
Exercise
Price
229
1,500
(1,003)
−
174
900
4,171 $
−
1,003
(592)
(174)
4,408 $
3.88
−
13.91
3.63
3.67
6.20
For stock option awards granted under the Inducement Plan during 2021, 2020, and 2019, the fair value was estimated on the date of grant using a
Black-Scholes option pricing model and the assumptions noted in the table below. The weighted average grant date fair value of these awards granted
during 2021, 2020, and 2019 was $9.65, $2.73, and $2.41, respectively. The fair value of the stock option awards is amortized to expense over the vesting
periods using a straight-line expense attribution method.
The following table summarizes the key assumptions used by the Company to value the stock option awards granted under all plans during 2021,
2020, and 2019, respectively. The expected life is based on the average of the assumption that all outstanding stock option awards will be exercised at full
vesting and the assumption that all outstanding stock option awards will be exercised at the midpoint of the current date (if already vested) or at full vesting
(if not yet vested) and the full contractual term. The expected volatility represents the historical volatility on the Company’s publicly traded common stock.
The Company has assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the
foreseeable future. The weighted average risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining
term equal to the expected term.
77
Weighted Average Assumptions for Stock Option Awards Granted to Employees and Directors under the Plans
Expected Life
Expected Volatility
Expected Dividend Yield
Risk-Free Interest Rate
2021
2020
2019
5.5
84%
0.0%
1.1%
5.5
84%
0.0%
0.4%
5.5
81%
0.0%
1.8%
The total intrinsic value of stock option awards exercised under the Incentive Plan was $25,484 during 2021, $1,562 during 2020, and $1,127 during
2019. The intrinsic value represents the total proceeds (fair market value at the date of exercise, less the exercise price, times the number of stock option
awards exercised) received by all individuals who exercised stock option awards during the period. The total intrinsic value of stock option awards
exercised under the Inducement Plan was $6,700 during 2021. No stock option awards were exercised under the Inducement Plan in 2020.
The following table summarizes, at December 31, 2021, by price range: (1) for stock option awards outstanding under the Incentive Plan, the
number of stock option awards outstanding, their weighted average remaining life and their weighted average exercise price; and (2) for stock option
awards exercisable under the Plan, the number of stock option awards exercisable and their weighted average exercise price:
Range
Number
Life
Outstanding
Weighted
Average
Remaining
Weighted
Average
Exercise
Price
Exercisable
Weighted
Average
Exercise
Price
Number
$
$
0
3
6
9
12
15
0
to
to
to
to
to
to
to
3
6
9
12
15
18
18
1,874
10,190
10,599
8,228
1,291
911
33,093
5.9 $
6.5
8.2
8.1
6.8
9.0
7.5 $
2.30
4.22
7.89
11.14
13.10
15.95
7.68
1,158 $
7,317
4,317
2,120
535
114
15,561 $
2.12
4.41
7.56
10.86
12.31
15.56
6.34
The weighted average remaining contractual life of stock option awards exercisable under the plans at December 31, 2021 was 5.7 years.
The aggregate intrinsic value of stock option awards outstanding and exercisable under the plans at December 31, 2021 was $116,811. The aggregate
intrinsic value represents the value (the period’s closing market price, less the exercise price, times the number of in-the-money stock option awards) that
would have been received by all stock option award holders under the plans had they exercised their stock option awards at the end of the year.
The total fair value of the stock option awards vested under the plans was $23,395 during 2021, $18,739 during 2020, and $12,499 during 2019.
As of December 31, 2021, the number of stock option awards vested and expected to vest under the plans is 30,268. The weighted average exercise
price of these stock option awards is $7.64 and their weighted average remaining contractual life is 7.4 years.
The following table summarizes the changes in the number and weighted-average grant-date fair value of non-vested stock option awards during
2021:
Balance December 31, 2020
Stock option awards granted
Stock option awards vested
Stock option awards forfeited
Balance December 31, 2021
Non-Vested Stock
Option Awards
Weighted Average
Grant-Date Fair
Value
16,020 $
7,756
(5,837)
(407)
17,532 $
4.25
3.31
3.97
4.14
3.86
As of December 31, 2021, there was approximately $107,852 of total unrecognized compensation cost related to non-vested employee stock option
awards granted by the Company. That cost is expected to be recognized as follows: $35,060 in 2022, $30,375 in 2023, $27,607 in 2024, and $14,810 in
2025.
78
Employee Stock Purchase Plan
The Company has reserved a total of 7,975 shares of common stock to be purchased under the ESPP, of which 6,052 shares remain available for
purchase at December 31, 2021. Eligible employees may authorize up to 15% of their salary to purchase common stock at the lower of 85% of the
beginning or 85% of the ending price during six-month purchase intervals. No more than 3 shares may be purchased by any one employee at the six-month
purchase dates and no employee may purchase stock having a fair market value at the commencement date of $25 or more in any one calendar year.
There were 321, 246, and 115 shares of common stock purchased under the ESPP in 2021, 2020, and 2019, respectively, at a weighted average price
per share of $6.20, $2.56, and $3.51, respectively. Expense of $1,523, $362, and $232 related to the ESPP was recognized during 2021, 2020, and 2019,
respectively. Compensation expense for shares purchased under the ESPP related to the purchase discount and the “look-back” option were determined
using a Black-Scholes option pricing model. The weighted average grant date fair values of shares granted under the ESPP during 2021, 2020, and 2019,
were $2.80, $1.47, and $2.01, respectively.
Note 13 — Income Taxes
The Company has incurred net losses since inception and, consequently, has not recorded any U.S. Federal and state income tax expense or benefit.
The components of loss before provision for income taxes were as follows:
Domestic
Foreign
Loss before provision for income taxes
Years Ended December 31,
2020
2021
$
$
(159,632) $
(22,177)
(181,809) $
(176,613)
(6,201)
(182,814)
The differences between the Company’s effective tax rate and the statutory tax rate in 2021, 2020, and 2019, are as follows:
Income tax benefit at federal statutory rate (21% for 2021, 2020 and 2019)
State and local income taxes net of federal tax benefit
Permanent items
Rate change
Expiration of attribute carryforwards
Research and development tax credits
Foreign rate differential
Other
Change in valuation allowance
Income tax expense
2021
2020
2019
(38,175) $
(2,288)
(1,343)
−
(1,057)
(5,994)
1,940
1,216
47,954
2,253 $
(38,391) $
(2,544)
774
(82)
3,774
(4,080)
542
1,456
38,551
− $
(22,868)
(1,591)
691
625
3,976
(4,938)
-
281
23,824
−
$
$
The Company recognizes the impact of a tax position in its financial statements if it is more likely than not that the position will be sustained on
audit based on the technical merits of the position. The Company has concluded that it has an uncertain tax position pertaining to its research and
development and orphan drug credit carryforwards. The Company has established these credits based on information and calculations it believes are
appropriate and the best estimate of the underlying credit. Any changes to the Company’s unrecognized tax benefits are offset by an adjustment to the
valuation allowance and there would be no impact on the Company’s financial statements. The Company does not expect its unrecognized tax benefits to
change significantly over the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Balance at January 1,
Additions to current period tax positions
Balance at December 31,
2021
2020
$
$
8,230 $
1,499
9,729 $
7,210
1,020
8,230
The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the
event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code of 1986, as amended and similar state tax law.
79
Significant components of the Company’s deferred tax assets and liabilities are as follows:
Deferred tax assets:
Net federal and state operating losses
Research and development credits
Royalty income
Stock-based compensation
Capitalized R&D
Leasing obligations
Other
Total deferred tax assets
Deferred tax liabilities:
Fixed assets
Right of use asset
Total deferred tax liabilities
Valuation allowance
Net deferred tax assets
2021
2020
113,649 $
71,197
106,007
14,512
8,997
1,836
4,809
321,007
(607)
(1,527)
(2,134)
(318,714)
159 $
159,939
66,331
28,034
10,732
−
1,135
5,563
271,734
(124)
(854)
(978)
(270,756)
−
$
$
The majority of the Company’s deferred tax assets relate to net operating loss and research and development carryforwards that can only be realized
if the Company is profitable in future periods. It is uncertain whether the Company will realize any tax benefit related to these carryforwards. Accordingly,
the Company has provided a valuation allowance against substantially all the net deferred tax assets due to uncertainties as to their ultimate realization. The
valuation allowance will remain at the full amount of the deferred tax assets until it is more likely than not that the related tax benefits will be realized. The
Company’s valuation allowance increased by $47,954, $38,551, and $23,824 in 2021, 2020, and 2019, respectively.
As of December 31, 2021, the Company had U.S. federal operating loss carryforwards of $480,331, state operating loss carryforwards of $177,567,
foreign net operating losses of $29,355, and U.S. research and development and orphan drug credit carryforwards of $80,925, which will expire at various
dates from 2022 through 2041. Federal losses, state losses, research and development credit carryforwards began expiring in 2020. The foreign net
operating losses have an indefinite carryforward period.
Tax years 2018-2021 remain open to examination by the major taxing jurisdictions to which the Company is subject. Additionally, years prior to
2017 are also open to examination to the extent of loss and credit carryforwards from those years. The Company recognizes interest and penalties accrued
related to unrecognized tax benefits as components of its income tax provision. However, there were no provisions or accruals for interest and penalties in
2021, 2020 and 2019.
As of December 31, 2021, the Company has accumulated undistributed earnings of $750, generated by our foreign subsidiaries which have already
been subject to local and U.S. tax (as part of the GILTI provisions). We intend to indefinitely reinvest these earnings, as well as future earnings from our
foreign subsidiaries to fund out international operations. In addition, we expect future U.S. cash generation will be sufficient to meet future U.S cash needs.
Note 14 — Employee 401(k) Plan
In January 1991, the Company adopted an employee retirement plan (“401(k) Plan”) under Section 401(k) of the Internal Revenue Code covering all
employees. Employee contributions may be made to the 401(k) Plan up to limits established by the Internal Revenue Service. Company matching
contributions may be made at the discretion of the Board of Directors. The Company made matching contributions of $2,834, $1,569, and $926 in 2021,
2020, and 2019, respectively.
Note 15 — Collaborative and Other Relationships
National Institute of Allergy and Infectious Diseases (“NIAID/HHS”). In September 2013, NIAID/HHS contracted with the Company for the
development of galidesivir as a treatment for Marburg virus disease and subsequently, Yellow Fever and Ebola virus disease. On September 15, 2021, the
Company entered into an amendment to pay for certain additional costs, including additional manufacturing development costs and overhead, and to
change the total value of the contract, as amended, to $47,315 from $45,931. This is the commencement of closing out the contract. All options under the
contract have been awarded.
In August 2020, NIAID/HHS awarded the Company a new contract, with potential aggregate funding up of to $43,908 if all contract options are
exercised, to manufacture and evaluate the safety, efficacy and tolerability of galidesivir. NIAID/HHS made an initial award of $6,326 to the Company
under this contract.
Biomedical Advanced Research and Development Authority (“BARDA/HHS”). In March 2015, BARDA/HHS awarded the Company a contract for
the continued development of galidesivir as a potential treatment for diseases caused by RNA pathogens, including filoviruses. This BARDA/HHS contract
includes a base contract of $16,265 to support galidesivir drug manufacturing, as well as $22,855 in additional development options that can be exercised
by the government, bringing the potential value of the contract to $39,120. As of December 31, 2021, a total of $20,574 has been awarded under exercised
options within this contract. The most recent development option was completed as of December 31, 2021.
80
The contracts with NIAID/HHS and BARDA/HHS are cost-plus-fixed-fee contracts. That is, the Company is entitled to receive reimbursement for
all costs incurred in accordance with the contract provisions that are related to the development of galidesivir plus a fixed fee, or profit. BARDA/HHS and
NIAID/HHS will make periodic assessments of progress, and the continuation of the contracts is based on the Company’s performance, the timeliness and
quality of deliverables, and other factors. The government has rights under certain contract clauses to terminate these contracts. These contracts are
terminable by the government at any time for breach or without cause.
U.S. Department of Health and Human Services (“HHS”). In September 2018, HHS awarded the Company a $34,660 contract for the procurement
of up to 50,000 doses of RAPIVAB (peramivir injection) over a five-year period. The Company delivered 20,000 doses of RAPIVAB under this contract in
2019 for a total price of approximately $13.9 million. For the year ended December 31, 2021, the Company delivered a total of 9,980 doses for $6,918. On
September 1, 2021, the Company announced that HHS exercised its option to purchase an additional 10,000 doses of RAPIVAB under this contract for a
total price of approximately $6.9 million which has not been delivered as of December 31, 2021. As of December 31, 2021, the Company has delivered a
total of 29,980 RAPIVAB doses of the 50,000 RAPIVAB doses available under the contract with HHS.
Torii Pharmaceutical Co., Ltd. (“Torii”). On November 5, 2019, the Company entered into a Commercialization and License Agreement with Torii
(the “Torii Agreement”), granting Torii the exclusive right to commercialize ORLADEYO for the prevention of hereditary angioedema (“HAE”) attacks in
Japan.
Under the Torii Agreement, the Company received an upfront, non-refundable payment of $22,000. The Japanese National Health Insurance
System’s (“NHI”) approval of the addition of ORLADEYO to the NHI drug price list in April 2021 triggered a $15,000 milestone payment from Torii to
the Company, which was received in May 2021.
In addition, under the Torii Agreement, the Company is entitled to receive tiered royalty payments, ranging from 20% to 40% of annual net sales of
ORLADEYO in Japan during each calendar year. Torii’s royalty payment obligations are subject to customary reductions in certain circumstances, but may
not be reduced by more than 50% of the amount that otherwise would have been payable to the Company in the applicable calendar quarter. Torii’s royalty
payment obligations commenced upon the first commercial sale of ORLADEYO in Japan and expire upon the later of (i) the tenth anniversary of the date
of first commercial sale of ORLADEYO in Japan, (ii) the expiration of the Company’s patents covering ORLADEYO, and (iii) the expiration of regulatory
exclusivity for ORLADEYO in Japan. The Company is responsible for supplying Torii with its required amounts of ORLADEYO. The activities of the
parties pursuant to the Torii Agreement are overseen by a joint steering committee, composed of an equal number of representatives from each party to
coordinate the development and commercialization of ORLADEYO in Japan. Torii launched ORLADEYO in Japan on April 23, 2021.
The Company identified performance obligations related to (i) the license to develop and commercialize ORLADEYO, (ii) regulatory approval
support and (iii) reimbursement pricing approval support. These were each determined to be distinct from the other performance obligations. The Company
allocated the $22,000 upfront consideration to the identified performance obligations using estimation approaches to determine the standalone selling prices
under ASC Topic 606. Specifically, in determining the value related to the license, a valuation approach utilizing risk adjusted discounted cash flow
projections was used, and an expected cost plus margin approach was utilized for the other performance obligations. For the year ended December 31,
2020, $1,899 of the $22,000 upfront payment was recognized as revenue as the services were delivered. Prior to 2020, the Company had recognized as
revenue $20,101 of the $22,000 upfront payment.
Seqirus UK Limited (“SUL”). On June 16, 2015, the Company and SUL, a limited company organized under the laws of the United Kingdom and a
subsidiary of CSL Limited, a company organized under the laws of Australia, entered into a License Agreement (the “SUL Agreement”) granting SUL and
its affiliates worldwide rights to develop, manufacture and commercialize RAPIVAB (peramivir injection) for the treatment of influenza except for the
rights to conduct such activities in Israel, Japan, Korea and Taiwan (the permitted geographies together constituting the “Territory”). Under the terms of the
SUL Agreement, the Company received an upfront payment of $33,740 and has achieved all development milestones under the contract totaling $12,000.
On March 4, 2020, the International Court of Arbitration of the International Chamber of Commerce (“ICC Tribunal”) delivered a Partial Arbitration
Award (the “Partial Arbitration Award”) in an arbitration matter between the Company and SUL with respect to the SUL Agreement. In the Partial
Arbitration Award, the ICC Tribunal found that, during the term, SUL materially breached and abandoned its core duties to the Company under the Diligent
Efforts (as defined in the SUL Agreement) requirements of the SUL Agreement as applicable in the U.S. The ICC Tribunal granted a declaratory judgment
in favor of the Company terminating the SUL Agreement and restoring all rights to peramivir to the Company. The parties agreed on a transition process
for the product, with a full transition of commercialization of the product in the U.S. and Australia returned to the Company as of August 1, 2020 and
November 1, 2020, respectively. The ICC Tribunal also awarded the Company its attorneys’ fees and expenses incurred in securing the declaratory
judgment as well as the costs incurred by the Company in the arbitration. Finally, the ICC Tribunal found that SUL breached the SUL Agreement by failing
to pay the milestone payment due to the Company within 30 days of the approval of peramivir for adult use in the European Union and awarded the
Company $5,000 (plus interest) for this claim. The ICC Tribunal retained jurisdiction for further proceedings relating to the award of attorneys’ fees and for
any dispute relating to the return to the Company of all rights to peramivir in the Territory. The Company recognized a settlement gain of $8,893 in other
income and legal fees and other expenses of $5,026 in selling, general and administrative expenses for the year ended December 31, 2020.
81
Shionogi & Co., Ltd. (“Shionogi”). In February 2007, the Company entered into an exclusive license agreement with Shionogi to develop and
commercialize peramivir in Japan for the treatment of seasonal and potentially life-threatening human influenza. Under the terms of the agreement,
Shionogi obtained rights to injectable formulations of peramivir in Japan. The Company developed peramivir under a license from UAB and will owe
sublicense payments to UAB on any future milestone payments and/or royalties received by the Company from Shionogi. In October 2008, the Company
and Shionogi amended the license agreement to expand the territory covered by the agreement to include Taiwan. Shionogi has commercially launched
peramivir under the commercial name RAPIACTA in Japan and Taiwan.
Green Cross Corporation (“Green Cross”). In June 2006, the Company entered into an agreement with Green Cross to develop and commercialize
peramivir in Korea. Under the terms of the agreement, Green Cross is responsible for all development, regulatory, and commercialization costs in Korea
and the Company is entitled to share in profits resulting from the sale of peramivir in Korea, including the sale of peramivir to the Korean government for
stockpiling purposes. Furthermore, Green Cross will pay the Company a premium over its cost to supply peramivir for development and any future
marketing of peramivir products in Korea.
Albert Einstein College of Medicine of Yeshiva University and Industrial Research, Ltd. (“AECOM” and “IRL,” respectively). In June 2000, the
Company licensed a series of potent inhibitors of PNP from AECOM and IRL, (together, the “Licensors”). The lead product candidate from this
collaboration is forodesine. The Company has obtained worldwide exclusive rights to develop and ultimately distribute this, or any other, product
candidates that might arise from research on these inhibitors. The Company has the option to expand the agreement to include other inventions in the field
made by the investigators or employees of the Licensors. Under this agreement, as amended and restated, the Company has agreed to use commercially
reasonable efforts to develop these drugs and to pay certain milestone payments for each licensed product (which range in the aggregate from $1,400 to
almost $4,000 per indication) for future development, single digit royalties on net sales of any resulting product made by the Company, and to share a
portion of future payments received from other third-party partners, if any. In addition, the Company has agreed to pay annual license fees, which can range
from $150 to $500, that are creditable against actual royalties and other payments due to the Licensors. The Licensors have also granted the Company an
exclusive worldwide license of galidesivir for any antiviral use.
The University of Alabama at Birmingham (“UAB”). The Company currently has agreements with UAB for influenza neuraminidase and
complement inhibitors. Under the terms of these agreements, UAB performed specific research for the Company in return for research payments and
license fees. UAB has granted the Company certain rights to any discoveries in these areas resulting from research developed by UAB or jointly developed
by UAB with the Company. The Company has agreed to pay single digit royalties on sales of any resulting product and to share in future payments
received from other third-party partners. The Company has completed the research under the UAB agreements. These two agreements each have an initial
25-year term, are automatically renewable for five-year terms throughout the life of the last patent and are terminable by the Company upon three months’
notice and by UAB under certain circumstances. Upon termination, both parties shall cease using the other parties’ proprietary and confidential information
and materials, the parties shall jointly own joint inventions and UAB shall resume full ownership of all UAB licensed products. There is currently no
activity between the Company and UAB on these agreements, but when the Company licenses this technology, such as in the case of the Shionogi and
Green Cross collaborations, or commercializes products related to these programs, the Company will owe sublicense fees or royalties on amounts received.
82
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BioCryst Pharmaceuticals, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BioCryst Pharmaceuticals, Inc. (the Company) as of December 31, 2021 and 2020, the
related consolidated statements of comprehensive income, shareholders’ equity (deficit) and cash flows for each of the three years in the period ended
December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations
and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 28, 2022 expressed an unqualified
opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to
those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.
Description of the
Matter
Accrued Clinical Trial and Manufacturing Activities
As discussed in Note 1 to the consolidated financial statements, the Company has recorded $72.7 million of
accrued expenses which includes costs for clinical trial and manufacturing activities (together, clinical
related activities) based upon estimates of expenses incurred through the balance sheet date that have yet to
be invoiced by the contract research organizations (CROs), clinical study sites, contract manufacturing
organizations, or other vendors (together, clinical vendors). This accrual process involves identifying
services that have been performed and estimating the level of service performed and the associated cost
when the Company has not yet been invoiced or otherwise notified of actual cost.
Auditing the Company’s accruals for costs associated with in-process clinical related activities may include
judgment because the timing and pattern of vendor invoicing may not correspond to the level of services
provided and the estimate can incorporate significant assumptions such as expected patient enrollment, site
activation, and estimated project duration.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal
controls that addressed the information used in and the identified risks related to the Company’s process for
recording accrued costs for clinical related activities.
To evaluate the accrual for clinical related expenses, our audit procedures included, among others,
inspecting the Company’s contracts with clinical vendors (including pending change orders), testing the
completeness and accuracy of the underlying data used in the estimate of the level of service provided
including evaluating the significant assumptions as discussed above for the applicable in process contracts
with clinical vendors. To assess the significant assumptions, we corroborated the progress of clinical related
activities through inquiry with the Company’s clinical team and with information obtained directly from
third party clinical vendors, as well as tested invoices received from clinical vendors subsequent to the
balance sheet date.
83
Description of the
Matter
Royalty Financing Obligations
As described in Note 8 to the consolidated financial statements, the Company entered into Royalty Purchase
Agreements (“RPA’s”) with third parties. Pursuant to the RPA’s, the Company received proceeds of
approximately $425 million in exchange for the right to receive royalty payments based on future net
revenues of the Company’s drug, Orladeyo, and the drug candidates within the BCRX 9930 program.
The Company recorded the RPA’s as non-current liability instruments (royalty financing obligations) on the
balance sheet at their carrying value of $449.4 million as of December 31, 2021 and imputed interest
expense associated with these liabilities using the effective interest rate method. The effective interest rate is
calculated based on the rate that would enable the liability to be repaid in full over the anticipated life of the
arrangement. The interest rate on this liability may vary during the term of the agreement depending on a
number of factors, including the level and timing of forecasted net revenues which affects the repayment
timing and ultimate amount of repayment. In order to amortize the royalty financing obligations, the
Company utilizes the prospective method to estimate the future royalties to be paid by the Company to the
third parties over the life of the arrangements. Under the prospective method, a new effective interest rate is
determined based on the revised estimate of remaining cash flows. The Company periodically assesses the
amount and timing of expected royalty payments using a combination of internal projections and forecasts
from external sources.
Auditing the royalty financing obligations was complex and highly judgmental due to the estimation
uncertainty in determining the effective interest rate. The Company’s effective interest rate models includes
actual revenues recorded and royalties paid to-date, as well as revenue projections for which future royalties
will be paid, which are sensitive to significant assumptions (including population, penetration, probability of
success, and sales price, among others) that are affected by expectations about future market conditions.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s processes to account for the royalty financing obligations, including controls over
management’s review of the revenue projections within the models.
Description of the
Matter
To evaluate the royalty financing obligations, our audit procedures included, among others, assessing the
underlying data and assumptions used by the Company in its effective interest rate models. We compared the
significant assumptions in the revenue projections to current industry, market and economic trends. We
recalculated the current year interest expense based on the amortization schedules and estimates of royalties
using the effective interest method, and performed sensitivity analyses to evaluate the changes in the
effective interest rates, and associated interest expense, that would result from changes in the assumptions.
Product Sales, net
As discussed in Note 1, when recognizing revenue, the Company makes an estimate of the net selling price
(transaction price), which includes estimates of variable consideration. For the year ended December 31,
2021, the Company recorded net product sales of $136.4 million. Product sales are recorded net of
adjustments for variable consideration including estimated government rebates, managed care rebates,
chargebacks, costs of co-payment for assistance programs, and product returns at the time revenue is
recorded. Limited historical data is available for use in developing such estimates which are periodically
reviewed and adjusted as necessary.
Auditing the Company’s net product sales was complex due to the Company’s limited history of product
sales. The Company’s estimates of variable consideration depend on the identification of key customer
contract terms and conditions, as well as estimates of sales volumes to different classes of payors. The
revenue recognition process can be complex and can involve judgment related to these estimates as well as
to identify and assess the terms and conditions of customer agreements and related government regulations
that could affect revenue recognition, as the Company’s revenue expands with new customers and new
markets.
84
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over
the Company’s process of recording product sales and related rebates, chargebacks and returns. We also
tested management’s controls related to the identification and assessment of the terms and conditions of
customer agreements and the completeness and accuracy of data utilized in the controls, and the calculations
supporting management’s estimates.
To test product sales, our audit procedures included, among others, tracing a sample of revenue transactions
recognized during the year to source documentation. We also confirmed a sample of outstanding receivable
balances directly with the Company’s customers. To test management’s estimates of variable consideration,
we obtained management’s calculations for the respective estimates and performed one or more of the
following procedures: tested management’s estimation process to assess whether the recorded reserve
balances are within a reasonable range of estimate, performed retrospective reviews, assessed subsequent
events, and tested a sample of credits issued throughout the year.
We have served as the Company’s auditor since 1993.
/s/ Ernst & Young LLP
Raleigh, North Carolina
February 28, 2022
85
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of BioCryst Pharmaceuticals, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited BioCryst Pharmaceuticals Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO
criteria). In our opinion, BioCryst Pharmaceuticals Inc. (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of BioCryst Pharmaceuticals, Inc. as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income,
shareholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated
February 28, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Raleigh, North Carolina
February 28, 2022
86
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported, within
the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and
communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding
required disclosure. We carried out an evaluation as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Exchange Act, under the
supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, our disclosure controls and procedures are
effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the
effectiveness of internal control over financial reporting. As defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act, internal control over
financial reporting is a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our Board
of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the
financial statements in accordance with U.S. GAAP. Internal control over financial reporting includes policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and
expenditures are being made only in accordance with authorizations of our management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In connection with the preparation of our annual financial statements, management has undertaken an assessment of the effectiveness of our internal
control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO Framework). Management’s assessment included an
evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.
Based on this assessment, management has concluded that, as of December 31, 2021, our internal control over financial reporting was effective.
Management believes our internal control over financial reporting will provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with U.S. GAAP.
Ernst & Young LLP, the independent registered public accounting firm that audited our financial statements included in this report, has issued an
attestation report on the Company’s internal control over financial reporting, a copy of which appears on page 86 of this annual report.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
87
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
PART III
The information required by this item is set forth under the captions “Items to be Voted upon — 1. Election of Directors,” “Executive Officers,” and
“Corporate Governance” in our definitive Proxy Statement for the 2022 Annual Meeting of Stockholders and incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is set forth under the captions “Compensation Discussion and Analysis,” “Summary Compensation Table,”
“Grants of Plan-Based Awards in 2021,” “Outstanding Equity Awards at December 31, 2021,” “2021 Option Exercises and Stock Vested,” “Potential
Payments Upon Termination or Change in Control,” “2021 Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and
“Compensation Committee Report” in our definitive Proxy Statement for the 2022 Annual Meeting of Stockholders and incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The information required by this item is set forth under the captions “Equity Compensation Plan Information” and “Security Ownership of Certain
Beneficial Owners and Management” in our definitive Proxy Statement for the 2022 Annual Meeting of Stockholders and incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is set forth under the captions “Certain Relationships and Related Transactions” and “Corporate Governance”
in our definitive Proxy Statement for the 2022 Annual Meeting of Stockholders and incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm is Ernst & Young LLP, Raleigh, NC, Auditor Firm ID: 42.
The information required by this item is set forth under the caption “Items to be Voted upon — 2. Ratification of Appointment of Independent
Registered Public Accountants” in our definitive Proxy Statement for the 2022 Annual Meeting of Stockholders and incorporated herein by reference.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
The following financial statements appear in Item 8 of this Form 10-K:
PART IV
Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2021, 2020, and 2019
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Internal Control
Page in
Form 10-K
56
57
58
59
60
83
86
No financial statement schedules are included because the information is either provided in the consolidated financial statements or is not required
under the related instructions or is inapplicable and such schedules therefore have been omitted.
88
(b) Exhibits
Number
Description
3.1
3.2
3.3
3.4
3.5
3.6
3.7
4.1
4.2
4.3
4.4
Third Restated Certificate of Incorporation of BioCryst Pharmaceuticals, Inc. Incorporated by reference to Exhibit 3.1 to the Company’s
Form 8-K filed December 22, 2006.
Certificate of Amendment to the Third Restated Certificate of Incorporation of BioCryst Pharmaceuticals, Inc. Incorporated by
reference to Exhibit 3.1 to the Company’s Form 8-K filed July 24, 2007.
Certificate of Amendment to the Third Restated Certificate of Incorporation of BioCryst Pharmaceuticals, Inc. Incorporated by
reference to Exhibit 3.1 to the Company’s Form 8-K filed May 7, 2014.
Certificate of Elimination of the Series B Junior Participating Preferred Stock. Incorporated by reference to Exhibit 3.1 to the
Company’s Form 8-K filed May 13, 2020.
Certificate of Amendment to the Third Restated Certificate of Incorporation of BioCryst Pharmaceuticals, Inc. Incorporated by
reference to Exhibit 3.2 to the Company’s Form 8-K filed May 13, 2020.
Amended and Restated Bylaws of BioCryst Pharmaceuticals, Inc., effective October 29, 2008. Incorporated by reference to Exhibit 3.2
to the Company’s Form 8-K filed November 4, 2008.
Amendment to Amended and Restated By-Laws of BioCryst Pharmaceuticals, Inc., effective January 21, 2018. Incorporated by
reference to Exhibit 3.1 to the Company’s Form 8-K filed January 22, 2018.
Description of Securities. Incorporated by reference to Exhibit 4.1 to the Company’s Form 10-K filed March 1, 2021.
Indenture, dated as of March 9, 2011 by and between JPR Royalty Sub LLC and U.S. Bank National Association, as trustee.
Incorporated by reference to Exhibit 4.3 to the Company’s Form 10-Q filed May 6, 2011.
Form of Pre-Funded Warrant to Purchase Common Stock, dated November 21, 2019. Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed November 21, 2019.
Form of Pre-Funded Warrant to Purchase Common Stock, dated June 1, 2020. Incorporated by reference to Exhibit 4.1 to the
Company’s Form 8-K filed June 1, 2020.
10.1&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated March 29, 2012). Incorporated by reference to Exhibit
10.1 of the Company’s Form 8-K filed May 25, 2012.
10.2&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated March 8, 2014). Incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed May 5, 2014.
10.3&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated May 23, 2016). Incorporated by reference to Exhibit
10.1 to the Company’s Registration Statement on Form S-8, filed May 23, 2016.
10.4&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated April 3, 2017). Incorporated by reference to Exhibit 10.1
to the Company’s Form 8-K filed May 30, 2017.
10.5&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated September 17, 2018). Incorporated by reference to
Exhibit 10.1 to the Company’s Form 8-K filed October 31, 2018.
10.6&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated April 12, 2019). Incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed June 4, 2019.
10.7&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated March 19, 2020). Incorporated by reference to Exhibit
10.1 to the Company’s Form 8-K filed May 13, 2020.
10.8&
BioCryst Pharmaceuticals, Inc. Stock Incentive Plan (as amended and restated April 1, 2021). Incorporated by reference to Exhibit 10.1
to the Company’s Form 8-K filed May 26, 2021.
89
10.9&
Form of Notice of Grant of Non-Employee Director Automatic Stock Option and Stock Option Agreement under the BioCryst
Pharmaceuticals, Inc. Stock Incentive Plan. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-K filed March 4,
2008.
10.10&
Form of Notice of Grant of Stock Option and Stock Option Agreement under the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan.
Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-K filed March 4, 2008.
10.11&
Standard Stock Option Agreement under the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan. Incorporated by reference to Exhibit
10.7 to the Company’s Form 10-K filed March 2, 2015.
10.12&
Form of Notice of Grant of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the BioCryst Pharmaceuticals, Inc.
Stock Incentive Plan. Incorporated by reference to Exhibit 10.8 of the Company’s Form 10-K filed March 2, 2015.
10.13&
Form of Notice of Grant of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the BioCryst Pharmaceuticals, Inc.
Stock Incentive Plan. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed May 7, 2021.
(10.14)&
Form of Notice of Grant of Restricted Stock Unit Award and Restricted Stock Unit Agreement under the BioCryst Pharmaceuticals, Inc.
Stock Incentive Plan.
10.15&
BioCryst Pharmaceuticals, Inc. Employee Stock Purchase Plan (as amended and restated April 1, 2021). Incorporated by reference to
Exhibit 10.2 to the Company's Form 8-K filed May 26, 2021.
10.16&
BioCryst Pharmaceuticals, Inc. Inducement Equity Incentive Plan (effective as of April 24, 2019). Incorporated by reference to Exhibit
99.1 to the Company’s Form S-8 (File No. 333-231108) filed April 29, 2019.
10.17&
BioCryst Pharmaceuticals, Inc. Inducement Equity Incentive Plan (as amended and restated February 7, 2020). Incorporated by
reference to Exhibit 10.2 of the Company’s Form 10-Q filed May 11, 2020.
10.18&
BioCryst Pharmaceuticals, Inc. Inducement Equity Incentive Plan (as amended and restated July 17, 2020). Incorporated by reference to
Exhibit 99.1 to the Company’s Form S-8 (File No. 333-245024) filed August 12, 2020.
10.19&
BioCryst Pharmaceuticals, Inc. Inducement Equity Incentive Plan (as amended and restated July 23, 2021). Incorporated by reference to
Exhibit 99.1 to the Company’s Form S-8 (File No. 333-259919) filed September 30, 2021.
10.20&
Form of Notice of Grant of Stock Option and Standard Stock Option Agreement under the BioCryst Pharmaceuticals, Inc. Inducement
Equity Incentive Plan. Incorporated by reference to Exhibit 10.16 to the Company’s Form 10-K filed March 1, 2021.
10.21&
BioCryst Pharmaceuticals, Inc. Annual Incentive Plan (effective as of December 16, 2020). Incorporated by reference to Exhibit 10.1 to
the Company’s Form 8-K filed December 17, 2020.
10.22&
Executive Relocation Policy. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-K filed March 4, 2008.
10.23&
Amended and Restated Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Jon P. Stonehouse, dated February
14, 2007. Incorporated by reference to Exhibit 10.12 to the Company’s Form 10-K filed March 14, 2007.
10.24&
Amended and Restated Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and William P. Sheridan, dated August
4, 2021. Incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q filed August 9, 2021.
10.25&
Amended and Restated Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Yarlagadda S. Babu, dated August
4 2021. Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed August 9, 2021.
10.26&
Amended and Restated Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Alane P. Barnes, dated August 4,
2021. Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed August 9, 2021.
90
10.27&
Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Megan Sniecinski, dated May 31, 2019. Incorporated by
reference to Exhibit 10.1 to the Company’s Form 10-Q filed August 8, 2019.
10.28&
Separation Agreement and Release between BioCryst Pharmaceuticals, Inc. and Megan Sniecinski, dated August 8, 2021. Incorporated
by reference to Exhibit 10.1 to the Company’s Form 8-K filed August 9, 2021.
10.29&
Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Charles Gayer, dated January 14, 2020. Incorporated by
reference to Exhibit 10.26 to the Company’s Form 10-K filed March 1, 2021.
10.30&
Amendment No. 1 to the Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Charles Gayer, dated September
24, 2021. Incorporated by reference to Exhibit 10.10 to the Company’s Form 10-Q filed November 4, 2021.
10.31&
Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Anthony Doyle, dated March 29, 2020. Incorporated by
reference to Exhibit 10.1 to the Company’s Form 10-Q filed May 11, 2020.
10.32&
Amendment No. 1 to the Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Anthony Doyle, dated September
24, 2021. Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q filed November 4, 2021.
10.33&
Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Dr. Helen M. Thackray, dated February 18, 2021.
Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed May 7, 2021.
10.34&
Amendment No. 1 to the Employment Letter Agreement between BioCryst Pharmaceuticals, Inc. and Dr. Helen M. Thackray, dated
September 24, 2021. Incorporated by reference to Exhibit 10.9 to the Company’s Form 10-Q filed November 4, 2021.
10.35†
License, Development and Commercialization Agreement dated as of February 28, 2007, by and between the Company and Shionogi &
Co., Ltd. Incorporated by reference to Exhibit 10.28 to the Company’s Form 10-K filed March 1, 2021.
10.36†
First Amendment to License, Development and Commercialization Agreement, effective as of September 30, 2008, between the
Company and Shionogi & Co., Ltd. Incorporated by reference to Exhibit 10.29 to the Company’s Form 10-K filed March 1, 2021.
10.37†
License Agreement dated as of June 27, 2000, by and among Albert Einstein College of Medicine, Industrial Research, Ltd. and
BioCryst Pharmaceuticals, Inc., as amended by the First Amendment Agreement dated as of July 26, 2002 and the Second Amendment
Agreement dated as of April 15, 2005. Incorporated by reference to Exhibit 10.32 to the Company’s Form 10-K filed March 1, 2021.
10.38†*
Third Amendment Agreement by and among Albert Einstein College of Medicine, Industrial Research, Ltd. and BioCryst
Pharmaceuticals, Inc., dated as of December 11, 2009. Incorporated by reference to Exhibit 10.33 to the Company’s Form 10-K filed
March 1, 2021.
10.39#
Fourth Amendment Agreement by and among Albert Einstein College of Medicine, Industrial Research, Ltd. and BioCryst
Pharmaceuticals, Inc., dated as of May 5, 2010. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed August 6,
2010. (Portions omitted pursuant to request for confidential treatment.)
10.40†
Fifth Amendment Agreement by and among Albert Einstein College of Medicine, Industrial Research, Ltd. and BioCryst
Pharmaceuticals, Inc., dated as of November 17, 2011. Incorporated by reference to Exhibit 10.35 to the Company’s Form 10-K filed
March 1, 2021.
10.41†
Sixth Amendment Agreement by and among Albert Einstein College of Medicine, Industrial Research, Ltd. and BioCryst
Pharmaceuticals, Inc., dated as of June 19, 2012. Incorporated by reference to Exhibit 10.36 to the Company’s Form 10-K filed March
1, 2021.
10.42
Novation Agreement among Albert Einstein College of Medicine of Yeshiva University, BioCryst Pharmaceuticals, Inc., Mundipharma
International Corporation Limited, Callaghan Innovation Research Limited, and Victoria Link Limited, dated May 18,
2015. Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed August 7, 2015.
91
10.43
Novation Agreement among Albert Einstein College of Medicine of Yeshiva University, BioCryst Pharmaceuticals, Inc., Callaghan
Innovation Research Limited, and Victoria Link Limited, dated June 24, 2015. Incorporated by reference to Exhibit 10.7 to the
Company’s Form 10-Q filed August 7, 2015.
10.44
Purchase and Sale Agreement, dated as of March 9, 2011 between BioCryst Pharmaceuticals, Inc. and JPR Royalty Sub LLC.
Incorporated by reference to Exhibit 10.1 of the Company’s Form 10-Q filed May 6, 2011.
10.45
Pledge and Security Agreement, dated as of March 9, 2011 between BioCryst Pharmaceuticals, Inc. and U.S. Bank National
Association, as trustee. Incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed May 6, 2011.
10.46
Confirmation of terms and conditions of ISDA Master Agreement, dated as of March 7, 2011, between Morgan Stanley Capital Services
Inc. and BioCryst Pharmaceuticals, Inc. dated as of March 9, 2011. Incorporated by reference to Exhibit 10.3 of the Company’s Form
10-Q filed May 6, 2011.
10.47#
Agreement, dated as of September 12, 2013, between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and
Infectious Diseases. Incorporated by reference to Exhibit 10.2 of the Company’s Form 10-Q filed November 8, 2013. (Portions omitted
pursuant to request for confidential treatment.)
10.48#
10.49#
10.50#
10.51#
10.52#
10.53#
Amendment #1 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated December 26, 2013. Incorporated by reference to Exhibit 10.51 to the Company’s Form 10-K filed on March 10, 2014. (Portions
omitted pursuant to request for confidential treatment.)
Amendment #2 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated January 24, 2014. Incorporated by reference to Exhibit 10.52 to the Company’s Form 10-K filed on March 10, 2014. (Portions
omitted pursuant to request for confidential treatment.)
Amendment #3 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated June 17, 2014. Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on August 8, 2014. (Portions omitted
pursuant to request for confidential treatment.)
Amendment #4 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated June 17, 2014. Incorporated by reference to Exhibit 10.6 to the Company’s Form 10-Q filed on August 8, 2014. (Portions omitted
pursuant to request for confidential treatment.)
Amendment #5 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated August 11, 2014. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 7, 2014. (Portions
omitted pursuant to request for confidential treatment.)
Amendment #6 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated August 27, 2014. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on November 7, 2014. (Portions
omitted pursuant to request for confidential treatment.)
10.54#
Amendment #8 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated September 17, 2014. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on November 7,
2014. (Portions omitted pursuant to request for confidential treatment.)
10.55#
10.56#
10.57#
Amendment #9 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated October 29, 2014. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed on November 7, 2014. (Portions
omitted pursuant to request for confidential treatment.)
Amendment #10 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated February 13, 2015. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on August 7,
2015. (Portions omitted pursuant to request for confidential treatment.)
Amendment #11 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated March 19, 2015. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on August 7,
2015. (Portions omitted pursuant to request for confidential treatment.)
10.58#
Amendment #12 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated June 12, 2015. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed on August 7,
2015. (Portions omitted pursuant to request for confidential treatment.)
92
10.59#
Amendment #13 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated June 17, 2015. Incorporated by reference to Exhibit 10.5 to the Company’s Form 10-Q filed on August 7,
2015. (Portions omitted pursuant to request for confidential treatment.)
10.60#
Amendment #14 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated September 16, 2015. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on November 6,
2015. (Portions omitted pursuant to request for confidential treatment.)
10.61
Amendment #15 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated November 16, 2015. Incorporated by reference to Exhibit 10.70 to the Company’s Form 10-K filed on February 26,
2016.
10.62#
Amendment #16 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated December 18, 2015. Incorporated by reference to Exhibit 10.71 to the Company’s Form 10-K filed on February 26,
2016. (Portions omitted pursuant to request for confidential treatment.)
10.63
Amendment #17 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated April 18, 2016. Incorporated by reference to Exhibit 10.74 to the Company’s Form 10-K filed on February 27, 2017.
10.64#
Amendment #18 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated June 30, 2016. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed on August 8, 2016.
(Portions omitted pursuant to request for confidential treatment.)
10.65#
Amendment #19 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated August 10, 2016. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 8, 2016.
(Portions omitted pursuant to request for confidential treatment.)
10.66#
10.67#
Amendment #20 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated January 9, 2017. Incorporated by reference to Exhibit 10.77 to the Company’s Form 10-K filed on February 27,
2017. (Portions omitted pursuant to request for confidential treatment.)
Amendment #21 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated March 21, 2018. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 9, 2018.
(Portions omitted pursuant to request for confidential treatment.)
10.68
Amendment #22 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated September 10, 2018. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed November 8, 2018.
10.69
Amendment #23 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated August 21, 2020. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed November 6, 2020.
10.70
Amendment #23 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated September 14, 2020. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed November 6, 2020.
10.71
Amendment #25 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated September 15, 2021. Incorporated by reference to Exhibit 10.7 to the Company’s Form 10-Q filed November 4, 2021.
(10.72)
Amendment #26 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases, dated October 27, 2021.
10.73†
Agreement, dated September 1, 2020, between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious
Diseases. Incorporated by reference to Exhibit 10.4 to the Company’s Form 10-Q filed November 6, 2020.
10.74†
Amendment #1 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated October 14, 2020. Incorporated by reference to the Company’s Form 10-Q filed November 6, 2020.
93
10.75
Amendment #2 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated June 29, 2021. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed August 9, 2021.
(10.76)
Amendment #3 to the Agreement between BioCryst Pharmaceuticals, Inc. and the National Institute of Allergy and Infectious Diseases,
dated October 27, 2021.
10.77#
Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development Authority within the
U.S. Department of Health and Human Services' Office of the Assistant Secretary for Preparedness and Response, dated March 27,
2015. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on May 8, 2015. (Portions omitted pursuant to
request for confidential treatment.)
10.78#
Amendment #1 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated June 2, 2015. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on August 7, 2015. (Portions omitted
pursuant to request for confidential treatment.)
10.79#
Amendment #2 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated July 8, 2015. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 6, 2015. (Portions
omitted pursuant to request for confidential treatment.)
10.80#
Amendment #3 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated August 25, 2015. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on November 6, 2015. (Portions
omitted pursuant to request for confidential treatment.)
10.81#
Amendment #4 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated February 25, 2016. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on May 9, 2016. (Portions
omitted pursuant to request for confidential treatment.)
10.82#
Amendment #5 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated April 11, 2016. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on August 8, 2016. (Portions omitted
pursuant to request for confidential treatment.)
10.83#
Amendment #6 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated May 20, 2016. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on August 8, 2016. (Portions omitted
pursuant to request for confidential treatment.)
10.84#
Amendment #7 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated September 26, 2016. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on November 8, 2016.
(Portions omitted pursuant to request for confidential treatment.)
10.85
Amendment #8 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated September 20, 2017. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 8, 2017.
10.86#
Amendment #9 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated December 1, 2017. Incorporated by reference to Exhibit 10.88 to the Company’s Form 10-K filed on March 12, 2018.
10.87
Amendment #10 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated March 19, 2018. Incorporated by reference to Exhibit 10.1 to the Company’s Form 10-Q filed on November 8, 2018.
94
10.88
Amendment #11 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness and Response,
dated September 20, 2018. Incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q filed on November 8, 2018.
(Portions omitted pursuant to request for confidential treatment.)
10.89†
10.90
10.91
Amendment #12 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness Response,
dated April 17, 2020. Incorporated by reference to Exhibit 10.3 to the Company’s Form 10-Q filed August 7, 2020.
Amendment #13 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness Response,
dated September 29, 2020. Incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q filed November 6, 2020.
Amendment #14 to the Agreement between BioCryst Pharmaceuticals, Inc. and the Biomedical Advanced Research and Development
Authority within the U.S. Department of Health and Human Services’ Office of the Assistant Secretary for Preparedness Response,
dated November 24, 2020. Incorporated by reference to Exhibit 10.82 to the Company’s Form 10-K filed March 1, 2021.
10.92
Registration Rights Agreement, dated March 15, 2017, by and between BioCryst Pharmaceuticals, Inc. 667, L.P., and Baker Brothers
Life Sciences, L.P. Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed March 17, 2017.
10.93
Amendment to the Registration Rights Agreement, dated January 21, 2018, by and among BioCryst Pharmaceuticals, Inc., 667, L.P. and
Baker Brothers Life Sciences, L.P. Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed January 22, 2018.
10.94
Agreement dated as of September 1, 2018 between BioCryst Pharmaceuticals, Inc. and the Centers for Disease Control and Prevention.
Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 6, 2018.
10.95
Amendment #1 to Agreement between BioCryst Pharmaceuticals, Inc. and the Centers for Disease Control and Prevention, dated
October 1, 2018, assigning contract administration to ASPR-BARDA within the U.S. Department of Health and Human Services.
Incorporated by reference to Exhibit 10.87 to the Company’s Form 10-K filed on March 1, 2021.
10.96
Amendment #2 to Agreement between BioCryst Pharmaceuticals, Inc. and the U.S. Department of Health and Human Services, dated
September 23, 2019. Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed on September 26, 2019.
10.97
Amendment #3, dated August 31, 2020, to the Contract dated September 1, 2018 between BioCryst Pharmaceuticals, Inc. and the U.S.
Department of Health and Human Services. Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed September 3,
2020.
10.98
Amendment #4, dated August 27, 2021, to the Contract dated September 1, 2018, between BioCryst Pharmaceuticals, Inc. and the
Department of Health and Human Services. Incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed September 1,
2021.
10.99†
Commercialization and License Agreement dated as of November 5, 2019 between BioCryst Pharmaceuticals, Inc. and Torii
Pharmaceutical Co., Ltd. Incorporated by reference to Exhibit 10.83 to the Company's Form 10-K filed March 13, 2020.
10.100†*
Purchase and Sale Agreement, dated as of December 7, 2020, between BioCryst Pharmaceuticals, Inc. and RPI 2019 Intermediate
Finance Trust. Incorporated by reference to Exhibit 10.91 to the Company’s Form 10-K filed March 1, 2021.
(10.101)†*
Amendment Number One to Credit Agreement, dated as of November 19, 2021, by and among BioCryst Pharmaceuticals, Inc., as
borrower, the guarantors listed on the signature pages thereto, the lenders listed on the signature pages thereto, and Athyrium
Opportunities III Co-Invest 1 LP, as administrative agent for the lenders.
(10.102)†*
Purchase and Sale Agreement, dated as of November 19, 2021, between BioCryst Pharmaceuticals, Inc. and RPI 2019 Intermediate
Finance Trust.
95
(10.103)†*
Purchase and Sale Agreement, dated as of November 19, 2021, between BioCryst Pharmaceuticals, Inc. and OCM IP Healthcare
Holdings Limited.
(10.104)†*
Common Stock Purchase Agreement, dated as of November 19, 2021, between BioCryst Pharmaceuticals, Inc. and RPI Intermediate
(21)
(23)
(31.1)
(31.2)
(32.1)
Finance Trust.
Subsidiaries of the Registrant.
Consent of Ernst & Young, LLP, Independent Registered Public Accounting Firm.
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002.
(32.2)
Certification of the Chief Financial Officer pursuant to 18.U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-
Oxley Act of 2002.
(101)
Financial statements from the Annual Report on Form 10-K of BioCryst Pharmaceuticals, Inc. for the fiscal year ended December 31,
2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Loss, (iii)
Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Stockholders’ Equity and (v) Notes to Consolidated Financial
Statements.
(104)
Cover Page Interactive Data File – The cover page from this annual report on Form 10-K for the fiscal year ended December 31, 2021 is
formatted in Inline XBRL (contained in Exhibit 101).
#
†
*
&
( )
Confidential treatment granted.
Certain identified information has been omitted pursuant to Item 601(b)(10) of Regulation S-K because it is both not material and
would likely cause competitive harm to the Company if publicly disclosed.
Certain personally identifiable information has been omitted from this exhibit pursuant to Item 601(a)(6) of Regulation S-K.
Management contracts.
Filed herewith.
ITEM 16. FORM 10-K SUMMARY.
None.
96
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on February 28, 2022.
SIGNATURES
BIOCRYST PHARMACEUTICALS, INC.
By:
/s/ Jon P. Stonehouse
Jon P. Stonehouse
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on February 28, 2022:
Signature
Title(s)
/s/ Jon P. Stonehouse
Jon P. Stonehouse
/s/ Anthony J. Doyle
Anthony J. Doyle
/s/ Michael L. Jones
Michael L. Jones
/s/ George B. Abercrombie
George B. Abercrombie
/s/ Stephen J. Aselage
Stephen J. Aselage
/s/ Steven K. Galson
Steven K. Galson, M.D.
/s/ Theresa M. Heggie
Theresa M. Heggie
/s/ Nancy J. Hutson
Nancy J. Hutson, Ph.D.
/s/ Robert A. Ingram
Robert A. Ingram
/s/ Kenneth B. Lee, Jr.
Kenneth B. Lee, Jr.
/s/ Alan G. Levin
Alan G. Levin
/s/ Amy E. McKee
Amy E. McKee, M.D.
/s/ Vincent J. Milano
Vincent J. Milano
/s/ Machelle Sanders
Machelle Sanders
President, Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
Executive Director, Finance and Principal Accounting Officer
(Principal Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
97
BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
NOTICE OF RESTRICTED STOCK UNIT AWARD
Exhibit 10.14
Notice is hereby given that BioCryst Pharmaceuticals, Inc. (the “Company”) has selected you to receive an award of restricted stock units with respect to
the Company’s Common Stock (such award referred to herein as the “RSUs” or “Award”) as described below and granted pursuant to the BioCryst
Pharmaceuticals, Inc. Stock Incentive Plan (the “Plan”) and the accompanying Restricted Stock Unit Agreement (the “Agreement”):
Name of Recipient:
Number of Underlying Shares:
Grant Date:
Vesting:
Recipient understands that the Award is granted subject to and in accordance with the express terms and conditions of the Plan and agrees to be bound by
and conform to the terms and conditions of the Plan, the Plan Prospectus, this Notice of Restricted Stock Unit Award, and the accompanying Agreement.
Recipient acknowledges that, notwithstanding anything to the contrary in any employment or other agreement between Recipient and the Company, the
vesting of the RSUs shall not accelerate upon a Change in Control (or any equivalent term as set forth in any applicable written employment agreement);
rather, vesting shall accelerate only to the extent provided in the Plan. Recipient acknowledges that copies of the Plan, the Plan Prospectus, and the
Agreement have been made available to Recipient.
Nothing in this Notice of Restricted Stock Unit Award, the accompanying Agreement, or the Plan shall confer upon the Recipient the right to continue in
the service or employment of the Company for any period of specific duration or otherwise restrict in any way the rights of the Company or the Recipient,
which rights are hereby expressly reserved by each, to terminate Recipient’s service or employment at any time for any reason whatsoever, with or without
cause.
By my signature below, I hereby acknowledge receipt of the Award granted to me on the Grant Date specified above and issued to me pursuant to the terms
and conditions of the Plan and the attached Agreement.
Agreed and Accepted:
BIOCRYST PHARMACEUTICALS, INC.
By:
Recipient:
Dated:
Jon P. Stonehouse
President and Chief Executive Officer
BIOCRYST PHARMACEUTICALS, INC.
RESTRICTED STOCK UNIT AGREEMENT
WITNESSETH:
RECITALS
A. The Board of Directors (the “Board”) of BioCryst Pharmaceuticals, Inc. (the “Company”) has adopted the Company’s Stock Incentive Plan
(the “Plan”) for the purpose of attracting and retaining the services of its employees (including officers and directors), non-employee Board members and
consultants and other independent contractors who contribute to the financial success of the Company or its parent or subsidiary corporations.
B. Recipient is an individual who has rendered and is to render valuable services to the Company or its parent or subsidiary corporations, and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Company’s grant of the Restricted
Stock Unit Award to Recipient.
NOW, THEREFORE, it is hereby agreed as follows:
The terms and conditions of the Award of restricted stock units with respect to Common Stock of the Company (the “RSUs”) made to the
Recipient, as set forth in the accompanying Notice of Restricted Stock Unit Award (the “Award Notice”), are as follows:
1.
Issuance of RSUs.
(a) The RSUs are hereby granted and issued to the Recipient, effective as of the Grant Date set forth in the accompanying Award
Notice, in consideration of the employment services rendered and to be rendered by the Recipient to the Company in accordance with Article Three of the
Plan. Each RSU represents the right to receive one share of Common Stock, subject to the terms and conditions hereof. This Award is made subject to and
awarded upon the terms and conditions set forth in this Agreement and the Plan.
(b) As promptly as practicable following the vesting of the RSUs pursuant to Section 2 (and in all events no later than March 15 of the
year following the year of vesting (unless earlier delivery is required by Section 409A of the Code or delivery is deferred pursuant to a nonqualified
deferred compensation plan in accordance with the requirements of Section 409A of the Code)), the Company shall issue, in the name of the Recipient, the
number of shares of Common Stock that have vested.
(c) The Recipient agrees that the RSUs shall be subject to the forfeiture provisions set forth in Section 3 of this Agreement and the
restrictions on transfer set forth in Section 4 of this Agreement.
2. General Vesting Terms; Lapsing of Restrictions.
(a) Vesting Schedule. Subject to Recipient’s continuous employment with or service to the Company from the Grant Date through each
applicable Vesting Date, the RSUs shall vest and no longer be subject to forfeiture with respect to __________ (___%) of the RSUs on
__________________ (each such ________ a “Vesting Date”).
(b) Change in Control. If a Change in Control occurs, Article III, Section 2 of the Plan shall govern the treatment of the RSUs in
connection therewith.
(c) Continuous Employment and Service. For purposes of this Agreement, Recipient shall be deemed to remain in continuous service
with the Company for so long as the Recipient continues to render periodic services to the Company or any parent or subsidiary corporation, whether as an
employee, a non-employee member of the Company’s Board of Directors or an independent consultant or advisor. The Recipient shall be deemed to be an
“employee” for so long as Recipient remains in the employ of the Company or one or more of its parent or subsidiary corporations subject to the control
and direction of the employer entity as to both the work to be performed and the manner and method of performance. For purposes of this Agreement, a
corporation shall be considered to be a subsidiary corporation of the Company if it is a member of an unbroken chain of corporations beginning with the
Company, provided each such corporation in the chain (other than the last corporation) owns, at the time of determination, stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other corporations in such chain. Similarly, for purposes of this Agreement, a
corporation shall be considered to be a parent corporation of the Company if it is a member of an unbroken chain ending with the Company, provided each
such corporation in the chain (other than the Company) owns, at the time of determination, stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
3. Forfeiture of Unvested RSUs Upon Employment Termination.
In the event that the Recipient ceases to be continuously employed by or continuously in service to the Company or one or more of its parent or
subsidiary corporations for any reason or no reason, with or without cause, except as otherwise expressly provided in Section 2 above, all of the RSUs that
are unvested as of the time of such employment termination shall be forfeited immediately and automatically to the Company and no shares of Common
Stock shall be issued with respect thereto, without the payment of any consideration to the Recipient, effective as of such termination of employment or
separation from service. The Recipient shall have no further rights with respect to any RSUs that are so forfeited. If the Recipient is employed by a
subsidiary of the Company, any references in this Agreement to employment with the Company shall instead be deemed to refer to employment with such
subsidiary.
4. Restrictions on Transfer.
The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise (collectively “transfer”)
any RSUs, or any interest therein (but may transfer Common Stock after its issuance pursuant to Section 1(b) above). Notwithstanding the foregoing to the
extent permitted by applicable law, the RSUs may be assigned in whole or part during the Recipient’s lifetime pursuant to a domestic relations
order; provided, however, that such RSUs shall in all cases remain subject to this Agreement (including, without limitation, the forfeiture provisions set
forth in Section 3 and the restrictions on transfer set forth in this Section 4) and such permitted transferee shall, as a condition to such transfer, deliver to the
Company a written instrument confirming that such transferee shall be bound by all of the terms and conditions of this Agreement. The Company shall not
be required: (i) to transfer on its books any of the RSUs (or issue shares of Common Stock with respect thereto) which have been transferred in violation of
any of the provisions of this Agreement or (ii) to treat as owner of such RSUs any transferee to whom such RSUs have been transferred in violation of any
of the provisions of this Agreement.
5. Rights as a Shareholder.
The Recipient shall have no rights as a shareholder with respect to the RSUs until such times as shares of Common Stock are issued in settlement
thereof; provided, however, that if any dividends and distributions with respect to the shares of Common Stock underlying the RSUs are paid in cash or
shares, or consist of a dividend or distribution to holders of Common Stock other than an ordinary cash dividend, the shares, cash or other property will be
credited to a notional account on behalf of the Recipient subject to the same restrictions on transferability and forfeitability as the related RSUs.
6. Tax Matters.
(a) Acknowledgments. The Recipient acknowledges that Recipient is responsible for obtaining the advice of the Recipient’s own tax
advisors with respect to the acquisition and vesting of the RSUs and that Recipient is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents with respect to the tax consequences relating to the RSUs. The Recipient understands that the Recipient
(and not the Company) shall be responsible for any and all of Recipient’s tax liabilities that may arise in connection with the acquisition, vesting and/or
settlement of the RSUs.
(b) Withholding. Unless the Plan Administrator expressly authorizes otherwise, the Recipient shall satisfy all tax withholding
obligations arising in connection with the vesting of RSUs by either (i) automatically having withheld or otherwise transferring to the Company, effective
as of each Vesting Date, such number of shares of Common Stock underlying the RSUs that vest on such Vesting Date as have a fair market value
(calculated in accordance with the Plan) equal to the amount of the applicable tax withholding obligations in connection with the vesting and settlement of
such RSUs, or (ii) through a sale-to-cover transaction authorized by the Recipient, pursuant to which an immediate open-market sale of a portion of the
shares of Common Stock issued to Recipient will be effected, for and on behalf of the Recipient, by the Company’s designated broker to cover such
withholding obligations (however, no sale-to-cover transaction shall be effected unless such a sale is at the time permissible under the Company’s insider
trading policies governing the sale of Common Stock). The Recipient further acknowledges and agrees that the Company has the right to deduct from
payments of any kind otherwise due to the Recipient any other federal, state, local or other taxes of any kind required by law to be withheld with respect to
the vesting and settlement of the RSUs in the event the withholding of shares of Common Stock authorized above is insufficient to satisfy all tax
withholding obligations. If requested by the Plan Administrator, the Recipient agrees to satisfy such tax withholding obligations by making a cash payment
to the Company on the date of vesting of the RSUs, in such amount as the Company determines is necessary to satisfy its withholding obligations in
connection with the vesting and settlement of such RSUs.
7. Miscellaneous.
(a) Authority of the Plan Administrator. In making any decisions or taking any actions with respect to the matters covered by this
Agreement, the Plan Administrator shall have full authority and discretion, and shall be subject to all of the protections provided for in the Plan. All
decisions and actions by the Plan Administrator with respect to this Agreement shall be made in the Plan Administrator’s sole discretion and shall be final
and binding on all.
(b) No Employment or Service Contract. The Recipient acknowledges and agrees that, notwithstanding the fact that vesting and
settlement of the RSUs is contingent upon Recipient’s continued employment with, or service to, the Company (or any parent or subsidiary corporation of
the Company employing or retaining Recipient), this Agreement does not constitute an express or implied promise of continued employment or service and
nothing herein or in the Plan shall confer upon the Recipient any rights to continue in the employment or service of the Company (or any parent or
subsidiary corporation of the Company employing or retaining Recipient) for any period of time or interfere with or otherwise restrict in any way the rights
of the Company (or any parent or subsidiary corporation of the Company employing or retaining Recipient) or Recipient, which rights are hereby expressly
reserved by each, to terminate Recipient’s service or employment at any time for any reason whatsoever, with or without cause.
(c) Notices. Any notice required to be given or delivered to the Company under the terms of this Agreement shall be in writing and
addressed to the Company in care of the Corporate Secretary at its principal corporate offices. Any notice required to be given or delivered to Recipient
shall be in writing and addressed to the Recipient at the address indicated below Recipient’s signature line of the Award Notice or such address as Recipient
may provide for the Company to keep on file as updated from time to time. All notices shall be deemed to have been given or delivered upon personal
delivery or upon deposit in the U. S. Mail, postage prepaid and properly addressed to the party to be notified.
(d) Construction; Amendment. The Recipient acknowledges that Recipient has read this Agreement, has received and read the Plan, and
understands the terms and conditions of this Agreement and the Plan. This Agreement and the RSUs evidenced hereby are made and granted pursuant to
the Plan and are in all respects limited by and subject to the express terms and provisions of the Plan. All decisions of the Plan Administrator with respect
to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having or claiming an interest in the RSUs.
This Agreement may only be amended by a writing executed by the parties hereto expressly providing for amendment of this Agreement except that the
Plan Administrator may unilaterally make amendments that do not adversely affect Recipient’s rights hereunder, provided timely notice of such
amendments is provided to Recipient.
(e) Successors and Assigns. Except to the extent otherwise expressly provided herein, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs, legal representatives and assigns of Recipient and the successors and assigns of
the Company.
(f) Liability of the Company. If the RSUs exceed, as of the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this Award shall be void with respect to such excess shares unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of this
Plan and all applicable laws. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this Agreement shall relieve the Company of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Company, however, shall use its best efforts to
obtain all such approvals.
(g) Compliance with Laws and Regulations. The award of RSUs hereunder and the settlement thereof is subject to compliance by the
Company and Recipient with all applicable requirements of law relating thereto and all applicable regulations of any stock exchange or over-the-counter
market on which such shares may be listed or traded at the time of such exercise and issuance. In connection with the settlement of RSUs, Recipient shall
execute and deliver to the Company such representations in writing as may be requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
(h) Capitalized Terms/Conflict. Capitalized terms not specifically defined herein have the meaning specified in the Plan. In the event of
a conflict between the terms and conditions of this Agreement and the Plan, the Plan controls.
(i) Electronic Delivery. Recipient hereby consents to the delivery of information (including, without limitation, information required to
be delivered to Recipient pursuant to applicable securities laws) regarding the Company and its subsidiaries and affiliates, the Plan, and the RSUs via
Company web site or other electronic delivery.
constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.
(j) Headings. The headings preceding the text of the sections hereof are inserted solely for convenience of reference, and shall not
(k) Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the internal laws of the
State of Delaware without regard to that state’s conflict-of-laws rules.
Exhibit 10.72
Exhibit 10.76
Exhibit 10.101
Certain information has been omitted from this exhibit in places marked “[***]” because it is both not material and would likely cause
competitive harm to the registrant if publicly disclosed. In addition, certain personally identifiable information contained in this document,
marked “[***]” has been omitted from this exhibit pursuant to Item 601(a)(6) under Regulation S-K.
AMENDMENT NUMBER ONE TO CREDIT AGREEMENT
THIS AMENDMENT NUMBER ONE TO CREDIT AGREEMENT (this “Amendment”), dated as of November 19, 2021, is entered
into by and among BIOCRYST PHARMACEUTICALS, INC., a Delaware corporation (the “Borrower”), the guarantors listed on the signature pages
hereto (the “Guarantors”), the lenders listed on the signature pages hereto (such lenders, and the other lenders party to the Credit Agreement (as defined
below), together with their respective successors and permitted assigns, each individually, a “Lender”, and collectively, the “Lenders”) and ATHYRIUM
OPPORTUNITIES III CO-INVEST 1 LP, a Delaware limited partnership, as administrative agent for the Lenders (in such capacity, together with its
successors and assigns in such capacity, the “Administrative Agent”), and in light of the following:
W I T N E S S E T H
WHEREAS, the Borrower, the Guarantors, the Lenders and the Administrative Agent are parties to that certain Credit Agreement, dated
as of December 7, 2020 (as supplemented by that certain (i) Joinder Agreement, dated as of December 31, 2020, by and between BioCryst US Sales Co.,
LLC, a Delaware limited liability company, and the Administrative Agent, and (ii) Joinder Agreement, dated as of February 8, 2021, by and between
BioCryst UK Limited, a private limited company incorporated in England and Wales (“BioCryst UK”), and the Administrative Agent, as amended by this
Amendment and as further amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, pursuant to that certain Purchase and Sale Agreement, dated as of the date hereof (the “OMERS Royalty Purchase
Agreement”), between the Borrower and OCM IP Healthcare Holdings Limited (“Omers”), the Borrower desires to sell, and Omers desires to purchase, a
synthetic royalty tied to annual net sales of Orladeyo;
WHEREAS, pursuant to that certain 2021 Purchase and Sale Agreement, dated as of the date hereof (the “2021 RP Royalty Purchase
Agreement”), between the Borrower and RPI 2019 Intermediate Finance Trust (“RPI Trust”), the Borrower desires to sell, and RPI Trust desires to
purchase, a synthetic royalty tied to annual net sales of Orladeyo, BCX9930 and Complement Inhibitor;
WHEREAS, pursuant to that certain Common Stock Purchase Agreement, dated as of the date hereof (the “Royalty Pharma Stock
Purchase Agreement”), between Borrower and RPI Trust, the Borrower desires to issue and sell, and RPI Trust desires to purchase, certain common stock
of the Borrower;
entering into of the OMERS Royalty Purchase Agreement and the 2021 RP Royalty Purchase Agreement; and
WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement to allow for the
WHEREAS, upon the terms and conditions set forth herein, the Administrative Agent and the undersigned Lenders, which constitute
Required Lenders, are willing to amend the Credit Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1. Defined Terms. All initially capitalized terms used herein (including the preamble and recitals hereof) without definition shall have
the meanings ascribed thereto in the Credit Agreement.
2. Amendments to Credit Agreement. Subject to the satisfaction (or waiver in writing by the Required Lenders) of the conditions
precedent set forth in Section 3 hereof, the Credit Agreement is hereby amended as follows:
(a) Amended Credit Agreement. The Credit Agreement (other than the schedules and exhibits attached thereto) shall
be amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bold
and double-underlined text (indicated textually in the same manner as the following example: bold and double-underlined text) as set
forth on the pages of the Credit Agreement attached as Annex A hereto.
(b) Complement Inhibitor Schedule. The Schedules to the Credit Agreement are amended by adding Schedule A
attached as Annex B hereto.
3. Condition Precedent to Amendment. The effectiveness of this Amendment is conditioned on the satisfaction in full, in a manner
satisfactory to the Administrative Agent and the Required Lenders, or waiver, of the following conditions precedent:
(a) Executed Amendment. The Administrative Agent shall have received this Amendment, duly executed and
delivered by the parties hereto, and the same shall be in full force and effect.
(b) Opinions of Counsel to the Loan Parties. Receipt by the Administrative Agent of favorable opinions of legal
counsel to the Loan Parties, addressed to the Administrative Agent and the Lenders, dated as of the date hereof, and in form and
substance satisfactory to the Administrative Agent, the Lenders and their counsel.
(c) Opinions of Counsel to the Administrative Agent. Receipt by the Administrative Agent of favorable opinions of
legal counsel to the Administrative Agent with respect to BioCryst UK and BioCryst Ireland Limited, addressed to the Administrative
Agent and the Lenders, dated as of the date hereof, and in form and substance satisfactory to the Administrative Agent, the Lenders and
their counsel.
shall be originals, facsimiles or pdf scans, in form and substance satisfactory to the Administrative Agent and its legal counsel:
(d) Organization Documents, Resolutions, Etc. Receipt by the Administrative Agent of the following, each of which
(i) (x) copies of (x) the Organization Documents of each Loan Party certified to be true and complete as of a recent date by the
appropriate Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and (y) a
certification by a Responsible Officer of such Loan Party that such Loan Party’s Organization Documents have not been amended or
otherwise modified since the last time that such Loan Party’s Organization Documents were delivered to the Administrative Agent;
(ii) such certificates of resolutions, shareholder resolutions or other action, incumbency certificates and/or other certificates of
Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each
Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Amendment and the other Loan Documents
to which such Loan Party is a party; and
(iii) such documents and certifications as the Administrative Agent may require to evidence that each Loan Party is duly
organized or formed, and is validly existing, in good standing and qualified to engage in business in its jurisdiction of organization or
formation, including certificates of good standing or status in all applicable jurisdictions (which shall exclude, for the avoidance of doubt,
Ireland).
(e) No Material Adverse Effect. Since [***], there shall not have occurred any event or condition that has had or
could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(f) Litigation. There shall not exist any action, suit, investigation or proceeding pending or threatened in any court or
before an arbitrator or Governmental Authority that could reasonably be expected, either individually or in the aggregate, to have a
Material Adverse Effect.
(g) Governmental and Third Party Approvals. The Borrower and its Subsidiaries shall have received all material
governmental, shareholder and third-party consents and approvals necessary in connection with the transactions contemplated by this
Agreement, the other Loan Documents, the Royalty Financing Documents, the Royalty Pharma Stock Purchase Agreement and the other
transactions contemplated hereby and all applicable waiting periods shall have expired without any action being taken by any Person that
could reasonably be expected to restrain, prevent or impose any material adverse conditions on the Borrower or any of its Subsidiaries or
such other transactions or that could seek to threaten any of the foregoing, and no law or regulation shall be applicable which could
reasonably be expected to have such effect.
(h) Closing Certificate. Receipt by the Administrative Agent of a certificate signed by a Responsible Officer of the
Borrower certifying, as of the Closing Date, (i) that the conditions specified in Sections 3(e), (f) and (g) have been satisfied, (ii) that the
representations specified in Sections 4(b) and (c) are true and correct and (iii) that the Borrower and its Subsidiaries (after giving effect to
the Amendment) are Solvent on a consolidated basis.
(i) OMERS Royalty Financing Documents.
(i) The OMERS Royalty Financing Documents shall have been executed and delivered and the transactions thereunder fully
consummated substantially concurrently with the execution and delivery of this Amendment.
(ii) Receipt by the Administrative Agent of the OMERS Royalty Financing Documents, each in form and substance reasonably
satisfactory to Administrative Agent and the Lenders.
(iii) The Borrower shall deliver a certificate of a Responsible Officer to the Administrative Agent certifying that (A)
Administrative Agent has received a true, correct and complete executed copy of each OMERS Royalty Financing Document,
(B) each Loan Party is in compliance in all material respects with the OMERS Royalty Financing Documents to which it is a
party, and such Person has not received any notice of default or termination thereunder and (C) as of the date hereof, no
OMERS Royalty Financing Document has been amended or waived or modified, without the written consent of the
Administrative Agent and the Lenders.
(j) 2021 RP Royalty Financing Documents.
(i) The 2021 RP Royalty Financing Documents shall have been executed and delivered and the transactions thereunder fully
consummated substantially concurrently with the execution and delivery of this Amendment.
(ii) Receipt by the Administrative Agent of the 2021 RP Royalty Financing Documents, each in form and substance reasonably
satisfactory to Administrative Agent and the Lenders.
(iii) The Borrower shall deliver a certificate of a Responsible Officer to the Administrative Agent certifying that (A) the
Administrative Agent has received a true, correct and complete executed copy of each 2021 RP Royalty Financing Document,
(B) each Loan Party is in compliance in all material respects with the 2021 RP Royalty Purchase Agreement and the other
2021 RP Royalty Financing Documents to which it is a party, and such Person has not received any notice of default or
termination thereunder and (C) as of the date hereof, neither the 2021 RP Royalty Purchase Agreement nor any other 2021 RP
Royalty Financing Document has been amended or waived or modified in any manner, without the written consent of the
Administrative Agent and the Lenders.
(k) Royalty Pharma Stock Purchase Agreement. The Royalty Pharma Stock Purchase Agreement shall have been executed and delivered
substantially concurrently with the execution and delivery of this Amendment.
(l) Royalty Pharma Stock Purchase Documents. Receipt by the Administrative Agent of the Royalty Pharma Stock Purchase Agreement, in
form and substance reasonably acceptable to the Administrative Agent and the Lenders, together with a certificate of a Responsible
Officer of the Borrower addressed to the Administrative Agent certifying that (i) the Administrative Agent has received a true, correct
and complete executed copy of the Royalty Pharma Stock Purchase Agreement and each material agreement entered into in connection
therewith (collectively, the “Royalty Pharma Stock Purchase Documents”), (ii) each Loan Party is in compliance in all material respects
with the Royalty Pharma Stock Purchase Documents to which it is a party, and such Loan Party has not received any notice of default or
termination thereunder and (iii) as of the date hereof, no Royalty Pharma Stock Purchase Documents (including, without limitation, the
Royalty Pharma Stock Purchase Agreement) has been amended or waived or modified in any manner, without the written consent of the
Administrative Agent and the Required Lenders.
(m) Lien Searches. Receipt by the Administrative Agent of searches of Uniform Commercial Code filings in the jurisdiction of formation of
each Loan Party or where a filing would need to be made in order to perfect the Administrative Agent’s security interest in the Collateral.
4. Representations and Warranties. Each of the Borrower and each Guarantor hereby represents and warrants to the Administrative
Agent and the Lenders as follows:
(a) The execution, delivery and performance of this Amendment and such Loan Party’s obligations hereunder have
been duly authorized by all necessary corporate or other similar action. This Amendment has been duly executed and delivered by each
Loan Party that is party thereto. Each of this Amendment and the Credit Agreement (for the avoidance of doubt, as amended by this
Amendment) constitutes a legal, valid and binding obligation of each Loan Party that is party thereto, enforceable against each such Loan
Party, subject to applicable Debtor Relief Laws or other Laws affecting creditors’ rights generally and subject to general principles of
equity.
(b) No Default or Event of Default has occurred and is continuing as of the date of the effectiveness of this
Amendment, and no condition exists which constitutes a Default or an Event of Default.
(c) After giving effect to this Amendment, the representations and warranties of the Borrower and each other Loan
Party contained in Article VI of the Credit Agreement or any other Loan Document, or which are contained in any document furnished at
any time under or in connection herewith or therewith, shall be true and correct in all material respects (and in all respects if any such
representation or warranty is already qualified by materiality or reference to Material Adverse Effect) on and as of the date hereof, except
to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all
material respects (and in all respects if any such representation or warranty is already qualified by materiality or reference to Material
Adverse Effect) as of such earlier date, and except that for purposes of this Section 4(c), the representations and warranties contained in
subsections (a) and (b) of Section 6.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant
to clauses (a) and (b), respectively, of Section 7.01 of the Credit Agreement.
5. GOVERNING LAW; JURISDICTION; ETC.; WAIVER OF RIGHT TO JURY TRIAL; AND JUDGMENT CURRENCY.
THIS AMENDMENT SHALL BE SUBJECT TO THE PROVISIONS REGARDING GOVERNING LAW; SUBMISSION TO
JURISDICTION, WAIVER OF VENUE, SERVICE OF PROCESS; WAIVER OF RIGHT TO TRIAL BY JURY; AND JUDGMENT
CURRENCY SET FORTH IN SECTIONS 12.14, 12.15 AND 12.16 OF THE CREDIT AGREEMENT, AND SUCH PROVISIONS ARE
INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.
6. Counterpart Execution. This Amendment may be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment by telefacsimile or other electronic method
of transmission shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed
counterpart of this Amendment by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of
this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this
Amendment.
7. Release. Each of the Loan Parties hereby releases and forever discharges the Administrative Agent, the Lenders and their respective
predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of the
above collectively referred to as, the “Lender Group”), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions
and causes of action of any nature whatsoever, in each case to the extent arising in connection with the Loan Documents or any of the
negotiations, activities, events or circumstances arising out of or related to the Loan Documents through the date of this Amendment, whether
arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or
contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any of the Loan Parties may have or claim to have against any
entity within the Lender Group.
8. Acknowledgment and Reaffirmation. By its execution hereof, each of the Loan Parties hereby expressly (a) acknowledges and agrees
to the terms and conditions of this Amendment, (b) except as otherwise amended hereby, reaffirms all of its respective covenants and other
obligations set forth in the Credit Agreement and the other Loan Documents to which it is a party, (c) ratifies and confirms all security interests
previously granted by it to the Administrative Agent for the benefit of the Secured Parties under the Loan Documents, as amended hereby, and (d)
acknowledges that its respective covenants and other obligations set forth in the Credit Agreement and the other Loan Documents to which it is a
party remain in full force and effect as amended hereby.
9. Entire Agreement. This Amendment, and the terms and provisions hereof, the Credit Agreement and the other Loan Documents
constitute the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede any and all
prior or contemporaneous amendments or understandings with respect to the subject matter hereof, whether express or implied, oral or written.
10. Integration. This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with
respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof.
11. Severability. In case any provision in this Amendment shall be invalid, illegal or unenforceable, such provision shall be severable
from the remainder of this Amendment and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
12. Costs and Expenses. As an inducement to the Administrative Agent and the Lenders entering into this Amendment and as otherwise
required under the Loan Documents, the Borrower hereby agrees to pay pursuant to Section 12.04 of the Credit Agreement, following execution
and delivery of this Amendment, all reasonable out-of-pocket cost and expenses of the Administrative Agent and the Lenders incurred in
connection with this Amendment and the matters contemplated herein, including all reasonable attorney’s fees.
13. Loan Document. This Amendment shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan
Documents. The occurrence and continuation of any Event of Default under this Amendment shall entitle the Administrative Agent and the
Lenders to exercise all rights and remedies available to them under Section 9.02 of the Credit Agreement. Each reference in the Credit Agreement
to “this Agreement”, “hereunder”, “hereof”, “herein”, or words of like import, and each reference to the Credit Agreement in any other Loan
Document shall be deemed a reference to the Credit Agreement as amended hereby.
[Signature pages follow]
IN WITNESS WHEREOF, the parties have entered into this Amendment as of the date first above written.
BORROWER:
BIOCRYST PHARMACEUTICALS, INC.
GUARANTORS:
By:
Name:
Title:
/s/ Anthony Doyle
Anthony Doyle
Chief Financial Officer
BIOCRYST IRELAND LIMITED
incorporated under the laws of Ireland
By:
Name:
/s/ Brian McInerney
Brian McInerney
Director
BIOCRYST UK LIMITED
incorporated under the laws of England
By:
Name:
Title:
/s/ Luke Robinson
Luke Robinson
Director
BIOCRYST US Sales Co., LLC
By:
Name:
Title:
/s/ Anthony Doyle
Anthony Doyle
Chief Financial Officer
[Signature Page to Amendment Number One to Credit Agreement]
ADMINISTRATIVE AGENT:
ATHYRIUM OPPORTUNITIES III CO-INVEST 1 LP, as Administrative
Agent
By: ATHYRIUM OPPORTUNITIES ASSOCIATES CO-INVEST LLC, its
General Partner
By:
Name:
Title:
/s/ Rashida Adams
Rashida Adams
Authorized Signatory
LENDER:
ATHYRIUM OPPORTUNITIES III CO-INVEST 1 LP
By: ATHYRIUM OPPORTUNITIES ASSOCIATES CO-INVEST LLC, its
General Partner
By:
Name:
Title:
/s/ Rashida Adams
Rashida Adams
Authorized Signatory
[Signature Page to Amendment Number One to Credit Agreement]
ANNEX A
AMENDED CREDIT AGREEMENT
[See Attached]
Annex A to Amendment Number One
CONFORMED THROUGH AMENDMENT NUMBER ONE TO CREDIT AGREEMENT
CREDIT AGREEMENT
Dated as of December 7, 2020
among
BIOCRYST PHARMACEUTICALS, INC.,
as the Borrower,
BIOCRYST IRELAND LIMITED
as a Guarantor
The other Guarantors from time to time party hereto,
The Lenders from time to time party hereto
and
ATHYRIUM OPPORTUNITIES III CO-INVEST 1 LP,
as Administrative Agent
i
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
Defined Terms
Other Interpretive Provisions
Accounting Terms
Times of Day
LIBOR Determinations
1.01
1.02
1.03
1.04
1.05
ARTICLE II THE COMMITMENTS
Commitments.
Borrowings.
Prepayments
Termination of Commitments
Repayment of Loans
Interest; Other Amounts
Fees
Evidence of Debt
Computation of Interest
Payments Generally
Sharing of Payments by Lenders
Defaulting Lenders.
2.01
2.02
2.03
2.04
2.05
2.06
2.07
2.08
2.09
2.10
2.11
2.12
ARTICLE III TAXES
3.01
3.02
Taxes
Survival
ARTICLE IV GUARANTY
The Guaranty
Obligations Unconditional
Reinstatement
Certain Additional Waivers
Remedies
Rights of Contribution
Guarantee of Payment; Continuing Guarantee
Limitations.
Guarantor Intent
ARTICLE V CONDITIONS PRECEDENT TO BORROWINGS
4.01
4.02
4.03
4.04
4.05
4.06
4.07
4.08
4.09
5.01
5.02
Conditions to Initial Borrowing
Conditions to all Borrowings
ARTICLE VI REPRESENTATIONS AND WARRANTIES
Existence, Qualification and Power
Authorization; No Contravention
6.01
6.02
i
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1
1
40
41
42
42
42
42
43
43
47
47
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48
49
49
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50
51
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53
54
54
54
55
55
55
56
56
56
56
56
56
60
61
61
61
6.03
6.04
6.05
6.06
6.07
6.08
6.09
6.10
6.11
6.12
6.13
6.14
6.15
6.16
6.17
6.18
6.19
6.20
6.21
6.22
6.23
6.24
6.25
6.26
6.27
6.28
6.29
6.30
6.31
6.32
6.33
Governmental Authorization; Other Consents
Binding Effect
Financial Statements; No Material Adverse Effect
Litigation
No Default
Ownership of Property; Liens
Environmental Compliance
Insurance
Taxes
ERISA Compliance
Subsidiaries and Capitalization; Management Fees
Margin Regulations; Investment Company Act
Disclosure
Compliance with Laws
Intellectual Property; Licenses, Etc.
Solvency
Perfection of Security Interests in the Collateral
Business Locations
Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act
Material Contracts
Regulatory Compliance.
Labor Matters
Affected Financial Institution
Ranking of Loans
Consummation of the Royalty Financing
Regulation H
Data Privacy.
Centre of Main Interests and Establishments.
JPR Royalty Sub.
Royalty and Other Payments.
Non-Competes.
ARTICLE VII AFFIRMATIVE COVENANTS
7.01
7.02
7.03
7.04
7.05
7.06
7.07
7.08
7.09
7.10
7.11
7.12
7.13
Financial Statements; Lender Calls
Certificates; Other Information
Notices
Payment of Obligations
Preservation of Existence, Etc.
Maintenance of Properties
Maintenance of Insurance
Compliance with Laws
Books and Records
Inspection Rights
Use of Proceeds
Additional Subsidiaries
ERISA Compliance
ii
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61
61
62
62
63
63
64
64
64
65
66
66
66
66
69
69
69
69
70
70
75
75
75
75
75
75
76
76
76
76
76
76
77
80
82
82
82
83
83
83
84
84
84
85
7.14
7.15
7.16
7.17
7.18
7.19
7.20
7.21
7.22
7.23
Pledged Assets
Compliance with Material Contracts
Deposit Accounts
Regulatory Compliance
Intellectual Property; Consent of Licensors
Anti-Corruption Laws
Post-Closing Obligations
JPR Royalty Sub - Indenture.
Restrictions on Cash
People with Significant Control Regime
ARTICLE VIII NEGATIVE COVENANTS
8.01
8.02
8.03
8.04
8.05
8.06
8.07
8.08
8.09
8.10
8.11
8.12
8.13
8.14
8.15
8.16
8.17
8.18
Liens
Investments
Indebtedness
Fundamental Changes
Dispositions
Restricted Payments
Change in Nature of Business
Transactions with Affiliates and Insiders
Burdensome Agreements
Use of Proceeds
Prepayment of Other Indebtedness
Organization Documents; Fiscal Year; Legal Name, Jurisdiction of Formation and Form of Entity; Certain
Amendments
Ownership of Subsidiaries
Sale Leasebacks
Sanctions; Anti-Corruption Laws
Minimum Liquidity.
Minimum Orladeyo Consolidated U.S. Net Product Sales
MDCP.
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES
9.01
9.02
9.03
9.04
Events of Default
Remedies Upon Event of Default
Application of Funds
Cure Right
ARTICLE X INCREASED COSTS AND INABILITY TO DETERMINE RATES
10.01
10.02
10.03
10.04
10.05
Increased Costs, Etc.
Mitigation Obligations; Replacement of Lenders.
Inability to Determine Rates
Illegality
Survival
iii
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85
85
86
88
89
89
89
90
90
90
90
92
93
94
94
95
95
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96
96
96
97
97
98
98
98
98
99
99
99
102
104
104
105
105
106
106
109
110
ARTICLE XI ADMINISTRATIVE AGENT
11.01
11.02
11.03
11.04
11.05
11.06
11.07
11.08
11.09
Appointment and Authority
Rights as a Lender
Exculpatory Provisions
Reliance by Administrative Agent
Delegation of Duties
Resignation of Administrative Agent
Non-Reliance on Administrative Agent and Other Lenders
Administrative Agent May File Proofs of Claim
Collateral and Guaranty Matters
ARTICLE XII MISCELLANEOUS
12.01
12.02
12.03
12.04
12.05
12.06
12.07
12.08
12.09
12.10
12.11
12.12
12.13
12.14
12.15
12.16
12.17
12.18
12.19
12.20
12.21
12.22
Amendments, Etc.
Notices and Other Communications; Facsimile Copies
No Waiver; Cumulative Remedies; Enforcement
Expenses; Indemnity; and Damage Waiver
Marshalling; Payments Set Aside
Successors and Assigns; Transfers
Treatment of Certain Information; Confidentiality
Set-off
Interest Rate Limitation
Counterparts; Integration; Effectiveness
Survival of Representations and Warranties
Severability
Replacement of Lenders.
Governing Law; Jurisdiction; Etc.
Waiver of Right to Trial by Jury
Judgment Currency
Electronic Execution of Assignments and Certain Other Documents
USA PATRIOT Act
No Advisory or Fiduciary Relationship
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
Publicity
Conflicts
SCHEDULES
A
1.01
2.01
6.1
6.13(a)
6.13(b)
6.17
6.20(a)
Complement Inhibitor
Products, Services and Facilities
Commitments and Applicable Percentages
Insurance
Subsidiaries
Capitalization
IP Rights
Locations of Real Property
iv
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111
111
112
112
112
113
113
114
114
114
116
118
118
120
120
124
124
125
125
126
126
126
127
128
128
129
129
129
130
130
131
6.20(b)
6.20(c)
6.22
6.23
6.32
7.2
8.01
8.02
8.03
12.02
Taxpayer and Organizational Identification Numbers
Changes in Legal Name, State of Organization and Structure
Material Contracts
Regulatory Compliance
Royalty and Other Payments
Post-Closing Obligations
Liens Existing on the Closing Date
Investments Existing on the Closing Date
Indebtedness Existing on the Closing Date
Certain Addresses for Notices
v
EXHIBITS
A
B-1
B-2
B-3
C
D
E
F
Form of Loan Notice
Form of Term A Note
Form of Term B Note
Form of Term C Note
Form of Assignment and Assumption
Form of Compliance Certificate
Form of Joinder Agreement
Form of Orladeyo Label
vi
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of December 7, 2020 among BIOCRYST PHARMACEUTICALS, INC., a Delaware corporation
(the “Borrower”), the Guarantors (defined herein) listed on the signature pages hereto and from time to time party hereto, the Lenders (defined herein) from
time to time party hereto and ATHYRIUM OPPORTUNITIES III CO-INVEST 1 LP, a Delaware limited partnership, as Administrative Agent for the
Lenders (each as defined below).
The Borrower has requested that the Lenders make an investment in the Borrower in the form of term loan facilities and the Lenders are willing to
do so on the terms and conditions set forth herein.
In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01 Defined Terms.
As used in this Agreement, the following terms shall have the meanings set forth below:
“2020 RP Buyer” means the “Buyer” as such term is defined in the 2020 RP Royalty Purchase Agreement as in effect on the date hereof.
“2020 RP Revenue Participation Right” means, the “Revenue Participation Right” as such term is defined in the 2020 RP Royalty
Purchase Agreement as in effect on the Amendment No. 1 Effective Date.
“2020 RP Royalty Financing” means, subject to the Royalty Financing Restrictions, that certain true sale of the 2020 RP Revenue
Participation Right to RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, on the Term A Borrowing Date pursuant to the terms of
the 2020 RP Royalty Purchase Agreement.
“2020 RP Royalty Purchase Agreement” means the Purchase and Sale Agreement, dated as of December 7, 2020, between the Borrower
and RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, as may be amended, supplemented or otherwise modified from time to time
in accordance with the terms of the Loan Documents.
“2020 RP Royalty Financing Documents” means the 2020 RP Royalty Purchase Agreement, the 2020 RP Royalty Financing Side Letter,
the Intercreditor Agreement and any other agreement, instrument or document entered into from time to time in connection therewith, in each
case, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Loan Documents.
“2020 RP Royalty Financing Side Letter” means the letter agreement, dated as of December 7, 2020 between the Borrower and RPI 2019
Intermediate Finance Trust, a Delaware statutory trust, as amended, supplemented or otherwise modified from time to time in accordance with
the terms of the Loan Documents.
“2021 RP Buyer” means the “Buyer” as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment
No. 1 Effective Date.
“2021 RP Revenue Participation Right” means, the “2021 Revenue Participation Right” as such term is defined in the 2021 RP Royalty
Purchase Agreement as in effect on the Amendment No. 1 Effective Date.
“2021 RP Royalty Financing” means, subject to the Royalty Financing Restrictions, that certain true sale of the 2021 RP Revenue
Participation Right to RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, on the Amendment No. 1 Effective Date pursuant to the
terms of the 2021 RP Royalty Purchase Agreement.
“2021 RP Royalty Purchase Agreement” means the 2021 Purchase and Sale Agreement, dated as of the Amendment No. 1 Effective Date,
between the Borrower and RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, as may be amended, supplemented or otherwise
modified from time to time in accordance with the terms of the Loan Documents.
“2021 RP Royalty Financing Documents” means the 2021 RP Royalty Purchase Agreement, the 2021 RP Royalty Financing Side Letter,
the Intercreditor Agreement and any other agreement, instrument or document entered into from time to time in connection therewith, in each
case, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Loan Documents.
“2021 RP Royalty Financing Side Letter” means the letter agreement, dated as of the Amendment No. 1 Effective Date between the
Borrower and RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, as amended, supplemented or otherwise modified from time to
time in accordance with the terms of the Loan Documents.
“Accrediting Organization” means any Person from which any Loan Party or Subsidiary has received an accreditation as of the Closing Date or
thereafter.
“Acquisition” means, with respect to any Person, (a) the acquisition by such Person, in a single transaction or in a series of related transactions, of
(i) assets of another person which constitute all or substantially all of the assets of such Person, or of any division, line of business or other business unit of
such Person or (ii) at least a majority of the Voting Stock of another Person or (b) a Product Acquisition, in each case whether or not involving a merger,
amalgamation or consolidation with such other Person and whether for cash, property, services, assumption of Indebtedness, securities or otherwise.
“Administrative Agent” means Athyrium Opportunities III Co-Invest 1 LP, a Delaware limited partnership, in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 12.02 or such
other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
2
“Affected Financial Institution” means (a) any EEA Financial Institution or (b) UK Financial Institution.
“Affiliate” means, with respect to a specified Person, (a) another Person that directly, or indirectly through one or more intermediaries, Controls or
is Controlled by or is under common Control with the Person specified and (b) other than with respect to any Lender and the Administrative Agent, any
manager, officer or director of such Person.
“Agreement” means this Credit Agreement.
“Amendment No. 1” means that certain Amendment Number One to Credit Agreement, dated as of the Amendment No. 1 Effective Date,
among the Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent.
“Amendment No. 1 Effective Date” means November 19, 2021.
“Applicable Percentage” means with respect to any Lender at any time, (a) in respect of the Term A Facility, with respect to any Term A Lender at
any time, the percentage (carried out to the ninth decimal place) of the Term A Facility represented by (i) at any time during the Term A Availability
Period, such Term A Lender’s Term A Commitment at such time and (ii) thereafter, the outstanding principal amount of such Term A Lender’s Term A
Loans at such time, (b) in respect of the Term B Facility, with respect to any Term B Lender at such time, the percentage (carried out to the ninth decimal
place) of the Term B Facility represented by (i) at any time during the Term B Availability Period, such Term B Lender’s Term B Commitment at such time
and (ii) at any time thereafter, the outstanding principal amount of such Term B Lender’s Term B Loans at such time and (c) in respect of the Term C
Facility, with respect to any Term C Lender at such time, the percentage (carried out to the ninth decimal place) of the Term C Facility represented by (i) at
any time during the Term C Availability Period, such Term C Lender’s Term C Commitment at such time and (ii) at any time thereafter, the outstanding
principal amount of such Term C Lender’s Term C Loans at such time. The initial Applicable Percentage of each Lender in respect of each Facility is set
forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto, as
applicable.
“Appropriate Lender” means, at any time, with respect to any Facility, a Lender that has a Commitment with respect to such Facility or holds a
Loan under such Facility at such time.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
an entity that administers or manages a Lender.
“Assignment and Assumption” means an assignment and assumption agreement entered into by a Lender and an Eligible Assignee (with the
consent of any party whose consent is required by Section 12.06(b), and accepted by the Administrative Agent), in substantially the form of Exhibit C
hereto or any other form (including electronic documentation generated by MarkitClear or other electronic platform) approved by the Administrative
Agent.
“Athyrium” means Athyrium Capital Management, LP and its successors and assigns.
“Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease of any Person, the
capitalized amount of the remaining lease payments under the relevant lease that would appear on a balance sheet of such Person prepared as of such date
in accordance with GAAP if such lease were accounted for as a Capital Lease and (c) in respect of any Securitization Transaction of any Person, the
outstanding principal amount of such financing, after taking into account reserve accounts and making appropriate adjustments, determined by the
Administrative Agent in its reasonable judgment.
3
“Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year of the
Borrower ended December 31, 2019, and the related consolidated statements of income or operations, shareholders’ equity and cash flows of the Borrower
and its Subsidiaries for such fiscal year, including the notes thereto, audited by independent public accountants of recognized national standing and
prepared in conformity with GAAP.
“Back-Up Security InterestInterests” means, collectively, (i) the “Back-Up Security Interest” as such term is defined in the Royalty
Financing2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date, which modifies the “Back-Up Security
Interest” as such term is defined in the 2020 RP Royalty Purchase Agreement as in effect on the date hereof and (ii) the “Back-Up Security Interest”
as such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date.
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability
of an Affected Financial Institution.
“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European
Parliament and of the Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to
time which is described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act
2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing
banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or insolvency proceedings).
“BCX9930” means the molecule described in investigational new drug application (IND) 142,217 filed with the FDA and in analogous filings in
jurisdictions outside the United States and referenced by the Borrower as “BCX9930”.
“BCX9930 Product Family” means (a) BCX9930, [***].
“BCX9930 Net Product Sales” means, for any period, consolidated net revenues of the Borrower and its Subsidiaries from sales of the BCX9930
Product Family in any jurisdiction for such period, all as determined and reported in accordance with GAAP.
“Board of Directors” means (a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to
act on behalf of such board, (b) with respect to a partnership, the Board of Directors of the general partner of the partnership, (c) with respect to a limited
liability company, the managing member or members or any controlling committee of managing members thereof, and (d) with respect to any other Person,
the board or committee of such Person serving a similar function.
4
“Borrower” has the meaning set forth in the introductory paragraph hereto.
“Borrowing” means a Term A Borrowing, a Term B Borrowing or a Term C Borrowing, as the context may require.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of,
or are in fact closed in, New York, New York.
“Businesses” means, at any time, a collective reference to the businesses operated by the Borrower and its Subsidiaries at such time.
“Buyer” means the “Buyer” as such term is defined in the Royalty Financing Agreement as in effect on the date hereof.
“Buyers” means, collectively, the 2020 RP Buyer, the 2021 RP Buyer and the OMERS Buyer.
“Capital Lease” means, as applied to any Person, any lease of any property by that Person as lessee which, in accordance with GAAP, is required
to be accounted for as a capital lease on the balance sheet of that Person.
“Cash Equivalents” means, as at any date, (a) securities issued or directly and fully guaranteed or insured by the United States or any agency or
instrumentality thereof (provided, that, the full faith and credit of the United States is pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition, (b) Dollar denominated time deposits and certificates of deposit of (i) any United States commercial bank of
recognized standing having capital and surplus in excess of $[***] or (ii) any bank whose short-term commercial paper rating from S&P is at least A-1 or
the equivalent thereof or from Moody’s is at least P-1 or the equivalent thereof (any such bank being an “Approved Bank”), in each case with maturities of
not more than 270 days from the date of acquisition, (c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent
company thereof) or any variable or fixed rate notes issued by, or guaranteed by, any domestic corporation rated A-1 (or the equivalent thereof) or better by
S&P or P-1 (or the equivalent thereof) or better by Moody’s and maturing within six months of the date of acquisition, (d) repurchase agreements entered
into by any Person with a bank or trust company (including any of the Lenders) or recognized securities dealer having capital and surplus in excess of
$[***] for direct obligations issued by or fully guaranteed by the United States in which such Person shall have a perfected first priority security interest
(subject to no other Liens) and having, on the date of purchase thereof, a fair market value of at least 100% of the amount of the repurchase obligations, and
(e) Investments, classified in accordance with GAAP as current assets, in money market investment programs registered under the Investment Company
Act of 1940, which are administered by reputable financial institutions having capital of at least $[***] and the portfolios of which are limited to
Investments of the character described in the foregoing subdivisions (a) through (d).
“Cash Pay Election” shall have the meaning set forth in Section 2.06(d).
“cGCP” means the then current Good Clinical Practices that establish the international ethical and scientific quality standards for designing,
conducting, recording and reporting clinical trials that are promulgated or endorsed for the United States by the FDA (including through ICH E6 and 21
CFR Parts 50, 54, 56 and 312) and for outside the United States by comparable Governmental Authorities.
5
“cGLP” means the then current Good Laboratory Practices that establish the international ethical and scientific quality standards for designing,
conducting, recording and reporting non-clinical and laboratory testing that are promulgated or endorsed for the United States by the FDA and for outside
the United States by comparable Governmental Authorities.
“cGMP” means the then current Good Manufacturing Practice for drugs and biologics (including the regulations for drugs and finished
pharmaceutical products contained in 21 C.F.R. Parts 210 and 211 and related Guidance documents issued by the United States Food and Drug
Administration), or medical devices (including the Quality System Regulations contained in 21 C.F.R. Part 820, as applicable, and related Guidance
documents issued by the United States Food and Drug Administration), and for outside the United States by comparable Governmental Authorities.
“CHAMPVA” means, collectively, the Civilian Health and Medical Program of the Department of Veterans Affairs, and all laws and
implementing rules and regulations and requirements pertaining to such program, in each case as the same may be amended, supplemented or otherwise
modified from time to time.
“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any law, rule,
regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by
any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any
Governmental Authority; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection
Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives
promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United
States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date
enacted, adopted or issued.
“Change of Control” means the occurrence of any of the following events:
(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, but
excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan), becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group
has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly
or indirectly, of Equity Interests representing 35% or more of the aggregate ordinary voting power in the election of the Board of Directors of
the Borrower represented by the issued and outstanding Equity Interests of the Borrower on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to any option right); or
(b) during any period of twelve (12) consecutive months, a majority of the members of the Board of Directors of the Borrower cease
to be composed of individuals (i) who were members of that Board of Directors on the first day of such period, (ii) whose election, appointment
or nomination to that Board of Directors was approved by individuals referred to in clause (i) above constituting at the time of such election,
appointment or nomination at least a majority of that Board of Directors, or (iii) whose election, appointment or nomination to that Board of
Directors was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a
majority of that Board of Directors; or
6
(c) any “Change of Control” (or any comparable term) shall occur under any document, instrument or other agreement evidencing
any Indebtedness with an aggregate principal amount in excess of the Threshold Amount; or
(d) except to the extent expressly permitted by this Agreement, the Borrower shall cease to directly or indirectly own, beneficially
and of record (other than director’s qualifying shares of investments by foreign nationals to the extent mandated by applicable Laws), 100% of
the issued and outstanding Equity Interests of each Subsidiary of the Borrower.
“CLIA” means the Clinical Laboratory Improvement Amendments (42 U.S.C. § 263a) and the implementing regulations at 42 C.F.R. pt. 493.
“Clinical Trial Material” means any raw materials, parts, or supplies used in the ordinary course of development of a Product for which regulatory
approval has not yet been obtained and that are used exclusively for purposes of supporting clinical and preclinical research.
“Closing Date” means the date hereof.
“CMS” means the U.S. Centers for Medicare and Medicaid Services.
“Collateral” means a collective reference to all real and personal property with respect to which Liens in favor of the Administrative Agent, for the
benefit of the Secured Parties, are purported to be granted pursuant to and in accordance with the terms of the Collateral Documents.
“Collateral Access Agreement” means an agreement in form and substance reasonably satisfactory to the Administrative Agent pursuant to which
a lessor of real property on which Collateral is stored or otherwise located, or a warehouseman, processor or other bailee of inventory or other property
owned by any Loan Party, acknowledges the Liens of the Administrative Agent and waives (or, if approved by the Administrative Agent, subordinates) any
Liens held by such Person on such property, and permits the Administrative Agent reasonable access to any Collateral stored or otherwise located thereon.
“Collateral Documents” means a collective reference to the Security Agreement, the Pledge Agreement, the Deposit Account Control Agreements,
the Perfection and Due Diligence Certificate, the Collateral Access Agreements, the Real Property Security Documents, the IP Security Agreements, the
Irish Security Documents and other security documents as may be executed and delivered by the Loan Parties pursuant to the terms of Section 7.12,
Section 7.14, Section 7.20 or pursuant to the terms of any Collateral Document.
“Commitment” means a Term A Commitment, a Term B Commitment or a Term C Commitment, as the context may require.
“Companies Act” means the Companies Act 2014, of Ireland.
7
“Complement Inhibitor” means the inhibitor described on Schedule A attached hereto.
“Complement Inhibitor Product Family” means (a) the Complement Inhibitor, [***].
“Complement Inhibitor Net Product Sales” means, for any period, consolidated net revenues of the Borrower and its Subsidiaries from
sales of the Complement Inhibitor Product Family in any jurisdiction for such period, all as determined and reported in accordance with GAAP.
“Compliance Certificate” means a certificate substantially in the form of Exhibit D.
“Confidential Information” means all non-public information, whether written, oral or in any electronic, visual or other medium, that is the subject
of reasonable efforts to keep it confidential and that is owned by the Borrower or any Subsidiary or that the Borrower or any Subsidiary is licensed,
authorized or otherwise granted rights under or to, and that is used by the Borrower or any other Person to manufacture, develop, import, market, promote,
advertise, offer for sale, sell, use and/or otherwise distribute or provide a Product or Service.
“Consolidated Revenues” means, for any period, for the Borrower and its Subsidiaries on a consolidated basis, revenues for such period as
determined and reported in accordance with GAAP; provided, that, “Consolidated Revenues” shall exclude the revenues generated by any Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by that Subsidiary of the income resulting from such revenues is not at the time
permitted by operation of the terms of its Organization Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary.
“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its property is bound.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without
limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly,
power to vote [***]% or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
“Convertible Bond Indebtedness” means Indebtedness having a feature which entitles the holder thereof to convert or exchange all or a portion of
such Indebtedness into shares of common capital stock of the Borrower; provided, that, (a) the principal amount (or accreted value, if applicable) of such
Convertible Bond Indebtedness does not exceed $[***], (b) such Convertible Bond Indebtedness shall be unsecured, (c) no Subsidiary shall Guarantee such
Convertible Bond Indebtedness, (d) such Convertible Bond Indebtedness shall not mature, and no scheduled or mandatory principal payments, repayments,
prepayments, cash settlements, repurchases, redemptions or sinking fund or like payments (but excluding, for the avoidance of doubt, regularly scheduled
cash interest payments and conversion of such Convertible Bond Indebtedness into shares of common capital stock of the Borrower in accordance with the
terms thereof) of such Convertible Bond Indebtedness shall be required at any time on or prior to the date that is one (1) year after the Maturity Date, other
than upon a “Change of Control”, “fundamental change”, “make-whole fundamental change” or similar event, (e) such Convertible Bond Indebtedness
shall (i) not include (A) any financial maintenance covenants or (B) other covenants and defaults that are, taken as a whole, more restrictive on the
Borrower and its Subsidiaries than the covenants and defaults set forth in the Loan Documents and (ii) have a cash interest rate of less than the greater of
(x) [***] percent ([***]%) per annum and (y) such cash interest rate as the Administrative Agent, in its sole discretion, shall approve in writing after the
Closing Date, upon the request of the Borrower in light of changes to market interest rates for similar convertible notes, (f) such Convertible Bond
Indebtedness shall include conversion, redemption and fundamental change provisions that are customary for public market convertible indebtedness
(pursuant to a public offering or an offering under Rule 144A or Regulation S of the Securities Act), (g) such Convertible Bond Indebtedness shall be
subordinated in right of payment to the Obligations pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of
subordination incorporated into the indenture under which such Convertible Bond Indebtedness is issued), in each case, in form and substance, and on
terms, approved by the Administrative Agent in writing in its sole discretion, (h) no Default or Event of Default shall have occurred and be continuing at
the time of incurrence of such Convertible Bond Indebtedness or could result therefrom and (i) the Borrower shall have delivered to the Administrative
Agent a certificate of a Responsible Financial Officer of the Borrower certifying as to the foregoing.
8
“Copyright License” means any agreement, whether written or oral, providing for the grant of any right to use any Work under any Copyright.
“Copyrights” means (a) all proprietary rights afforded Works pursuant to Title 17 of the United States Code, including, without limitation, all
rights in mask works, copyrights and original designs, and all proprietary rights afforded such Works by other countries for the full term thereof (and
including all rights accruing by virtue of bilateral or international treaties and conventions thereto), whether registered or unregistered, including, but not
limited to, all applications for registration, renewals, extensions, reversions or restorations thereof now or hereafter provided for by law and all rights to
make applications for registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by the Borrower or any
Subsidiary or which the Borrower or any Subsidiary is licensed, authorized or otherwise granted rights under or to the Borrower or the Borrower; and (b)
all copyright rights under the copyright laws of the United States and all other countries for the full term thereof (and including all rights accruing by virtue
of bilateral or international copyright treaties and conventions), whether registered or unregistered, including, but not limited to, all applications for
registration, renewals, extensions, reversions or restorations of copyrights now or hereafter provided for by law and all rights to make applications for
copyright registrations and recordations, regardless of the medium of fixation or means of expression, which are owned by the Borrower or any Subsidiary
or which the Borrower or any Subsidiary is licensed, authorized or otherwise granted rights under or to, and which are used by the Borrower or any other
Person to manufacture, develop, import, market, promote, advertise, offer for sale, sell, use, provide and/or otherwise distribute a Product or Service.
“Covered Party” has the meaning specified in Section 12.21.
“Cure Right” has the meaning specified in Section 9.04.
“Debt Issuance” means the issuance by any Loan Party or any Subsidiary of any Indebtedness other than Indebtedness permitted under Section
8.03.
“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the
benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect.
9
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both,
would be an Event of Default.
“Default Rate” means an interest rate equal to the sum of (a) Three-Month LIBOR for the applicable Interest Period plus (b) [***]% per annum, to
the fullest extent permitted by applicable Laws.
“Defaulting Lender” means, subject to Section 2.12(b), any Lender, as determined by the Administrative Agent, that (a) has failed to perform any
of its funding obligations hereunder, including with respect to any Term A Commitments, any Term B Commitments or any Term C Commitments, within
three (3) Business Days of the date required to be funded by it hereunder, (b) has notified the Borrower or the Administrative Agent that it does not intend
to comply with its funding obligations hereunder or (c) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding
under any Debtor Relief Law, (ii) had a receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or a custodian appointed for it, (iii) taken any action in furtherance of, or indicated its consent to, approval of or
acquiescence in any such proceeding or appointment or (iv) become the subject of a Bail-In Action; provided, that, a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any Equity Interests in that Lender or any direct or indirect parent company thereof by a
Governmental Authority.
“Delaware Divided LLC” means any Delaware LLC which has been formed upon the consummation of a Delaware LLC Division.
“Delaware LLC” means any limited liability company organized or formed under the laws of the State of Delaware.
“Delaware LLC Division” means the statutory division of any Delaware LLC into two or more Delaware LLCs pursuant to Section 18-217 of the
Delaware Limited Liability Company Act.
“Deposit Account” means a “deposit account” (as defined in Article 9 of the Uniform Commercial Code), investment account, securities account
or other account in which funds are held or invested to or for the credit or account of any Loan Party.
“Deposit Account Control Agreement” means any account control agreement by and among a Loan Party, the applicable depository bank or
securities intermediary (as the case may be) and the Administrative Agent, in each case in form and substance reasonably satisfactory to the Administrative
Agent.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory is the subject of any Sanction.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction or any
issuance by any Subsidiary of its Equity Interests) of any property by any Loan Party or any Subsidiary, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith (including any disposition, allocation,
transfer or conveyance of property to a Delaware Divided LLC pursuant to a Delaware LLC Division), but excluding the following: (a) the sale, lease,
license, transfer or
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other disposition of inventory in the ordinary course of business (including Stockpile Sales), (b) the sale, lease, license, transfer or other disposition in the
ordinary course of business of surplus, obsolete or worn out equipment no longer used or useful in the conduct of business of any Loan Party or any
Subsidiary, (c) any sale, lease, license, transfer or other disposition of property to any Loan Party or any Subsidiary; provided, that, if the transferor of such
property is a Loan Party, (i) the transferee thereof must be a Loan Party or (ii) to the extent such transaction constitutes an Investment, such transaction is
permitted under Section 8.02, (d) the abandonment or other disposition of IP Rights that are not material and are no longer used or useful in any material
respect in the business of the Borrower and its Subsidiaries taken as a whole, (e) licenses, sublicenses, leases or subleases (other than relating to intellectual
property) granted to third parties in the ordinary course of business and not interfering with the Businesses, (f) any Involuntary Disposition, (g) dispositions
of cash and Cash Equivalents in the ordinary course of business pursuant to transactions permitted hereunder, (h) dispositions consisting of the sale,
transfer, assignment or other disposition of unpaid and overdue accounts receivable in connection with the collection, compromise or settlement thereof in
the ordinary course of business and not as part of a financing transaction, (i) the sale of the “Revenue Participation RightsRights” (or other comparable
term) in accordance with the terms of the Royalty Financing Documents or the terms of the Other Royalty Financing Documents, (j) any disposition of the
equity interests of JPR Royalty Sub pursuant to an exercise of remedies under the Pledge and Security Agreement (as defined in the JPR Indenture) or in
connection with the compromise or settlement of claims with holders of Indebtedness issued under the JPR Indenture, (k) dispositions of Clinical Trial
Material that, in the good faith determination of Borrower, is no longer used or useful in the conduct of the business of Borrower and its Subsidiaries, (l)
the sale, transfer or other disposition of a de minimis number of shares of the Equity Interests of a Non-U.S. Subsidiary in order to qualify members of the
governing body of such Subsidiary if required by applicable Law, (m) to the extent constituting a Disposition, Liens permitted by Section 8.01 and
Investments permitted by Section 8.02 and (n) the unwinding of Swap Contracts permitted by Section 8.03(d).
“Disqualified Capital Stock” means any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or
in part, prior to the one hundred and eighty-first (181st) day after the Maturity Date, (b) requires the payment of any cash dividends at any time prior to the
one hundred and eighty-first (181st) day after the Maturity Date, (c) contains any repurchase obligation which may come into effect prior to payment in full
of all Obligations, or (d) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests
referred to in clause (a), (b) or (c) above, in each case at any time prior to the one hundred and eighty-first (181st) day after the Maturity Date.
“Dollar” and “$” mean lawful money of the United States.
“Domain Names” means all domain names and URLs that are registered and/or owned by the Borrower or any Subsidiary or which the Borrower
or any Subsidiary is licensed, authorized or otherwise granted rights under or to.
“Earn Out Obligations” means, with respect to an Acquisition, all obligations of the Borrower or any Subsidiary to make earn out or other
contingency payments (including purchase price adjustments, non-competition and consulting agreements, other indemnity obligations, royalty payments
and sale, or development and other milestone payments) pursuant to the documentation relating to such Acquisition. For purposes of determining the
aggregate consideration paid for an Acquisition at the time of such Acquisition, the amount of any Earn Out Obligations shall be deemed to be the
maximum amount of the earn-out payments in respect thereof as specified in the documents relating to such Acquisition.
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“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the
supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause
(a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a)
or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA
Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assets” means long-term assets that are used or useful in the same or a similar line of business as the Borrower and its Subsidiaries were
engaged in on the Closing Date (or any reasonable extension or expansions thereof).
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 12.06 (subject to such consents, if any, as may
be required under Section 12.06(b)(iii)).
“English Subsidiary” means (a) BioCryst UK Limited and (b) any other Subsidiary that is organized under the laws of England from time to time.
“Environmental Laws” means any and all federal, state, local, foreign and other applicable statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based
upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract,
agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all
of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests
in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including partnership, member, membership or trust interests therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are outstanding on any date of determination, but excluding, for the avoidance of doubt, any Convertible
Bond Indebtedness to the extent that the same have not yet been converted into shares of common capital stock of the Borrower.
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“ERISA” means the Employee Retirement Income Security Act of 1974.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Internal Revenue Code (and Sections 414(m) and (o) of the Internal Revenue Code for purposes of provisions relating to
Section 412 of the Internal Revenue Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of
ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan, (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as
a termination under Sections 4041 or 4041A of ERISA, (e) the institution by the PBGC of proceedings to terminate a Pension Plan, (f) any event or
condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan,
(g) the determination that any Pension Plan is considered an at-risk plan or a plan in endangered or critical status within the meaning of Sections 430, 431
and 432 of the Internal Revenue Code or Sections 303, 304 and 305 of ERISA, or (h) the imposition of any liability under Title IV of ERISA, other than for
PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor
person), as in effect from time to time.
“Event of Default” has the meaning set forth in Section 9.01.
“Examiner” means an examiner appointed under Section 509 of the Companies Act.
“Excluded Business Interruption Proceeds” means (a) cash proceeds of business interruption insurance not in excess of $[***] in any fiscal year
(the “Annual Business Interruption Cap”) and (b) any cash proceeds of business interruption insurance in excess of the Annual Business Interruption Cap
in any fiscal year which are actually applied to operating expenses or to rebuild or replace the property or remedy the event or occurrence giving rise to the
business interruption event in respect of which such business interruption insurance proceeds are being paid.
“Excluded Prepayment Amount” has the meaning provided in Section 2.03(b)(vi).
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“Excluded Property” means, with respect to any Loan Party, including any Person that becomes a Loan Party after the Closing Date as
contemplated by Section 7.12, (a) any property which, subject to the terms of Section 8.09, is subject to a Lien of the type described in Section 8.01(i)
pursuant to documents which prohibit such Loan Party from granting any other Liens in such property, (b) any United States intent-to-use trademark
applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of
such intent-to-use trademark applications under applicable federal law; provided, that, upon submission and acceptance by the United States Patent and
Trademark Office of a statement of use or an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision), such intent-to-
use trademark application shall no longer constitute “Excluded Property” and shall be considered Collateral, (c) any permit, lease, license, contract or other
agreement of a Loan Party if the grant of a security interest in such permit, lease, license, contract or other agreement in the manner contemplated by the
Collateral Documents, under the terms thereof or under applicable Law, is prohibited and would result in the termination thereof or give the other parties
thereto the right to terminate, accelerate or otherwise alter such Loan Party’s rights, titles and interests thereunder (including upon the giving of notice or
the lapse of time or both); provided, that, (x) any such limitation described in this clause (c) on the security interests granted under the Collateral
Documents shall only apply to the extent that any such prohibition would not be rendered ineffective pursuant to the Uniform Commercial Code or any
other applicable Law or principles of equity and (y) in the event of the termination or elimination of any such prohibition or the requirement for any
consent contained in any applicable Law, permit, lease, license, contract or other agreement, to the extent sufficient to permit any such item to become
Collateral, a security interest in such permit, lease, license, contract or other agreement shall be automatically and simultaneously granted under the
applicable Collateral Document and such permit, lease, license, contract or other agreement shall no longer constitute “Excluded Property” and shall be
considered Collateral, (d) the equity interests in JPR Royalty Sub to the extent that Borrower is prohibited from pledging such interests pursuant to the
terms of the Pledge and Security Agreement (as defined in the JPR Indenture), provided that, upon the termination or expiration of such prohibition or
termination of, or payment in full of the “Secured Obligations” under the JPR Indenture, the equity interests in JPR Royalty Sub shall automatically be
subject to the security interest granted in favor of Agent hereunder and shall become part of the “Collateral”, (e) the HSBC Cash Collateral Accounts and
(f) the Equity Interests of any Non-U.S. Subsidiary (other than any Irish Subsidiary and any English Subsidiary) to the extent not required to be pledged to
secure the Obligations pursuant to Section 7.14(a)., (g) the Participation Right (as defined in the 2020 RP Royalty Purchase Agreement as in effect on
the Closing Date), solely to the extent that title thereto has been transferred to the 2020 RP Buyer pursuant to the terms of the 2020 RP Royalty
Purchase Agreement, (h) the 2021 Revenue Participation Right (as defined in the 2021 RP Royalty Purchase Agreement as in effect on the
Amendment No. 1 Effective Date), solely to the extent that title thereto has been transferred to the 2021 RP Buyer pursuant to the terms of the
2021 RP Royalty Purchase Agreement and (i) the Revenue Participation Right (as defined in the OMERS Royalty Purchase Agreement as in effect
on the Amendment No. 1 Effective Date) solely to the extent that title thereto has been transferred to the OMERS Buyer pursuant to the terms of
the OMERS Royalty Purchase Agreement.
“Excluded Subsidiary” means (a) subject to Section 7.21(c), JPR Royalty Sub, (b) any Immaterial Non-U.S. Subsidiary, (c) MDCP, (d) any Non-
U.S. Regulatory Approval Subsidiaries, (e) any Non-U.S. Subsidiary (other than any English Subsidiary and any Irish Subsidiary), the grant or perfection
of a security interest in the assets of such Non-U.S. Subsidiary in support of, or the guaranteeing of, the Obligations would result in material adverse tax
consequences to the Borrower and its Subsidiaries (as reasonably determined by the Borrower with the consent of the Administrative Agent) and (f) any
Non-U.S. Subsidiary (other than any English Subsidiary and any Irish Subsidiary) with respect to which it is reasonably agreed by the Borrower and the
Administrative Agent that the cost or other consequences of providing a guarantee of the Obligations shall outweigh the benefits to be obtained by the
Lenders therefrom as a result of capital maintenance rules, corporate benefit requirements or similar Laws of the jurisdiction of organization of such Non-
U.S. Subsidiary.
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“Exempt Immaterial Subsidiary” means at any time, an Exempt Subsidiary that (a) as of the last day of the fiscal quarter of the Borrower most
recently ended for which the Borrower was required to deliver financial statements pursuant to Section 7.01(a) or (b), did not have (together with its
Subsidiaries, on a consolidated basis) assets in excess of (i) [***]% of the consolidated total assets of the Borrower and its Subsidiaries at the end of such
fiscal quarter for any one Exempt Immaterial Subsidiary and (ii) [***]% of the consolidated total assets of the Borrower and its Subsidiaries at the end of
such fiscal quarter for all Exempt Immaterial Subsidiaries in the aggregate and (b) for the period of four fiscal quarters most recently ended for which the
Borrower was required to deliver financial statements pursuant to Section 7.01(a) or (b), did not have (together with its Subsidiaries, on a consolidated
basis) Consolidated Revenues (without giving effect to proviso in the definition thereof) attributable to such Exempt Subsidiary for such period in excess of
(i) [***]% of Consolidated Revenues for such period for any one Exempt Immaterial Subsidiary and (ii) [***]% of Consolidated Revenues for such period
for all Exempt Immaterial Subsidiaries in the aggregate.
“Exempt Subsidiary” means any of the following: (a) BioCryst UK, Ltd., BioCryst Deutschland GmbH and BioCryst France SAS and (b) any
other Non U.S. Subsidiary that is formed after the Closing Date (but, for the avoidance of doubt, excluding any Non-U.S. Subsidiary that is acquired after
the Closing Date) and organized under the laws of France, Germany, Ireland, [***], Japan, [***] or United Kingdom.
“Existing Indebtedness” means all Indebtedness for borrowed money of the Borrower and its Subsidiaries in existence immediately prior to the
Term A Borrowing Date, including the MidCap Indebtedness.
“Extraordinary Receipts” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including
(1) tax refunds, (2) pension plan reversions, (3) indemnity payments (other than to the extent such indemnity payments are (i) immediately payable to a
Person that is not an Affiliate of the Borrower or any of its Subsidiaries or (ii) received by the Borrower or any of its Subsidiaries as reimbursement for (A)
actual losses or costs incurred by the Borrower or any of its Subsidiaries or (B) any payment previously made, in each case by the Company and its
Subsidiaries in connection with any such indemnity payments), and (4) proceeds of judgments, settlements or other consideration of any kind in connection
with any cause of action (other than to the extent (i) an amount equal to such proceeds of judgments, settlements or causes of action or such proceeds of
judgments, settlements or causes of action have already been paid or are immediately payable to a Person that is not the Borrower or any of its Subsidiaries
or Affiliates in accordance with requirements of law, settlements of the underlying events related thereto or with contractual obligations entered into in the
ordinary course of business in effect prior to such judgment, settlement or cause or action or (ii) such proceeds of judgments, settlements or causes of
action are received by the Borrower or any of its Subsidiaries as reimbursement for (A) actual losses or (B) any out-of-pocket costs, in each case incurred
or made by the Borrower and its Subsidiaries prior to the receipt thereof directly related to the event resulting from the subject judgment, settlement or
cause of action); provided, that Extraordinary Receipts shall in any event not include (x) proceeds described in Section 2.03(b)(i) hereof, (y) proceeds of
purchase price adjustments in connection with any Permitted Acquisition and (z) proceeds of issuances of common equity or other Equity Interests (other
than Disqualified Capital Stock).
“Facility” means the Term A Facility, the Term B Facility or the Term C Facility, as the context may require.
15
“Facility Termination Date” means the date as of which all of the following shall have occurred: (a) all of the Commitments have terminated and
(b) all Obligations have been paid in full in cash (other than contingent indemnification obligations for which no claim has been asserted).
“Facilities” means, at any time, a collective reference to the facilities (including any laboratory) and real properties owned, leased or operated by
any Loan Party or any Subsidiary.
“FATCA” means Sections 1471 through 1474 of the Internal Revenue Code as of the Closing Date (or any amended or successor version that is
substantively comparable and not materially more onerous to comply with) and any current or future regulations thereunder, official interpretations thereof,
any agreement entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code and any treaty, law, regulation or intergovernmental agreements
entered into (which facilitates the implementation of any law or regulation) thereunder.
“FDA” means the United States Food and Drug Administration or any successor entity thereto.
“FDCA” means the Federal Food, Drug, and Cosmetic Act, as amended, 21 U.S.C. Section 301 et seq. and all regulations promulgated thereunder.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided, that, if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business Day.
“Flood Hazard Property” means any real property subject to a Mortgage that is in an area designated by the Federal Emergency Management
Agency as having special flood or mudslide hazards.
“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in notes,
loans and/or similar extensions of credit in the ordinary course of its activities.
“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards
Board, consistently applied and as in effect from time to time.
“Government Account Debtor” means the United States government or a political subdivision thereof, or any state, county or municipality or
department, agency or instrumentality thereof, that is responsible for payment of an Account under any Government Reimbursement Program, or any
agent, administrator, intermediary or carrier for the foregoing.
“Government Account Debtor Account” means a Deposit Account in the name of a Loan Party that receives all incoming payments from
Government Account Debtors and other account debtors of the Loan Parties, which Deposit Account shall be subject to the requirements of Section 7.16(b)
(ii) hereof.
16
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing,
regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the
European Central Bank).
“Government Reimbursement Program” means (a) Medicare, (b) Medicaid, (c) the Federal Employees Health Benefit Program under 5 U.S.C. §§
8902 et seq., (d) TRICARE, (e) CHAMPVA, or (f) if applicable within the context of this Agreement, any agent, administrator, administrative contractor,
intermediary or carrier for any of the foregoing.
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such
Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or
any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other
obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), (b) any Lien on any assets
of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such
Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien) or (c) any direct or indirect liability, contingent
or not, of that Person for (i) any obligations for undrawn letters of credit for the account of that Person or (ii) all obligations from any interest rate, currency
or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation
in interest rates, currency exchange rates or commodity prices. The amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
“Guarantors” means (a) each Subsidiary of the Borrower identified as a “Guarantor” on the signature pages hereto and (b) each other Person that
joins as a Guarantor (i) pursuant to Section 7.12 (and “Guarantor” shall mean, as the context may require, each of them individually) or (ii) subject to the
Administrative Agent’s prior written consent, at the written election of the Borrower, in each case of the foregoing clauses (a) and (b), together with their
successors and permitted assigns.
“Guaranty” means the Guaranty made by the Guarantors in favor of the Secured Parties pursuant to Article IV.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
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“Healthcare Laws” means all applicable Laws relating to the procurement, testing, development, clinical and non-clinical evaluation or
investigation, product approval, manufacture, production, distribution, dispensing, importation, exportation, use, handling, quality, reimbursement, sale,
labeling, advertising, promotion, or postmarket requirements of any drug product or any ingredient or component thereof, including as applicable the
FDCA and similar state or foreign laws, controlled substances laws, consumer product safety laws, Medicare, Medicaid, TRICARE, HIPAA, CLIA, the
Patient Protection and Affordable Care Act (P.L. 111-1468), all federal and state fraud and abuse laws, including, without limitation, the federal Anti-
Kickback Statute (42 U.S.C. §1320a-7b), the civil False Claims Act (31 U.S.C. §3729 et seq.) and all laws, policies, procedures, requirements and
regulations pursuant to which Permits are issued, in each case, as the same may be amended from time to time.
“HHS” means the United States Department of Health and Human Services and any successor agency thereof.
“HIPAA” means (a) the Health Insurance Portability and Accountability Act of 1996; (b) the Health Information Technology for Economic and
Clinical Health Act (Title XIII of the American Recovery and Reinvestment Act of 2009); and (c) any state or local laws regulating the privacy and/or
security of individually identifiable information imposing a more restrictive standard, in each case as the same may be amended, modified or supplemented
from time to time, any successor statutes thereto, and any and all rules or regulations promulgated from time to time thereunder.
“HSBC Cash Collateral Accounts” means, collectively, Deposit Account #[***] and Deposit Account #[***] of the Borrower established and
maintained at HSBC Bank for the sole purpose of securing the Borrower’s obligations under the HSBC Letter of Credit; provided that (a) no such Deposit
Account shall hold an aggregate of cash and cash equivalents in excess of [***] percent ([***]%) of the aggregate face amount of the letters of credit it is
securing and (b) with respect to all such Deposit Accounts, the aggregate amount deposited there in at any time does not exceed [***] Dollars ($[***]).
“HSBC Letter of Credit” means the letter of credit issued by HSBC Bank in favor of the landlord with respect to the Borrower’s leased real
property located at 2100 Riverchase Center, Ste. 200 / Building 200, Birmingham, AL 35244, in an aggregate face amount equal to One Million Four
Hundred Thousand Dollars ($1,400,000).
“Immaterial Non-U.S. Subsidiary” means at any time a Non-U.S. Subsidiary that (a) as of the last day of the fiscal quarter of the Borrower most
recently ended for which the Borrower was required to deliver financial statements pursuant to Section 7.01(a) or (b), did not have (together with its
Subsidiaries, on a consolidated basis) assets in excess of (i) [***]% of the consolidated total assets of the Borrower and its Subsidiaries at the end of such
fiscal quarter for any one Immaterial Non-U.S. Subsidiary and (ii) [***]% of the consolidated total assets of the Borrower and its Subsidiaries at the end of
such fiscal quarter for all Immaterial Non-U.S. Subsidiaries in the aggregate and (b) for the period of four fiscal quarters most recently ended for which the
Borrower was required to deliver financial statements pursuant to Section 7.01(a) or (b), did not have (together with its Subsidiaries, on a consolidated
basis) Consolidated Revenues (without giving effect to proviso in the definition thereof) attributable to such Non-U.S. Subsidiary for such period in excess
of (i) [***]% of Consolidated Revenues for such period for any one Immaterial Non-U.S. Subsidiary and (ii) [***]% of Consolidated Revenues for such
period for all Immaterial Non-U.S. Subsidiaries in the aggregate; provided, however, that in no event will any Non U.S. Subsidiary (x) that is organized
under the laws of France, Germany, Ireland, [***], Japan, [***] or United Kingdom or (y) which is acquired pursuant to a Permitted Acquisition, in each
case, constitute an Immaterial Non-U.S. Subsidiary.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:
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(a) all obligations, whether current or long-term, for borrowed money (including the Obligations) and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b) all purchase money Indebtedness;
(c) the principal portion of all obligations under conditional sale or other title retention agreements relating to property purchased by
such Person or any Subsidiary thereof (other than customary reservations or retentions of title under agreements with suppliers entered into in
the ordinary course of business);
(d) all obligations arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety
bonds and similar instruments;
(e) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary
course of business and, in each case, not due more than 90 days after the date on which such trade account payable was created), including,
without limitation, any Earn Out Obligations that have become a liability on the balance sheet in accordance with GAAP;
(f) the Attributable Indebtedness of Capital Leases, Securitization Transactions and Synthetic Leases;
(g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Disqualified
Capital Stock in such Person or any other Person, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends;
(h) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on, or payable out of the proceeds of production from, property owned or acquired by such Person, whether or not
the obligations secured thereby have been assumed;
(i) the Swap Termination Value of any Swap Contract;
(j) all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (i) above of any other Person;
and
(k) all Indebtedness of the types referred to in clauses (a) through (j) above of any partnership or joint venture (other than a joint
venture that is itself a corporation or limited liability company) in which such Person or a Subsidiary thereof is a general partner or joint
venturer, unless such Indebtedness is expressly made non-recourse to such Person or such Subsidiary.
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For purposes hereof, the amount of any direct obligation arising under letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds and similar instruments shall be the maximum amount available to be drawn thereunder.
“Indemnitee” has the meaning set forth in Section 12.04(b).
“Indirect Lender” means any Person that is not a U.S. Person and either (1) directly holds equity interests in a Lender that is treated as a
partnership or disregarded entity for United States federal income tax purposes or (2) directly holds equity interests in a U.S. Person that is treated as a
partnership or disregarded entity for U.S. federal income tax purposes that, directly, or indirectly through entities each of which is treated a partnership or a
disregarded entity for U.S. federal income tax purposes, holds equity interests in a Lender.
“Information” has the meaning set forth in Section 12.07.
“Intercreditor Agreement” means the Amended and Restated Intercreditor Agreement, dated as of the ClosingAmendment No. 1 Effective Date,
by and among the Administrative Agent, the 2020 RP Buyer, the 2021 RP Buyer and the OMERS Buyer, and acknowledged and agreed to by the
Borrower and the Guarantors as amended, amended and restated, supplemented and otherwise modified from time to time in accordance with the terms
thereof.
“Interest Period” means, with respect to any Borrowing (a) initially, the period beginning on (and including) the date of such Borrowing and
ending on (and including) the next following Interest Payment Date, and (b) thereafter, the period beginning on (and including) the first day immediately
following such Interest Payment Date and ending on the earlier of (and including) (i) the next following Interest Payment Date and (ii) the Maturity Date.
“Interest Payment Date” means (a) the last Business Day of each March, June, September and December, and (b) the Maturity Date.
“Interim Financial Statements” means the unaudited consolidated financial statements of the Borrower and its Subsidiaries for each of the fiscal
quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, including balance sheets and statements of income or operations, shareholders’
equity and cash flows.
“Internal Revenue Code” means the United States Internal Revenue Code of 1986, as amended.
“Internal Revenue Service” means the United States Internal Revenue Service, as amended.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or
other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in, another Person, including any partnership or joint venture interest in such other
Person and any arrangement pursuant to which the investor Guarantees Indebtedness of such other Person, or (c) an Acquisition. For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of
such Investment, but giving effect to any repayments of principal in the case of Investments in the form of loans and any return of capital or return on
Investment in the case of equity Investments, but in each case not in excess of the amount of the initial Investment.
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“Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of
any Loan Party or any of its Subsidiaries.
“IP Rights” means, collectively, all Confidential Information, all Copyrights, all Copyright Licenses, all Domain Names, all Permits, all Other
Intellectual Property, all Other IP Agreements, all Patents, all Patent Licenses, all Proprietary Databases, all Proprietary Software, all Trademarks, all
Trademark Licenses, all Trade Secrets, all Websites and all Website Agreements.
“IP Security Agreement” means notices of grant of security interest in the form required by the Security Agreement executed and delivered by a
Loan Party.
“Irish All Asset Debenture” means that certain Irish law governed all asset debenture (other than Excluded Property) dated as of the Closing Date
executed in favor of the Administrative Agent, for the benefit of the Secured Parties, by each of the Loan Parties that is an Irish Subsidiary, in form and
substance reasonably acceptable to the Administrative Agent, as amended or modified from time to time in accordance with the terms hereof, to include
such other agreements, third-party assessments, certificates, notices, acknowledgments of such notices and documents that the Administrative Agent may
reasonable request in connection therewith as is customary or appropriate.
“Irish Security Documents” means, collectively, the Irish All Asset Debenture and the Irish Share Charge.
“Irish Share Charge” means that certain Irish law governed share charge dated as of the Closing Date executed in favor of the Administrative
Agent, for the benefit of the Secured Parties, by each of the Loan Parties holding any Equity Interests in an Irish Subsidiary, in form and substance
reasonably acceptable to the Administrative Agent, as amended or modified from time to time in accordance with the terms hereof.
“Irish Subsidiary” means any Subsidiary that is incorporated under the laws of Ireland.
“Joinder Agreement” means a joinder agreement substantially in the form of Exhibit E executed and delivered by a Subsidiary in accordance with
the provisions of Section 7.12.
“JPR Indenture” means that certain Indenture, dated as of March 9, 2011, by and between JPR Royalty Sub and U.S. Bank, National Association,
as in effect on the date hereof.
“JPR Royalty Sub” means JPR Royalty Sub LLC, a Delaware limited liability company.
“Key Products” means, collectively, the Orladeyo Product Family and, the BCX9930 Product Family and the Complement Inhibitor Product
Family.
“Key Territories” means the United States, France, Germany, [***], [***] and the United Kingdom.
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the
enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits
of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
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“Legal Reservations” means:
(a) the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by
laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b) the time barring of claims under the Statute of Limitation 1957 and defences of set-off or counterclaim;
(c) the principle that security expressed to be fixed security may take effect as floating security; and
(d) any other matters which are set out as qualifications or reservations as to matters of law of general application in any legal
opinions delivered pursuant to this Agreement.
“Lenders” means each of the Persons identified as a “Lender” on the signature pages hereto and their successors and assigns.
“Lending Office” means, as to any Lender, the office address of such Lender and, as appropriate, account of such Lender set forth on Schedule
12.02 or such other address or account as such Lender may from time to time notify the Borrower and the Administrative Agent.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).
“Loan” means an extension of credit by a Lender to the Borrower under Article II in the form of a Term A Loan, a Term B Loan or a Term C
Loan.
“Loan Documents” means this Agreement, each Note, each Joinder Agreement, each Collateral Document, the Intercreditor Agreement and any
other agreement, instrument or document designated by its terms as a “Loan Document”.
“Loan Notice” means a notice of a Borrowing of Loans pursuant to Section 2.02(a), which shall be substantially in the form of Exhibit A.
“Loan Parties” means, collectively, the Borrower and each Guarantor.
“Make-Whole Amount” means, on any date of determination, with respect to any amount of any Loan that is repaid or required to be repaid prior
to the date as set forth in clause (a) of the definition of “Maturity Date”, an amount equal to the amount, if any, by which (a) the sum of (i) one hundred two
percent (102%) of the principal amount of the Loan repaid or required to be repaid plus (ii) the present value as of such date of determination (as
determined by the Administrative Agent in accordance with customary practice) of all interest that would have accrued on the principal amount of the
Loans repaid or required to be repaid through and including the second anniversary of the date of the Borrowing of such Loan, computed using a discount
rate equal to the Three-Month Treasury Rate (provided that if a PIK Election was made for the most recently completed Interest Period, this present value
computation shall be calculated assuming that the Borrower would have made the PIK Election for all of the remaining periods eligible for such PIK
Election) plus one half of one percent (0.50%), exceeds (b) the principal amount of the Loan repaid or required to be repaid.
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“Market Withdrawal” means a Person’s removal or correction of a distributed product which involves a minor violation that would not be subject
to legal action by the FDA, CMS or any other Governmental Authority or which involves no violation, e.g., normal stock rotation practices, routine
equipment adjustments and repairs, etc., as that term is defined in 21 C.F.R. 7.3(j).
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the business, assets, properties, liabilities
(actual or contingent), or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole, (b) a material impairment of the rights
and remedies of the Administrative Agent or any Lender under any Loan Document to which it is a party or a material impairment in the perfection, value
or priority of the Administrative Agent’s security interests in the Collateral, (c) a material impairment of the ability of any Loan Party to perform its
obligations under any Loan Document to which it is a party, or (d) a material adverse effect upon the legality, validity, binding effect or enforceability
against any Loan Party of any Loan Document to which it is a party.
“Material Contracts” means (i) the Organization Documents of the Loan Parties, (ii) those agreements listed on Schedule 6.22, (iii) the Royalty
Financing Documents and any Other Royalty Financing Documents and (iv) after the Closing Date, any agreement of the type described in any of clauses
(a) through (g) of Section 6.22.
“Material IP Rights” means IP Rights (i) with respect to each of the Key Products and (ii) any other Product material to the Loan Parties, their
respective properties or the conduct or operation of their respective businesses taken as a whole.
“Material Product” means (a) each of the Key Products and (b) each other Product the loss of which could reasonably be expected, either
individually or, together with its related (as determined based on the applicable drug substance) Products in the aggregate, to have a Material Adverse
Effect.
“Material Required Permit” means (a) any Required Permit with respect to any Material Product in any Key Territory or Ireland and (b) any other
Required Permit where, in the case of this clause (b), the loss of which, the failure to possess or maintain, or any restriction placed thereon, in each case,
could reasonably be expected, either individually or in the aggregate, to result in (i) a material adverse effect on any Product Development and
Commercialization Activities or (ii) a Material Adverse Effect.
“Maturity Date” means (a) December 7, 2025, or (b) if earlier, such earlier date on which the Loans are accelerated in whole pursuant to Section
9.02 hereof; provided, that, if such date is not a Business Day, the Maturity Date shall be the first Business Day immediately preceding such date.
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“Maximum Rate” has the meaning set forth in Section 12.09.
“MDCP” means MDCP, LLC, a Delaware limited liability company.
“Medicaid” shall mean a medical assistance program administered by a state agency and approved by the CMS pursuant to Title XIX of the Social
Security Act, (42 U.S.C. §§ 1396 et seq.) and the regulations promulgated thereunder, or any successor program.
“Medicare” means that certain federal program providing health insurance for eligible elderly and other individuals, under which physicians,
hospitals, skilled nursing homes, home health care and other providers are paid for certain covered services they provide to the beneficiaries of such
program, which program is more fully described in Title XVIII of the Social Security Act (42 U.S.C. §§ 1395 et seq.) and the regulations promulgated
thereunder, or any successor program.
“MidCap Indebtedness” means the all Indebtedness or other obligations of the Borrower and its Subsidiaries outstanding under that certain Second
Amended and Restated Credit and Security Agreement, dated as of February 5, 2019, by and among the Borrower, the Subsidiaries of the Borrower party
thereto from time to time, MidCap Financial Trust, as administrative agent, and the lenders party thereto from time to time, the “Security Documents” (as
defined therein) and all other agreements and documents entered into in connection therewith, in each case, as amended, modified or otherwise
supplemented from time to time prior to the Term A Borrowing Date.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Mortgages” means, individually or collectively, as the context requires, each of the mortgages, deeds of trust or deeds to secure debt that purport
to grant to the Administrative Agent, for the benefit of the Secured Parties, a security interest in the fee interest and/or leasehold interests of any Loan Party
in real property (other than Excluded Property).
“Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any
ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least
two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“NDA” means a new drug application filed with the FDA pursuant to Section 505(b) of the FDCA, along with all supplements and amendments
thereto, and any similar application for marketing authorization required by any country, jurisdiction or Governmental Authority other than the United
States.
“Net Cash Proceeds” means the aggregate cash or Cash Equivalents proceeds received by any Loan Party or any Subsidiary in respect of any
Disposition, Debt Issuance, Involuntary Disposition or Extraordinary Receipt (other than Excluded Business Interruption Proceeds), net of (a) reasonable
direct costs incurred in connection therewith (including, without limitation, legal, accounting and investment banking fees, and sales commissions), (b)
Taxes paid or payable as a result thereof, (c) in the case of any Disposition, the amount necessary to retire any Indebtedness secured by a Permitted Lien
(ranking senior to any Lien of the Administrative Agent) on the related property and (d) in the case of any Extraordinary Receipt, reasonable direct costs
incurred in connection with the collection of such proceeds, awards or other payments; it being understood that “Net Cash Proceeds” shall include, without
limitation, any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received by any Loan Party or any
Subsidiary in any Disposition, Involuntary Disposition or Extraordinary Receipt.
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“Net Cash Proceeds - Licensing” means Net Cash Proceeds received by the Borrower or any Subsidiary in respect of any Non-Permitted License
or Permitted License, including, without limitation, all upfront payments, royalties, milestone payments, sublicense revenues or other proceeds received in
connection therewith.
“Net Cash Proceeds – Non-Permitted Royalty Financing” means Net Cash Proceeds received by the Borrower or any Subsidiary in respect of any
Non-Permitted Royalty Financing.
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders
or all affected Lenders in accordance with the terms of Section 12.01(a) and (b) has been approved by the Required Lenders.
“Non-FDA Governmental Action” has the meaning set forth in Section 9.01(s).
“Non-Key Products” means Products of the Borrower and its Subsidiaries other than the Key Products.
“Non-Key Territories” means any jurisdiction other than the Key Territories.
“Non-Permitted License” means any exclusive or non-exclusive license or sublicense of a Key Product (or any IP Rights related to a Key Product)
in any Key Territory. For the avoidance of doubt, but subject to the definition of Permitted License, Non-Permitted Licenses shall not include (i) any
exclusive or non-exclusive license or sublicense of a Key Product (or any IP Rights related to a Key Product) in a Non-Key Territory and (ii) any exclusive
or non-exclusive license or sublicense of a Product that is not a Key Product (or any IP Rights related to such Product that is not a Key Product) in any
territory.
“Non-Permitted Royalty Financing” means the sale, transfer or financing of a right to receive any sales or revenue or other consideration with
respect to a Product (or any IP Rights related a Product) other than the Royalty FinancingFinancings and any Other Royalty Financing.
“Non-U.S. Regulatory Approval Subsidiary” means any Non-U.S. Subsidiary organized under the laws of any of any jurisdiction (other than
France, Germany, Ireland, [***], Japan, [***] and the United Kingdom), all of the assets of which consist of a local law regulatory approval; provided,
however, that in no event will any Non U.S. Subsidiary which is acquired pursuant to a Permitted Acquisition constitute a Non-U.S. Regulatory Approval
Subsidiary.
“Non-U.S. Subsidiary” means any Subsidiary that is not a U.S. Subsidiary.
“Note” or “Notes” means the Term A Notes, the Term B Notes, and the Term C Notes, individually or collectively, as appropriate.
“Obligations” means (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Loan (including any PIK Interest Payments) and (b) all costs and expenses incurred in connection with
enforcement and collection of the foregoing, including the fees, charges and disbursements of counsel, in each case, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the
debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.
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“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“OMERS Buyer” means the “Buyer” as such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment
No. 1 Effective Date.
“OMERS Royalty Financing” means, subject to the Royalty Financing Restrictions, that certain true sale of the OMERS Revenue
Participation Right to OCM IP Healthcare Holdings Limited, an Ontario corporation, on the Amendment No. 1 Effective Date pursuant to the
terms of the OMERS Royalty Purchase Agreement.
“OMERS Royalty Purchase Agreement” means the Purchase and Sale Agreement, dated as of the Amendment No. 1 Effective Date,
between the Borrower and OCM IP Healthcare Holdings Limited, an Ontario corporation, as amended, supplemented or otherwise modified from
time to time in accordance with the terms of the Loan Documents.
“OMERS Royalty Financing Documents” means the OMERS Royalty Purchase Agreement, the OMERS Royalty Financing Side Letter,
the Intercreditor Agreement and any other agreement, instrument or document entered into from time to time in connection therewith, in each
case, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Loan Documents.
“OMERS Royalty Financing Side Letter” means the letter agreement, dated as of the Amendment No. 1 Effective Date between the
Borrower and OCM IP Healthcare Holdings Limited, an Ontario corporation, as amended, supplemented or otherwise modified from time to time
in accordance with the terms of the Loan Documents.
“OMERS Revenue Participation Right” means, the “Revenue Participation Right” as such term is defined in the OMERS Royalty
Purchase Agreement as in effect on the Amendment No. 1 Effective Date.
“OMERS Royalty Payments” means the “Royalty Payments” as such term is defined in the OMERS Royalty Purchase Agreement as in
effect on the Amendment No. 1 Effective Date.
“Operating Lease” means any lease of any Facility separate and distinct from the owner of the applicable Facility, and all amendments thereto and
extensions thereof.
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws, (b) with respect
to any limited liability company, the certificate or articles of formation, incorporation or organization and operating agreement or constitutional documents,
and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of
formation or organization, including in each case of the foregoing clauses (a) through (c) the equivalent or comparable constitutive documents with respect
to any non-U.S. jurisdiction, and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with
the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or
organization of such entity.
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“Orladeyo” means the Product described in the NDA No. 214094 filed with the FDA and analogous applications in jurisdictions outside the
United States and referenced by the Borrower as ORLADEYO™ (berotralstat).
“Orladeyo Product Family” means (a) Orladeyo, [***].
“Orladeyo Consolidated U.S. Net Product Sales” means, for any period, consolidated net revenues of the Loan Parties from sales of Orladeyo in
the United States for the usage by patients in the United States for such period, excluding (i) the revenues of any Subsidiary to the extent that the
declaration or payment of dividends or similar distributions by that Subsidiary of the income resulting from such revenues is not at the time permitted by
operation of the terms of its Organization Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (ii) for the avoidance of doubt, distribution income, service payments, royalty payments, license income, and all other forms
of non-product sales during such period and (iii) the aggregate amount of all payments paid or required to be paid in respect of such period under the
Royalty Financing Documents and, for the avoidance of doubt and without limiting the restrictions set forth in the definitions of Other Royalty Financings
and Royalty Financing Restrictions, the Other Royalty Financing Documents, all as determined and reported in accordance with GAAP.
“Orladeyo Net Product Sales” means, for any period, consolidated net revenues of the Borrower and its Subsidiaries from sales of the Orladeyo
Product Family in any jurisdiction for such period, all as determined and reported in accordance with GAAP.
“Other Intellectual Property” means all worldwide intellectual property rights, industrial property rights, proprietary rights and common-law
rights, whether registered or unregistered, which are not otherwise included in Confidential Information, Copyrights, Copyright Licenses, Domain Names,
Permits, Other IP Agreements, Patents, Patent Licenses, Trademarks and Trademark Licenses, Proprietary Databases, Proprietary Software, Websites,
Website Agreements and Trade Secrets, including, without limitation, all rights to and under all new and useful algorithms, concepts, data (including all
clinical data relating to a Product or Service), databases, designs, discoveries, inventions, know-how, methods, processes, protocols, show-how, software
(other than commercially available, off-the-shelf software), specifications for Products and processes for Services, techniques, technology, trade dress and
all improvements thereof and thereto, which is owned by the Borrower or any Subsidiary or which the Borrower or any Subsidiary is licensed, authorized
or otherwise granted rights under or to, and which is used by the Borrower or any other Person to advertise, develop, manufacture, import, market,
promote, offer for sale, sell, use, provide and/or otherwise distribute a Product or Service.
“Other IP Agreements” means any agreement, whether written or oral, providing for the grant of any right under any Confidential Information,
Permits, Proprietary Database, Proprietary Software, Trade Secret and/or any other IP Rights, to the extent that the grant of any such right is not otherwise
the subject of a Copyright License, Trademark License, Patent License or Website Agreement.
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“Other Royalty Financings” means one or more future royalty financings through true sales by the Borrower of a synthetic royalty tied to annual
net sales of (i) BCX9930 within the Key Territories, (ii) BCX9930 within the Non-Key Territories, (iii) the Complement Inhibitor within the Key
Territories, (iv) the Complement Inhibitor within the Non-Key Territories and/or (iiiv) the Non-Key Products, pursuant to the terms of the Other
Royalty Financing Documents.
“Other Royalty Financing Documents” means the documents governing or evidencing any Other Royalty Financing, which shall, in each case, be
subject to the Royalty Financing Restrictions.
“Outstanding Amount” means with respect to any Loans on any date, the aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of any Loans occurring on such date.
“Participant” has the meaning set forth in Section 12.06(h).
“Participant Register” has the meaning specified in Section 12.06(d).
“Patent License” means any agreement, whether written or oral, providing for the grant of any right under any Patent.
“Patents” means all letters patent and patent applications in the United States and all other countries (and all letters patent that issue therefrom)
and all reissues, extensions, renewals, divisions and continuations (including continuations-in-part and continuing prosecution applications) thereof, for the
full term thereof, together with the right to claim the priority thereto, which are owned by the Borrower or any Subsidiary or which the Borrower or any
Subsidiary is licensed, authorized or otherwise granted rights under or to.
“PATRIOT Act” means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)).
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“Pension Act” means the Pension Protection Act of 2006.
“Pension Funding Rules” means the rules of the Internal Revenue Code and ERISA regarding minimum required contributions (including any
installment payment thereof) to Pension Plans and set forth in Section 412, 430, 431, 432 and 436 of the Internal Revenue Code and Sections 302, 303, 304
and 305 of ERISA.
“Pension Plan” means any employee pension benefit plan (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained or is
contributed to by the Borrower or any ERISA Affiliate and that is either covered by Title IV of ERISA or is subject to minimum funding standards under
Section 412 of the Internal Revenue Code.
“Perfection and Due Diligence Certificate” means that certain Perfection and Due Diligence Certificate dated as of the Closing Date executed by
the Loan Parties and certified to the Lenders and the Administrative Agent, as amended or modified from time to time in accordance with the terms hereof.
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“Permits” means licenses, certificates, accreditations, product clearances or approvals, provider numbers or provider authorizations, marketing
authorizations, other authorizations, registrations, permits, consents and approvals issued in connection with the conduct of the Borrower’s or any
Subsidiary’s business or to comply with any applicable Laws, including those issued by any Governmental Authority or any other Person, including,
without limitation, those relating to Environmental Laws.
“Permitted Acquisition” means an Investment consisting of an Acquisition by a Loan Party; provided, that: (x) the Required Lenders have
consented thereto in writing or (y) (a) no Default or Event of Default shall have occurred and be continuing or would result from such Acquisition, (b) the
property acquired (or the property of the Person acquired) in such Acquisition is used or useful in the same or a reasonably related line of business as the
Borrower and its Subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions thereof), (c) the Administrative Agent shall
have received all items in respect of the Equity Interests or property acquired in such Acquisition required to be delivered by the terms of Section 7.12
and/or Section 7.14, (d) such Acquisition shall not be a “hostile” acquisition and shall have been approved by the Board of Directors and/or the
shareholders (or equivalent) of the applicable Loan Party and the target of such Acquisition, (e) the Borrower shall have delivered to the Administrative
Agent pro forma financial statements for the Borrower and its Subsidiaries after giving effect to such Acquisition for the twelve month period ending as of
the most recent fiscal quarter end in a form satisfactory to the Administrative Agent, (f) the representations and warranties made by the Loan Parties in each
Loan Document shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by
materiality or reference to Material Adverse Effect) both (i) at and as if made as of the date of execution of the definitive documentation for such
Acquisition (assuming for such purposes that such Acquisition has been consummated) and (ii) at and as if made as of the date of such Acquisition
(assuming for such purposes that such Acquisition has been consummated) except to the extent any such representation and warranty expressly relates to an
earlier date, in which case it shall be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified
by materiality or reference to Material Adverse Effect) as of such earlier date, (g) Borrower shall have demonstrated to the reasonable satisfaction of the
Administrative Agent that, after giving effect to such Acquisition on a pro forma basis, the Loan Parties are in compliance with the financial covenants set
forth in Section 8.16 and, if the Term C Borrowing Date has occurred and for so long as the Borrower has not exercised the Cure Right in accordance with
Section 9.04, Section 8.17, (h) the aggregate consideration (including cash and non-cash consideration, deferred purchase price and any Earn Out
Obligations) paid by the Borrower and its Subsidiaries for all such Acquisitions during the term of this Agreement shall not exceed $[***] in the aggregate,
and (i) Borrower shall have delivered to the Administrative Agent a certificate of a Responsible Financial Officer of Borrower certifying that the foregoing
conditions have been satisfied.
“Permitted Contingent Obligations” means (a) Guarantees resulting from endorsements for collection or deposit in the ordinary course of business;
(b) Guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds and other similar obligations not to
exceed [***] Dollars ($[***]) in the aggregate at any time outstanding; (c) Guarantees arising under indemnity agreements with title insurers; (d)
Guarantees arising with respect to customary indemnification obligations in favor of purchasers in connection with Dispositions of personal property assets
permitted hereunder; (e) Guarantees arising under the Loan Documents; (f) [reserved]; (g) Guarantees existing or arising in connection with any security
deposit or letter of credit obtained for the sole purpose of securing a lease of real property, or in connection with ancillary bank services such as a corporate
credit card facility, provided that the aggregate face amount of all such security deposits, letters of credit and ancillary bank services does not at any time
exceed [***] Dollars ($[***]); and (h) the HSBC Letter of Credit secured solely by Liens permitted under Section 8.01(s).
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“Permitted Licenses” means, collectively, (a) the licenses set forth in Schedule 1.01, and (b) exclusive and non-exclusive licenses and sublicenses
(other than any Non-Permitted License) entered into after the Closing Date for the use of IP Rights of the Borrower or any of its Subsidiaries entered into in
the ordinary course of business and not interfering in any material respect with the business of any Loan Party or any of its Subsidiaries; provided, that,
solely with respect to clause (b) above, with respect to each such license and sublicense, (i) no Event of Default has occurred or is continuing at the time of
such license or sublicense, (ii) after giving effect thereto, the Borrower and its Subsidiaries retain sufficient rights to use or benefit from the subject IP
Rights as to enable them to conduct their business in the ordinary course, (iii) such license or sublicense constitutes an arm’s-length transaction, the terms
of which, on their face, (x) do not provide for a sale or assignment of any IP Rights and (y) do not restrict the ability of the Borrower or any of its
Subsidiaries, as applicable, to pledge, grant a Lien on, or assign or otherwise transfer any IP Rights of the Borrower or any Subsidiary (except, in the case
of this clause (y) with respect to such license or sublicense, customary non-assignment provisions that restrict the assignability of such license or sublicense
but do not otherwise restrict the ability of the Borrower or any Subsidiary (as applicable) to pledge, grant a Lien on or assign or otherwise transfer any other
IP Rights), (iv) all upfront payments, royalties, milestone payments, sublicense revenues or other proceeds (other than upfront payments, royalties,
milestone payments, sublicense revenues or other proceeds of less than $[***] in the aggregate per Permitted License) arising from the licensing agreement
that are payable to a Loan Party are paid to a Deposit Account that is governed by a Deposit Account Control Agreement or solely in the case of a Deposit
Account of Loan Party that is a Non-U.S Subsidiary, in which the Administrative Agent otherwise has a first-priority, perfected security interest for the
benefit of the Secured Parties, (v) in the case of any exclusive license or sublicense, (A) the Borrower delivers ten (10) days’ prior written notice and a brief
summary of the terms of the proposed license or sublicense to the Administrative Agent and delivers to the Administrative Agent copies of the final
executed licensing documents in connection with such exclusive license or sublicense promptly upon consummation thereof and (B) any such license or
sublicense could not result in a legal transfer of title of the licensed or sublicensed property and (vi) such license has been approved by the Borrower’s
Board of Directors.
“Permitted Liens” means, at any time, Liens in respect of property of any Loan Party or any of its Subsidiaries permitted to exist at such time
pursuant to the terms of Section 8.01.
“Person” means any natural person, corporation, limited liability company, trust, unincorporated organization, joint venture, association, company,
partnership, Governmental Authority or any other legal entity, whether acting in an individual, fiduciary or other capacity.
“PHSA” means the Public Health Service Act, 42 U.S.C. Section 201 et seq., as amended, and all regulations promulgated thereunder.
“PIK Election” shall have the meaning set forth in Section 2.06(d).
“PIK Interest” shall have the meaning set forth Section 2.06(d).
“PIK Interest Payment” shall have the meaning set forth in Section 2.06(d).
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“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan), maintained for employees of
the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its
employees or otherwise has any liability.
“Pledge Agreement” means the pledge agreement dated as of the Closing Date executed in favor of the Administrative Agent, for the benefit of
the Secured Parties, by each of the Loan Parties, as amended or modified from time to time in accordance with the terms hereof.
“Product” means any current or future service or product researched, designed, developed, imported, exported, manufactured, licensed, marketed,
advertised, sold, offered for sale, performed, distributed, promoted, tested, provided or commercialized by or on behalf of the Borrower or any Subsidiary,
including any such product in development or which may be developed in connection with or that embody, in whole or in part, the IP Rights, including
those products set forth on Schedule 1.01 (as updated from time to time in accordance with the terms of this Agreement), provided, that, if the Borrower
shall fail to comply with its obligations under this Agreement to give notice to the Administrative Agent and update Schedule 1.01 prior to manufacturing,
selling, developing, testing or marketing any new Product, any such improperly undisclosed Product shall be deemed to be included in this definition.
“Product Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in the
acquisition of a product license or a product line, and/or related IP Rights acquired or licensed by a Loan Party or any of its Subsidiaries from a Person
(other than a Loan Party, any Subsidiary thereof or any Affiliate thereof) to facilitate the advertisement, development, importing, manufacturing, marketing,
offering for sale, promotion, sale, testing, use or distribution of such product or product line by a Loan Party or a Subsidiary.
“Product Collateral” means, collectively, (i) the “Product Collateral” as such term is defined in the Royalty Financing2021 RP Royalty Purchase
Agreement as in effect on the Amendment No. 1 Effective Date, which amends the term “Product Collateral” as such term is defined in the 2020
RP Royalty Purchase Agreement as in effect on the date hereof and (ii) the “Product Collateral” as such term is defined in the OMERS Royalty
Purchase Agreement as in effect on the Amendment No. 1 Effective Date.
“Product Development and Commercialization Activities” means, with respect to any Material Product, any combination of research,
development, manufacture, import, use, sale, importation, storage, labeling, marketing, promotion, supply, distribution, testing, packaging, purchasing or
other commercialization activities, receipt of payment in respect of any of the foregoing, or like activities the purpose of which is to develop or
commercially exploit such Material Product.
“Proprietary Databases” means any material non-public proprietary database that is owned by the Borrower or any Subsidiary or that the Borrower
or any Subsidiary is licensed, authorized or otherwise granted rights under or to, and that is used by the Borrower or any other Person to manufacture,
develop, import, market, promote, advertise, offer for sale, sell, use and/or otherwise distribute or provide a Product or Service.
“Proprietary Software” means any proprietary software owned, licensed or otherwise used, other than any software that is generally commercially
available, off-the-shelf and/or open source including, without limitation, the object code and source code forms of such software and all associated
documentation, which is owned by the Borrower or any Subsidiary or which the Borrower or any Subsidiary is licensed, authorized or otherwise granted
rights under or to, and that is used by the Borrower or any other Person to manufacture, develop, import, market, promote, advertise, offer for sale, sell, use
and/or otherwise distribute or provide a Product or Service.
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“Qualified Capital Stock” of any Person means any Equity Interests of such Person that are not Disqualified Capital Stock.
“Real Property Security Documents” means with respect to the fee interest and/or leasehold interest of any Loan Party in any real property:
(a) a fully executed and notarized Mortgage encumbering the fee interest of such Loan Party in such real property;
(b) if requested by the Administrative Agent in its sole discretion, maps or plats of an as-built survey of the sites of such real property
certified to the Administrative Agent and the title insurance company issuing the policies referred to in clause (c) of this definition in a manner
satisfactory to each of the Administrative Agent and such title insurance company, dated a date satisfactory to each of the Administrative Agent
and such title insurance company by an independent professional licensed land surveyor, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey exception contained in the applicable title policy and be made in accordance with
the Minimum Standard Detail Requirements for Land Title Surveys jointly established and adopted by the American Land Title Association and
the National Society of Professional Surveyors, Inc. in 2016 with items 2, 3, 4, 6(b), 7(a), 7(b)(1), 7(c), 8, 9, 10, 11(a), 13, 14, 16,17, 18 and 19
on Table A thereof completed;
(c) ALTA mortgagee title insurance policies issued by a title insurance company acceptable to the Administrative Agent with respect
to such real property, assuring the Administrative Agent that the Mortgage covering such real property creates a valid and enforceable first
priority mortgage lien on such real property, free and clear of all defects and encumbrances except Permitted Liens, which title insurance
policies shall otherwise be in form and substance satisfactory to the Administrative Agent and shall include such endorsements as are requested
by the Administrative Agent;
(d) evidence as to (i) whether such real property is a Flood Hazard Property and (ii) if such real property is a Flood Hazard Property,
(A) whether the community in which such real property is located is participating in the National Flood Insurance Program, (B) the applicable
Loan Party’s written acknowledgment of receipt of written notification from the Administrative Agent (1) as to the fact that such real property is
a Flood Hazard Property and (2) as to whether the community in which each such Flood Hazard Property is located is participating in the
National Flood Insurance Program and (C) copies of insurance policies or certificates of insurance of the Borrower and its Subsidiaries
evidencing flood insurance satisfactory to the Administrative Agent and naming the Administrative Agent and its successors and/or assigns as
sole loss payee on behalf of the Secured Parties;
(e) if requested by the Administrative Agent in its sole discretion, an environmental assessment report, as to such real property, in
form and substance and from professional firms acceptable to the Administrative Agent;
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(f) if requested by the Administrative Agent in its sole discretion, evidence reasonably satisfactory to the Administrative Agent that
such real property, and the uses of such real property, are in compliance in all material respects with all applicable zoning laws (the evidence
submitted as to which should include the zoning designation made for such real property, the permitted uses of such real property under such
zoning designation and, if available, zoning requirements as to parking, lot size, ingress, egress and building setbacks);
(g) in the case of a leasehold interest of any Loan Party in such real property, (i) such Collateral Access Agreements as may be
required by the Administrative Agent, and (ii) evidence that the applicable lease, a memorandum of lease with respect thereto, or other evidence
of such lease in form and substance satisfactory to the Administrative Agent, has been or will be recorded in all places to the extent necessary or
desirable, in the judgment of the Administrative Agent, so as to enable the Mortgage encumbering such leasehold interest to effectively create a
valid and enforceable first priority lien (subject to Permitted Liens) on such leasehold interest in favor of the Administrative Agent (or such
other Person as may be required or desired under local law); and
(h) if requested by the Administrative Agent in its sole discretion, an opinion of legal counsel to the Loan Party granting the
Mortgage on such real property, addressed to the Administrative Agent and each Lender, in form and substance reasonably acceptable to the
Administrative Agent.
“Recipient” means the Administrative Agent and any Lender.
“Register” has the meaning provided in Section 12.06(c).
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees,
administrators, managers, consultants, advisors, sub-advisors and representatives of such Person and of such Person’s Affiliates.
“Repatriation” and “Repatriated” has the meaning provided in Section 2.03(b)(vi).
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty-day notice period has
been waived.
“Required Lenders” means, at any time, Lenders having Total Credit Exposures representing more than fifty percent (50%) of the Total Credit
Exposures of all Lenders. The Total Credit Exposure of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“Required Permit” means a Permit (a) issued or required under Laws applicable to the business or Facilities of the Borrower or any Subsidiary or
necessary to be eligible to receive payment and compensation from and to participate in any material Third Party Payor Arrangements or any Government
Reimbursement Program, or in the manufacturing, testing, developing, importing, exporting, possession, ownership, warehousing, marketing, promoting,
sale, labeling, furnishing, distribution or delivery of goods or services under Laws applicable to the business or Facilities of the Borrower or any Subsidiary
(including without limitation, at any point in time, all licenses, approvals and permits issued by the FDA, CMS or any other Governmental Authority
necessary for the testing, development, manufacture, marketing, sale or provision of any Product or Service by the Borrower or any Subsidiary as such
activities are being conducted by the Borrower or such Subsidiary with respect to such Product or Service at such time), or (b) issued by any Person from
which the Borrower or any Subsidiary has, as of the Closing Date, received an accreditation.
33
“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Responsible Financial Officer” means the chief financial officer, treasurer or assistant treasurer of the Borrower. Any document delivered
hereunder that is signed by a Responsible Financial Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of the Borrower and such Responsible Financial Officer shall be conclusively presumed to have acted
on behalf of the Borrower.
“Responsible Officer” means the chief executive officer, president, chief financial officer, chief operating officer, chief legal officer, general
counsel, treasurer, assistant treasurer or any senior vice president of a Loan Party or in the case of a Non-U.S. Subsidiary that is a Loan Party, any of its
directors, and, solely for purposes of the delivery of certificates pursuant to Sections 5.01 or 7.12(b), the secretary or any assistant secretary of a Loan
Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized
by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to
have acted on behalf of such Loan Party.
“Restricted Payment” means (a) any dividend or other distribution, direct or indirect, on account of any shares (or equivalent) of any class of
Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Equity Interests of any Loan Party or any of its
Subsidiaries, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, (d) any payment made in respect
of management, consulting, transaction or similar advisory fees (other than normal and reasonable compensation (including in the form of Equity Interests)
and reimbursement of expenses of officers and directors in the ordinary course of business) to or for the account of any officer, director or holder (or any
Affiliate of any holder) of at least 5% of the Equity Interests of any Loan Party or any of its Subsidiaries, (e) any payment made to the holders of
Convertible Bond Indebtedness and (f) any payment made to any “Buyer” (or other comparable term) pursuant to the Royalty Financing Documents or the
Other Royalty Financing Documents.
“Revenue Participation RightRights” means, collectively, the “2020 RP Revenue Participation Right” as such term is defined in the Royalty
Financing Agreement as in effect on the date hereof, the 2021 RP Revenue Participation Right and the OMERS Revenue Participation Right.
“Royalty Financed BCX9930 Net Sales” means, for any fiscal year, consolidated net revenues of the Borrower and its Subsidiaries from sales of
BCX9930 in any Key Territory for such period, whether worldwide or within the Key Territories and/or the Non-Key Territories, including
distribution income, service payments, royalty payments and license income during such fiscal year, all as determined and reported in accordance with
GAAP, but excluding the revenues of any Subsidiary to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of
the income resulting from such revenues is not at the time permitted by operation of the terms of its Organization Documents or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary.
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“Royalty Financed Complement Inhibitor Net Sales” means, for any fiscal year, consolidated net revenues of the Borrower and its
Subsidiaries from sales of the Complement Inhibitor for such period, whether worldwide or within the Key Territories and/or the Non-Key
Territories, including distribution income, service payments, royalty payments and license income during such fiscal year, all as determined and
reported in accordance with GAAP, but excluding the revenues of any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of the income resulting from such revenues is not at the time permitted by operation of the terms of its
Organization Documents or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that
Subsidiary.
“Royalty FinancingFinancings” means, subject tocollectively, the 2020 RP Royalty Financing Restrictions, that certain true sale of the Revenue
Participating Right to RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, on the Term A Borrowing Date pursuant to the terms of the, the
2021 RP Royalty Financing Agreementand the OMERS Royalty Financing.
“Royalty Financing AgreementPurchase Agreements” means, collectively, the 2020 RP Royalty Purchase and Sale Agreement, dated as of
December 7, 2020, between the Borrower and RPI 2019 Intermediate Finance Trust, a Delaware statutory trust, as amended, supplement or otherwise
modified from time to time in accordance with the terms of the Loan Documents the 2021 RP Royalty Purchase Agreement and the OMERS Royalty
Purchase Agreement.
“Royalty Financing Documents” means the 2020 RP Royalty Financing AgreementDocuments, the 2021 RP Royalty Financing Side Letter, the
Intercreditor Agreement and any other agreement, instrument or document entered into from time to time in connection therewith, in each case, as
amended, supplemented or otherwise modified from time to time in accordance with the terms of the LoanDocuments and the OMERS Royalty
Financing Documents.
“Royalty Financing Restrictions” means with respect to theany Royalty Financing or any Other Royalty Financing, that:
(i) neither thesuch Royalty Financing nor any such Other Royalty Financing shall have or provide for any (a) payment or return minimums, (b)
redemption or buy-back obligations or any financial or other covenants (except for (x) customary exceptions such as royalty payments, reporting, audits,
tax treatment and withholding, diligence, confidentiality, licensing and prosecution, maintenance and defense of IP Rights and (y) in the case of the Royalty
Financing Documents, restrictions on Indebtedness pursuant to Section 6.8 of the 2021 RP Royalty FinancingPurchase Agreement as in effect on the date
hereof Amendment No. 1 Effective Date and the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date (but, in
any event, shall permit the Indebtedness and other Obligations pursuant to the Loan Documents), (c) Lien on any asset of the Borrower or any of its
Subsidiaries (including on the Borrower’s or such Subsidiary’s IP Rights, regulatory permits, receivables or other agreements), except (ix) in the case of the
Royalty Financing Documents, but subject to the Intercreditor Agreement, the Back-Up Security InterestInterests in respect of the Revenue Participation
RightRights and the Product Collateral and (iiy) in the case of any Other Royalty Financing Documents, but subject to the execution and delivery of an
intercreditor agreement in form and substance acceptable to the Administrative Agent, the grant by the Borrower of a backup security interest in the
synthetic royalty purchased pursuant to such Other Royalty Financing Documents upon the recharacterization of the applicable Other Royalty Financing as
a secured loan, but not in any other asset of the Borrower or any Subsidiary, or (d) negative pledge restricting incurrence of any Lien on any asset of the
Borrower or any of its Subsidiaries or other burdensome restrictions consisting of restrictions on making Restricted Payments to any Loan Party, paying
Indebtedness or other obligations owed to any Loan Party, making loans or advances to any Loan Party, transferring any of its property to any Loan Party,
or either pledging its property pursuant to or acting as a Loan Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings
or extension thereof,
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(ii) neither theno Royalty Financing nor any such Other Royalty Financing shall be structured in a manner that adversely affects the Borrower’s or
any Subsidiary’s receipt of proceeds of Orladeyo Net Product Sales or, BCX9930 Net Product Sales, expect or Complement Inhibitor Net Product Sales,
except (x) in the case of the Royalty FinancingFinancings, the sale of the Revenue Participation RightRights and (y) in the case of any Other Royalty
Financing, the sale of the right to receive a portion of the proceeds of BCX9930 Net Product Sales, and/or Complement Inhibitor Net Product Sales,
(iii) (A) in the case of the 2020 RP Royalty Financing, for any fiscal quarter, the terms of the 2020 RP Royalty Financing Documents shall
provide for a royalty participation rate not to exceed (a) the Orladeyo Direct Sales Royalty Rate (as such term is defined in the 2020 RP Royalty
FinancingPurchase Agreement as in effect on the date hereof) multiplied by aggregate Orladeyo Direct Sales (as such term is defined in the 2020 RP
Royalty FinancingPurchase Agreement as in effect on the date hereof) during such fiscal quarter, (b) the Orladeyo Indirect Revenue Sharing Rate (as such
term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in effect on the date hereof) multiplied by aggregate Orladeyo Indirect Revenue
(as such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in effect on the date hereof) during such fiscal quarter, (c) [***] percent
([***]%) of Product Partnering Revenue (as such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in effect on the date hereof)
attributable to Orladeyo (as such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in effect on the date hereof) for such fiscal
quarter, (d) [***] percent ([***]%) of BCX9930 Net Sales (as each such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in
effect on the date hereof) (other than Product Partnering Revenue (as each such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as
in effect on the date hereof) attributable to BCX9930 (as each such term is defined in the 2020 RP Royalty FinancingPurchase Agreement as in effect on
the date hereof)) for such fiscal quarter and (e) [***] percent ([***]%) of BCX9930 Product Partnering Revenue (as such term is defined in the 2020 RP
Royalty FinancingPurchase Agreement as in effect on the date hereof) attributable to BCX9930 (as such term is defined in the 2020 RP Royalty
FinancingPurchase Agreement as in effect on the date hereof) for such fiscal quarter, (iv) in the case of
36
(B) in the case of the 2021 RP Royalty Financing, for any fiscal quarter, the terms of the 2021 RP Royalty Financing Documents shall
provide for a royalty participation rate not to exceed (a) the 2021 Orladeyo Direct Sales Royalty Rate (as such term is defined in the 2021 RP
Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) multiplied by aggregate Orladeyo Direct Sales (as such term is
defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) during such fiscal quarter, (b) the 2021
Orladeyo Indirect Revenue Sharing Rate (as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No.
1 Effective Date) multiplied by aggregate Orladeyo Indirect Revenue (as such term is defined in the 2021 RP Royalty Purchase Agreement as in
effect on the Amendment No. 1 Effective Date) during such fiscal quarter, (c) [***] percent ([***]%) of Product Partnering Revenue (as such term
is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) attributable to Orladeyo (as such term
is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) for such fiscal quarter, (d) the 2021
Combined BCX9930 and Complement Inhibitor Royalty Rate (as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on
the Amendment No. 1 Effective Date) multiplied by aggregate Combined BCX9930 and Complement Inhibitor Net Sales (as such term is defined
in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) (other than Product Partnering Revenue (as
such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) attributable to BCX9930 (as
such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) or Complement Inhibitor
(as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date)) during such fiscal
quarter and (e) the 2021 Combined BCX9930 and Complement Inhibitor Product Partnering Revenue Sharing Rate (as such term is defined in
the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) multiplied by aggregate Product Partnering
Revenue (as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) attributable to
BCX9930 (as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) and
Complement Inhibitor (as such term is defined in the 2021 RP Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date)
during such fiscal quarter,
(C) in the case of the OMERS Royalty Financing, for any fiscal quarter, the terms of the OMERS Royalty Financing Documents shall
provide for a royalty participation rate not to exceed (a) the Direct Sales Royalty Rate (as such term is defined in the OMERS Royalty Purchase
Agreement as in effect on the Amendment No. 1 Effective Date) multiplied by aggregate Direct Sales (as such term is defined in the OMERS
Royalty Purchase Agreement as in effect on the date Amendment No. 1 Effective Date) during such fiscal quarter, (b) the Indirect Revenue
Sharing Rate (as such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) multiplied
by aggregate Indirect Revenue (as such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective
Date) during such fiscal quarter, and (c)(x) if the Direct Sales Royalty Rate (as such term is defined in the OMERS Royalty Purchase Agreement
as in effect on the Amendment No. 1 Effective Date) is calculated under the Regime A Royalty Rate (as such term is defined in the OMERS
Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date), [***] percent ([***]%) of Product Partnering Revenue (as such
term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) attributable to the Product (as
such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) for such fiscal quarter or
(x) if the Direct Sales Royalty Rate (as such term is defined in the OMERS Royalty Purchase Agreement as in effect on the Amendment No. 1
Effective Date) is calculated under the Regime B Royalty Rate (as such term is defined in the OMERS Royalty Purchase Agreement as in effect on
the Amendment No. 1 Effective Date), [***] percent ([***]%) of Product Partnering Revenue (as such term is defined in the OMERS Royalty
Purchase Agreement as in effect on the Amendment No. 1 Effective Date) attributable to the Product (as such term is defined in the OMERS
Royalty Purchase Agreement as in effect on the Amendment No. 1 Effective Date) for such fiscal quarter, and
(D) without limiting the restrictions on the 2020 RP Royalty Financing and the 2021 RP Royalty Financing set forth above in this clause
(iii), in the case of all Other Royalty Financings of BCX9930, whether worldwide or within the Key Territories and/or the Non-Key Territories, the
royalty participation rate with respect theretoto all such Other Royalty Financings shall not in the aggregate exceed [***] percent ([***]%) of aggregate
Royalty Financed BCX9930 Net Sales in the aggregate for all Other Royalty Financings, (v) (it being understood that, for purposes of this clause (D),
with respect to any Other Royalty Financing that provides for multiple tiers of royalty participation rates, the royalty participation rate with
respect to such Other Royalty Financing shall be deemed to be the royalty participation rate at the highest of such tiers),
37
(E) without limiting the restrictions on the 2020 RP Royalty Financing and the 2021 RP Royalty Financing set forth above in this clause
(iii), in the case of all Other Royalty Financings of Complement Inhibitor, whether worldwide or within the Key Territories and/or the Non-Key
Territories, the royalty participation rate with respect to all such Other Royalty Financings shall not in the aggregate exceed [***] percent
([***]%) of aggregate Royalty Financed Complement Inhibitor Net Sales (it being understood that, for purposes of this clause (E), with respect to
any Other Royalty Financing that provides for multiple tiers of royalty participation rates, the royalty participation rate with respect to such
Other Royalty Financing shall be deemed to be the royalty participation rate at the highest of such tiers),
(iv) in the case of all Other Royalty Financings, shall not have covenants and defaults that are more restrictive on the Borrower and its
Subsidiaries than the covenants and defaults set forth in the Royalty Financing Documents (but, in any event, the Other Royalty Financing Documents shall
not include a restriction on the incurrence or maintenance of Indebtedness) or that conflict with, or prevent Borrower and its Subsidiaries from complying
with, the covenants and defaults set forth in the Royalty Financing Documents,
(viv) the Borrower shall cause any successor or permitted assignee of theany Buyer under the Royalty Financing Documents to become a party to
the Intercreditor Agreement in accordance with the terms thereof concurrently with such succession or assignment, and
(viivi) the Borrower shall cause any successor or permitted assignee of the purchaser or buyer under the Other Royalty Financing Documents to
become a party to the intercreditor agreement contemplated by clause (i)(c)(iiy) above to which such purchaser or buyer is a party in accordance with the
terms thereof concurrently with such succession or assignment.
“Royalty Financing Side Letter” means the letter agreement dated as of December 7, 2020 between the Borrower and RPI 2019 Intermediate
Finance Trust, a Delaware statutory trust, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Loan
Documents.
“Royalty Payments” means the RP Royalty Payments and the OMERS Royalty Payments.
“RP Royalty PaymentPayments” means the “Royalty PaymentPayments” as such term is defined in the 2021 RP Royalty FinancingPurchase
Agreement as in effect on the date hereofAmendment No. 1 Effective Date.
“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of McGraw-Hill Financial, Inc., and any successor thereto.
“Safety Notices” has the meaning set forth in Section 6.23(i).
38
“Sale and Leaseback Transaction” means, with respect to any Loan Party or any Subsidiary, any arrangement, directly or indirectly, with any
Person whereby the Loan Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property
being sold or transferred.
“Sanction(s)” means any sanction administered or enforced by the United States government (including, without limitation, OFAC), the United
Nations Security Council, the European Union, Her Majesty’s Treasury (“HMT”) or other relevant sanctions authority.
“Scheduled Unavailability Date” has the meaning specified in Section 10.03(c).
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the Indemnitees, each co-agent or sub‐agent appointed by the
Administrative Agent from time to time pursuant to Section 11.05 and each of the foregoing Persons successors and assigns.
“Securities Act” means the Securities Act of 1933.
“Securitization Transaction” means, with respect to any Person, any financing transaction or series of financing transactions (including factoring
arrangements) pursuant to which such Person or any Subsidiary of such Person may sell, convey or otherwise transfer, or grant a security interest in,
accounts, payments, receivables, rights to future lease payments or residuals or similar rights to payment to a special purpose subsidiary or affiliate of such
Person.
“Security Agreement” means the security agreement dated as of the Closing Date executed in favor of the Administrative Agent, for the benefit of
the Secured Parties, by each of the Loan Parties, as amended or modified from time to time in accordance with the terms thereof.
“Services” means services provided by the Borrower or any Affiliate thereof to un-Affiliated Persons, including without limitation any sales,
laboratory analysis, testing, consulting, marketing, commercialization and any other healthcare-related services.
“Small Business Act” means the Small Business Act (15 U.S. Code Chapter 14A – Aid to Small Business).
“Small Business Administration” means the U.S. Small Business Administration.
“Solvent” or “Solvency” means, with respect to any Person as of a particular date, that on such date (a) such Person is able to pay its debts and
other liabilities, contingent obligations and other commitments as they mature in the ordinary course of business, (b) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature in their ordinary course, (c)
such Person is not engaged in a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s property would
constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged or is to
engage, (d) the fair value of the property of such Person is greater than the total amount of liabilities, including, without limitation, contingent liabilities, of
such Person and (e) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured. In computing the amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.
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“Specified Products” means (a) means the molecule described in investigational new drug applications (IND) [***] filed with the FDA and
referenced by the Borrower as “BCX4430 (galidesivir)” and (b) means the Product described in the NDA No. 206426 filed with the FDA and referenced by
the Borrower as RAPIVAB™(peramivir injection), in each case, as in existence as of the Closing Date; provided that, for the avoidance of doubt, no
Specified Product shall include any Key Product.
“Stockpile Sales” means (a) “Non-Commercial Sales” as defined in the Purchase and Sale Agreement dated as of March 9, 2011 between the
Borrower and JPR Royalty Sub, LLC as in effect on the date hereof and entered into in connection with the JPR Indenture, but excluding, for the avoidance
of doubt, any sales, transfers, leases, licenses or other dispositions of any Key Product and (b) any sales (but excluding, for the avoidance of doubt, any
license, lease or other disposition) of a Product for a profit in the ordinary course of business to Governmental Authorities to supply stockpiles for use in a
public health emergency.
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of
the shares of Voting Stock is at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or
Subsidiaries of the Borrower. Notwithstanding the foregoing, until discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof,
unless expressly provided herein, Subsidiaries of the Borrower shall not include JPR Royalty Sub.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms
and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by
any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
40
“Synthetic Lease” means any synthetic lease, tax retention operating lease, off-balance sheet loan or similar off-balance sheet financing
arrangement whereby the arrangement is considered borrowed money indebtedness for tax purposes but is classified as an operating lease or does not
otherwise appear on a balance sheet under GAAP.
“Taxes” has the meaning set forth in Section 3.01(a).
“Term A Availability Period” means the period commencing on and including the Closing Date and ending on the earliest of (a) June 1, 2021, (b)
the date of termination of the Term A Commitments pursuant to Section 2.04 and (c) the date of termination of the Term A Commitments pursuant to
Section 9.02.
“Term A Borrowing” means a borrowing consisting of simultaneous Term A Loans made by each of the Term A Lenders pursuant to Section
2.01(a).
“Term A Borrowing Date” means the date that the Term A Borrowing shall be made pursuant to Section 2.01(a).
“Term A Commitment” means, as to each Term A Lender, its obligation to make a Term A Loan to the Borrower pursuant to Section 2.01(a), in
the principal amount set forth opposite such Lender’s name on Schedule 2.01. The aggregate principal amount of the Term A Commitments of all of the
Term A Lenders as in effect on the Closing Date is ONE HUNDRED TWENTY-FIVE MILLION DOLLARS ($125,000,000).
“Term A Draw Conditions” means the condition that the Borrower shall have delivered (on or before the date that the Term A Borrowing is
requested in accordance with Section 2.02(a)) to the Administrative Agent (i) a certificate of a Responsible Financial Officer of the Borrower (in form and
substance reasonably satisfactory to the Administrative Agent) certifying, and such other evidence as the Administrative Agent may request demonstrating,
that the FDA has approved Borrower’s NDA for the testing, manufacturing, marketing and commercial sale in the United States of Orladeyo for
prophylaxis to prevent attacks of hereditary angioedema (HAE) in adults and adolescent patients 12 years and older with either (a) a final product label
consistent with the draft Orladeyo label in the form attached hereto as Exhibit F or (b) such other a final product label approved by the Required Lenders in
writing, in their sole discretion and (ii) evidence satisfactory to the Administrative Agent that the Loan Parties are in compliance with the requirements set
forth in Section 8.16(i) immediately prior to the Term A Borrowing.
“Term A Facility” means, at any time, (a) on or prior to the Term A Borrowing Date, the aggregate amount of the Term A Commitments at such
time and (b) thereafter, the aggregate principal amount of the Term A Loans of all Term A Lenders outstanding at such time.
“Term A Lender” means (a) at any time on or prior to the Term A Borrowing Date, any Lender that has a Term A Commitment at such time and
(b) at any time thereafter, any Lender that holds one or more Term A Loans at such time.
“Term A Loan” means an advance made by any Term A Lender under the Term A Facility.
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“Term A Note” has the meaning set forth in Section 2.08.
“Term B Availability Period” means the period commencing on and including the Term A Borrowing Date and ending on the earliest of (a) [***],
(b) the date of termination of the Term B Commitments pursuant to Section 2.04 and (c) the date of termination of the Term B Commitments pursuant to
Section 9.02.
“Term B Borrowing” means a borrowing consisting of simultaneous Term B Loans made by each of the Term B Lenders pursuant to Section
2.01(b).
“Term B Borrowing Date” means the date that the Term B Borrowing shall be made pursuant to Section 2.01(b).
“Term B Commitment” means, as to each Lender, its obligation to make a Term B Loan to the Borrower pursuant to Section 2.01(b), in the
principal amount set forth opposite such Lender’s name on Schedule 2.01. The aggregate principal amount of the Term B Commitments of all of the
Lenders as in effect on the Closing Date is TWENTY-FIVE MILLION DOLLARS ($25,000,000).
“Term B Draw Conditions” means the conditions that (i) the Borrower shall have delivered (on or before the date that the Term B Borrowing is
requested in accordance with Section 2.02(a)) to the Administrative Agent (a) a certificate of a Responsible Financial Officer of the Borrower (in form and
substance reasonably satisfactory to the Administrative Agent) certifying, and such other evidence as the Administrative Agent may request demonstrating,
that Orladeyo Consolidated U.S. Net Product Sales for any [***] period ending on or before [***] were at least $[***] and (b) evidence satisfactory to the
Administrative Agent that the Loan Parties are in compliance with the requirements set forth in Section 8.16(ii) immediately prior to the Term B
Borrowing, and (ii) if the date on which the Term B Borrowing is requested in accordance with Section 2.02(a) is on or prior to the Term A Borrowing
Date, the Term A Borrowing shall have occurred prior to (or contemporaneously with) the Term B Borrowing.
“Term B Facility” means, at any time, (a) on or prior to the Term B Borrowing Date, the aggregate amount of the Term B Commitments at such
time and (b) thereafter, the aggregate principal amount of the Term B Loans of all Term B Lenders outstanding at such time.
“Term B Lender” means (a) at any time on or prior to the Term B Borrowing Date, any Lender that has a Term B Commitment at such time and
(b) at any time thereafter, any Lender that holds one or more Term B Loans at such time.
“Term B Loan” means an advance made by any Term B Lender under the Term B Facility.
“Term B Note” has the meaning set forth in Section 2.08.
“Term C Availability Period” means the period commencing on and including the Term B Borrowing Date and ending on the earliest of (a) [***],
(b) the date of termination of the Term C Commitments pursuant to Section 2.04, (c) the date of termination of the Term C Commitments pursuant to
Section 9.02 and (d) the repayment in full of the Term A Loans and/or the Term B Loans.
“Term C Borrowing” means a borrowing consisting of simultaneous Term C Loans made by each of the Term C Lenders pursuant to Section
2.01(c).
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“Term C Borrowing Date” means the date that the Term C Borrowing shall be made pursuant to Section 2.01(c).
“Term C Commitment” means, as to each Lender, its obligation to make a Term C Loan to the Borrower pursuant to Section 2.01(c), in the
principal amount set forth opposite such Lender’s name on Schedule 2.01. The aggregate principal amount of the Term C Commitments of all of the
Lenders as in effect on the Closing Date is FIFTY MILLION DOLLARS ($50,000,000).
“Term C Draw Conditions” means the conditions that (i) the Borrower shall have delivered (on or before the date that the Term C Borrowing is
requested in accordance with Section 2.02(a)) to the Administrative Agent (a) a certificate of a Responsible Financial Officer of the Borrower (in form and
substance reasonably satisfactory to the Administrative Agent) certifying, and such other evidence as the Administrative Agent may request demonstrating,
that Orladeyo Consolidated U.S. Net Product Sales for any [***] period ending on or before [***] were at least $[***] and (b) evidence satisfactory to the
Administrative Agent that the Loan Parties are in compliance with the requirements set forth in Section 8.16(iii) immediately prior to the Term C
Borrowing, and (ii) if the date on which the Term C Borrowing is requested in accordance with Section 2.02(a) is on or prior to the Term A Borrowing Date
and/or the Term B Borrowing Date, the Term A Borrowing and the Term B Borrowing shall have occurred prior to (or contemporaneously with) the Term
C Borrowing.
“Term C Facility” means, at any time, (a) on or prior to the Term C Borrowing Date, the aggregate amount of the Term C Commitments at such
time and (b) thereafter, the aggregate principal amount of the Term C Loans of all Term C Lenders outstanding at such time.
“Term C Lender” means (a) at any time on or prior to the Term C Borrowing Date, any Lender that has a Term C Commitment at such time and
(b) at any time thereafter, any Lender that holds one or more Term C Loans at such time.
“Term C Loan” means an advance made by any Term C Lender under the Term C Facility.
“Term C Note” has the meaning set forth in Section 2.08.
“Test Date” has the meaning set forth in Section 8.17.
“Third Party” means any Person other than the Borrower, any Subsidiary thereof or any Affiliate thereof.
“Third Party Payor” means (i) a commercial medical insurance company, health maintenance organization, professional provider organization or
other third party payor that reimburses providers for diagnostic laboratory services provided to individual patients, (ii) a nonprofit medical insurance
company (such as the Blue Cross, Blue Shield entities), and (iii) a Government Account Debtor making payments under a Government Reimbursement
Program.
“Third Party Payor Arrangement” shall mean a written agreement or arrangement with a Third Party Payor pursuant to which the Third Party
Payor pays all or a portion of the charges of any Loan Party or its Subsidiaries for providing diagnostic laboratory services.
43
“Three-Month LIBOR” means, with respect to any Interest Period, a rate per annum equal to the lesser of (i) the greater of (x) 1.75% per annum
and (y) the three-month London Interbank Offered Rate (or a comparable or successor rate which rate is approved by the Administrative Agent) for
deposits in Dollars at approximately 11:00 a.m. (London, England time), as determined by the Administrative Agent from the appropriate Bloomberg
screen page selected by the Administrative Agent (or any successor thereto or similar source reasonably determined by the Administrative Agent from time
to time), two (2) Business Days prior to the first day of such Interest Period, adjusted for any reserve requirement and any subsequent costs arising from a
change in governmental regulation, if applicable, such rate to be rounded up to the nearest 1/16 of 1% and (ii) 3.50% per annum. The Administrative
Agent’s determination of Three-Month LIBOR and internal records of applicable interest rates shall be determinative in the absence of manifest error. For
all purposes hereunder, in no event shall Three-Month LIBOR be less than 1.75% or greater than 3.50%.
“Three-Month Treasury Rate” means, as of any date of determination, the weekly average yield as of such date of determination of actually traded
United States Treasury securities adjusted to a constant maturity of three (3) months (as compiled and published in the most recent Federal Reserve
Statistical Release H.15(519) that has become publicly available at least two (2) Business Days prior to such date of determination (or, if such Federal
Reserve Statistical Release H.15(519) is no longer published, any publicly available source of similar market data)). For the avoidance of doubt, this
calculation is based on yields on actively traded non-inflation-indexed issues adjusted to constant maturities.
“Threshold Amount” means an amount equal to [***]% of the aggregate outstanding principal amount of the Loans on any date after giving effect
to any borrowings made on or before such date but without giving effect to any prepayments or repayments of Loans occurring on or before such date.
“Total Credit Exposure” means, as to any Lender at any time, the unused Commitments of such Lender and the Outstanding Amount of all Loans
of such Lender at such time.
“Trademark License” means any agreement, written or oral, providing for the grant of any right to use any Trademark.
“Trademarks” means all statutory and common-law trademarks, trade names, corporate names, company names, business names, fictitious
business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and all applications to register in connection therewith, under the laws of the United States,
any state thereof, the Netherlands, any political subdivision thereof or any other country or any political subdivision thereof, or otherwise, for the full term
and all renewals thereof, which are owned by the Borrower or any Subsidiary or which the Borrower or any Subsidiary is licensed, authorized or otherwise
granted rights under or to, and which are used by the Borrower or any other Person to manufacture, develop, import, market, promote, advertise, offer for
sale, sell, use, provide and/or otherwise distribute a Product or Service.
“Trade Secrets” means any data or information that is not commonly known by or available to the public, and which (a) derives economic value,
actual or potential, from not being generally known to and not being readily ascertainable by proper means by other Persons who can obtain economic
value from its disclosure or use, (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy, and (c) which are owned by
the Borrower or any Subsidiary or which the Borrower or any Subsidiary is licensed, authorized or otherwise granted rights under or to.
44
“Transaction” means, individually or collectively as the context may indicate, (a) the payoff of all Existing Indebtedness on the Term A Borrowing
Date, (b) the entering by the Borrower and the other Loan Parties of the Loan Documents to which they are a party and incurrence of the Term A
Borrowing and (c) the payment of fees, costs and expenses in connection with the foregoing.
“Treasury Regulations” means the regulations, including temporary regulations, promulgated by the United States Treasury Department under the
Internal Revenue Code, as such regulations may be amended from time to time (including the corresponding provisions of any future regulations).
“TRICARE” means the program administered pursuant to 10 U.S.C. Section 1071 (et. seq), Sections 1320a-7 and 1320a-7a of Title 42 of the
United States Code and the regulations promulgated pursuant to such statutes.
“UK Financial Institution” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time)
promulgated by the United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time
to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain
affiliates of such credit institutions or investment firms.
“UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any
UK Financial Institution.
“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as in effect in the State of New York; provided, that, if perfection
or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New York, “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof or of the other Loan Documents relating to such perfection, effect of perfection or non-
perfection or priority.
“United States” and “U.S.” mean the United States of America.
“Unrestricted Cash” means cash or Cash Equivalents of the Loan Parties (without duplication), that (a) do not appear (or would not be required to
appear) as “restricted” on a consolidated balance sheet of the Borrower as determined in accordance with GAAP, and (b) are not subject to any Lien in
favor of any Person (other than rights of setoff permitted under Section 8.01(l), Liens permitted by Section 8.01(c) and Liens in favor of the Administrative
Agent).
“U.S. Person” means a “United States Person” within the meaning of Section 7701(a)(30) of the Internal Revenue Code.
“U.S. Special Resolution Regimes” has the meaning specified in Section 12.21.
“U.S. Subsidiary” means any Subsidiary that is organized under the laws of any state of the United States or the District of Columbia.
“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right so to vote has
been suspended by the happening of such a contingency.
45
“Websites” means all websites that the Borrower or any Subsidiary shall operate, manage or control through a Domain Name, whether on an
exclusive basis or a nonexclusive basis, including, without limitations, all content, elements, data, information, materials, hypertext markup language
(HTML), software and code, works of authorship, textual works, visual works, aural works, audiovisual works and functionality embodied in, published or
available through each such website and all IP Rights in each of the foregoing.
“Website Agreements” means all agreements between the Borrower and/or any Subsidiary and any other Person pursuant to which such Person
provides any services relating to the hosting, design, operation, management or maintenance of any Website, including without limitation, all agreements
with any Person providing website hosting, database management or maintenance or disaster recovery services to the Borrower and/or any Subsidiary and
all agreements with any domain name registrar, as all such agreements may be amended, supplemented or otherwise modified from time to time.
“Wholly Owned Subsidiary” means any Person 100% of whose Equity Interests are at the time owned by the Borrower directly or indirectly
through other Persons 100% of whose Equity Interests are at the time owned, directly or indirectly, by the Borrower.
“Withholding Agent” means any Loan Party, the Administrative Agent and any other Person required by applicable Law to withhold or deduct
amounts from a payment made by or on account of any obligation of any Loan Party under any Loan Document.
“Work” means any work or subject matter that is subject to protection pursuant to Title 17 of the United States Code.
“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such
EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion
powers are described in the EU Bail-In Legislation Schedule. and (b) with respect to the United Kingdom, any powers of the applicable Resolution
Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract
or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any
other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation
in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
1.02 Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.”
Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including the Loan Documents
and any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended,
modified, extended, restated, replaced or supplemented from time to time (subject to any restrictions set forth herein or in any other Loan Document), (ii)
any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto”, “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to
any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references
appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and
any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, extended, restated, replaced
or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any
and all real and personal property and tangible and intangible assets and properties, including cash, securities, accounts, contract rights and IP Rights.
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the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”
(b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;”
interpretation of this Agreement or any other Loan Document.
(c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the
(d) Any reference herein to a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term,
shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the
unwinding of such a division or allocation), as if it were a merger, transfer, amalgamation, consolidation, assignment, sale, disposition or transfer, or
similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and
each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
1.03 Accounting Terms.
(a) Generally. Except as otherwise specifically prescribed herein, all accounting terms not specifically or completely defined herein
shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant
to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent
with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein; provided, however, that, calculations of
Attributable Indebtedness under any Synthetic Lease or the implied interest component of any Synthetic Lease shall be made by the Borrower in
accordance with accepted financial practice and consistent with the terms of such Synthetic Lease. Notwithstanding the foregoing, for purposes of
determining compliance with any covenant contained herein, Indebtedness of the Borrower and its Subsidiaries shall be deemed to be carried at 100% of
the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20, on financial liabilities shall be disregarded.
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(b) Changes in GAAP. Borrower will provide a written summary of material changes in GAAP and in the consistent application
thereof with each annual and quarterly financial statement delivered in accordance with Section 7.01. If at any time any change in GAAP would affect the
computation of any financial requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such requirement to preserve the original intent thereof in light
of such change in GAAP (subject to the approval of the Required Lenders); provided, that, until so amended, (i) such requirement shall continue to be
computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative and the Lenders financial
statements and other documents required under this Agreement or as requested hereunder setting forth a reconciliation between calculations of such
requirement made before and after giving effect to such change in GAAP. Notwithstanding any other provision contained in this Agreement, all terms of
an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without
giving effect to any change to GAAP occurring before or after the Closing Date as a result of ASU 2016-02, Leases (Topic 842) issued by the Financial
Accounting Standards Board or any other proposals issued by the Financial Accounting Standards Board in connection therewith, in each case if such
change would require treating any lease (or similar arrangement conveying the right to use) as a capital lease where such lease (or similar arrangement)
was not required to be so treated under GAAP as in effect prior to such change.
outstanding principal (or notional) amount thereof, valued at par.
(c) Calculations. For purposes of all calculations hereunder, the principal amount of Convertible Bond Indebtedness shall be the
(d) Consolidation of Variable Interest Rate Entities. All references herein to consolidated financial statements of the Borrower and its
Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each
case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest
entity was a Subsidiary as defined herein.
1.04 Times of Day.
Unless otherwise specified, all references herein to times of day shall be references to United States Eastern time (daylight or standard, as
applicable).
1.05 LIBOR Determinations.
The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the
administration, submission or any other matter related to the rates in the definition of “Three-Month LIBOR” or with respect to any comparable or
successor rate thereto.
ARTICLE II
THE COMMITMENTS
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2.01 Commitments.
(a) Term A Borrowing. Subject to the terms and conditions set forth herein, each Term A Lender severally agrees to make a single
term loan to the Borrower, in Dollars, on any Business Day during the Term A Availability Period, in an aggregate amount not to exceed such Term A
Lender’s Term A Commitment; provided, that, on or prior to such Business Day, the Term A Draw Conditions shall have been satisfied; provided, further,
that, for the avoidance of doubt, it is understood and agreed that there shall be no more than one (1) Term A Borrowing during the term of this Agreement.
The Term A Borrowing shall consist of Term A Loans made simultaneously by the Term A Lenders in accordance with their respective Term A
Commitments. Term A Borrowings repaid or prepaid may not be reborrowed.
(b) Term B Borrowing. Subject to the terms and conditions set forth herein, each Term B Lender severally agrees to make a single
term loan to the Borrower, in Dollars, on any Business Day during the Term B Availability Period, in an aggregate amount not to exceed such Term B
Lender’s Term B Commitment; provided, that, on or prior to such Business Day, the Term B Draw Conditions shall have been satisfied; provided, further,
that, for the avoidance of doubt, it is understood and agreed that there shall be no more than one (1) Term B Borrowing during the term of this Agreement.
The Term B Borrowing shall consist of Term B Loans made simultaneously by the Term B Lenders in accordance with their respective Term B
Commitments. Term B Borrowings repaid or prepaid may not be reborrowed.
(c) Term C Borrowing. Subject to the terms and conditions set forth herein, each Term C Lender severally agrees to make a single
term loan to the Borrower, in Dollars, on any Business Day during the Term C Availability Period, in an aggregate amount not to exceed such Term C
Lender’s Term C Commitment; provided, that, on or prior to such Business Day, the Term C Draw Conditions shall have been satisfied; provided, further,
that, for the avoidance of doubt, it is understood and agreed that there shall be no more than one (1) Term C Borrowing during the term of this Agreement.
The Term C Borrowing shall consist of Term C Loans made simultaneously by the Term C Lenders in accordance with their respective Term C
Commitments. Term C Borrowings repaid or prepaid may not be reborrowed.
2.02 Borrowings.
(a) Each Borrowing shall be made upon the Borrower’s irrevocable notice (in the form of a written Loan Notice, appropriately
completed and signed by a Responsible Financial Officer of the Borrower) to the Administrative Agent, which must be given not later than 9:00 a.m. on
the date at least twenty (20) Business Days (or such shorter period as the Administrative Agent may agree in its sole discretion) in advance of the
requested date of the Term A Borrowing, the Term B Borrowing or the Term C Borrowing, as the case may be. Each Loan Notice shall specify (i) the
requested date of the Borrowing (which shall be a Business Day) and (ii) the principal amount of Loans to be borrowed. For the avoidance of doubt, the
Term A Borrowing shall be in a principal amount of $125,000,000, the Term B Borrowing shall be in a principal amount of $25,000,000 and the Term C
Borrowing shall be in a principal amount of $50,000,000.
(b) Following receipt of a Loan Notice for a Facility, the Administrative Agent shall promptly notify each Appropriate Lender of the
amount of its Applicable Percentage under such Facility of the applicable Loans. Each Appropriate Lender shall make the amount of its Loan available to
the Administrative Agent in immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the Business Day specified in
the applicable Loan Notice. Upon satisfaction of the applicable conditions set forth in Section 5.02 (and, if such Borrowing is the initial Borrowing,
Section 5.01) and subject to the Term A Draw Conditions, the Term B Draw Conditions and the Term C Draw Conditions, as applicable, the
Administrative Agent shall make all funds so received available to the Borrower in like funds as received by the Administrative Agent by wire transfer of
such funds in accordance with instructions provided to (and acceptable to) the Administrative Agent by the Borrower.
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2.03 Prepayments.
(a) Voluntary Prepayments. Subject to the payment of any prepayment or repayment premium as required under Section 2.03(d), the
exit fee required under Section 2.07(b) and any other fees or amounts payable hereunder at such time, the Borrower may, upon written notice from the
Borrower to the Administrative Agent, voluntarily prepay the Loans, in whole or in part; provided, that, (i) such notice must be received not later than
11:00 a.m. five (5) Business Days prior to the date of prepayment and (ii) any such prepayment shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof (or, if less, the entire principal amount thereof then outstanding). Each such notice shall specify the date and
amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein. Any prepayment pursuant to this Section 2.03(a) shall be accompanied by (x) all accrued
interest on the principal amount of the Loans prepaid, (y) the prepayment or repayment premium required under Section 2.03(d) and the exit fee required
under Section 2.07(b) and (z) all fees, costs, expenses, indemnities and other amounts due and payable hereunder at the time of prepayment. Each such
prepayment shall be applied first, to outstanding Term C Loans (if any), second, to outstanding Term B Loans (if any) and third, to outstanding Term A
Loans. Each such prepayment shall be applied to the Loans of the Lenders in accordance with their respective Applicable Percentages in respect of each
of the relevant Facilities.
(b) Mandatory Prepayments of Loans.
(i) Dispositions; Involuntary Dispositions; Etc.
(A) The Borrower shall promptly (and, in any event, within three (3) Business Days, unless the Borrower delivers written notice
to the Administrative Agent of its intent to exercise the reinvestment rights pursuant to this clause (i)(A) within such three (3) Business
Day period) prepay the Loans in an aggregate amount equal to 100% of the Net Cash Proceeds (other than any Net Cash Proceeds –
Licensing, any Net Cash Proceeds – Non-Permitted Royalty Financing and any Net Cash Proceeds received by any Loan Party or theany
Subsidiary from any Royalty Financing or any Other Royalty Financing) of all Dispositions (other than any Disposition pursuant to
Section 8.05(c) hereof) and Involuntary Dispositions, to the extent such Net Cash Proceeds are not (1) in the case of either Dispositions
or Involuntary Dispositions, reinvested in Eligible Assets or (2) solely in the case of Involuntary Dispositions, used for the repair or
restoration of the property which was the subject of the Involuntary Disposition, in each case within 270 days of the date of such
Disposition or Involuntary Disposition.
(B) The Borrower shall promptly (1) (and, in any event, within one (1) Business Day) prepay the Loans in an aggregate amount
equal to 100% of any Net Cash Proceeds – Licensing received by any Loan Party or any Subsidiary pursuant to a Non-Permitted License
(it being understood and agreed that the payment pursuant to this clause (B)(1) shall be in addition to any other right and remedy that the
Administrative Agent or any other Secured Party has as a result of an Event of Default arising from the entering into such Non-Permitted
License) and (2) (and, in any event, within three (3) Business Days) prepay the Loans, in an amount equal, on a dollar-for-dollar basis, to
any Net Cash Proceeds - Licensing received by any Loan Party or Subsidiary pursuant to a Permitted License which are paid to theany
Buyer in connection with theany Royalty Financing or any buyer or purchaser under the Other Royalty Financing Documents in
connection with an Other Royalty Financing, as applicable, solely to the extent such payment exceeds the amount then required to be
paid pursuant to the express terms of the Royalty Financing Documents or the Other Royalty Financing Documents, as applicable.
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(C) The Borrower shall promptly (and, in any event, within one (1) Business Day) prepay the Loans in an aggregate amount
equal to 100% of any Net Cash Proceeds – Non-Permitted Royalty Financing received by any Loan Party or any Subsidiary (it being
understood and agreed that the payment pursuant to this clause (C) shall be in addition to any other right and remedy that the
Administrative Agent or any other Secured Party has as a result of an Event of Default arising from the entering into such Non-Permitted
Royalty Financing).
Any prepayment pursuant to this clause (i) shall be applied as set forth in clause (iv) below.
(ii) Extraordinary Receipts. The Borrower shall promptly (and, in any event, within three (3) Business Days, unless the
Borrower delivers written notice to the Administrative Agent of its intent to exercise the reinvestment rights pursuant to this clause (ii)
within such three (3) Business Day period) upon the receipt by any Loan Party or any Subsidiary of the Net Cash Proceeds of any
Extraordinary Receipts, prepay the Loans in an aggregate amount equal to 100% of such Net Cash Proceeds to the extent such Net Cash
Proceeds are not reinvested in Eligible Assets within 270 days of the date of receipt of the Net Cash Proceeds of such Extraordinary
Receipts. Any prepayment pursuant to this clause (ii) shall be applied as set forth in clause (iv) below.
(iii) Debt Issuance. The Borrower shall promptly (and, in any event, within one (1) Business Day) upon the receipt by any
Loan Party or any Subsidiary of the Net Cash Proceeds of any Debt Issuance, prepay the Loans in an aggregate amount equal to 100% of
such Net Cash Proceeds (it being understood and agreed that the payment pursuant to this clause (iii) shall be in addition to any other
right and remedy that the Administrative Agent or any other Secured Party has as a result of an Event of Default arising from such Debt
Issuance). Any prepayment pursuant to this clause (iii) shall be applied as set forth in clause (iv) below.
(iv) Application of Mandatory Prepayments. The Borrower shall provide the Administrative Agent with written notice of any
payment to be made under this Section 2.03(b) at least five (5) Business Days prior to the date such payment is required to be under this
Section 2.03(b). All payments under this Section 2.03(b) shall be applied (i) first to all fees, costs, expenses, indemnities and other
amounts due and payable hereunder (other than as contemplated by the immediately following clause (ii)), and (ii) then proportionately
(based on the relation of such amounts to the total amount of the relevant payment under this Section 2.03(b)) to the payment or
prepayment (as applicable) of the following amounts of the Obligations: default interest, if any, prepayment or repayment premium
required by Section 2.03(d), the exit fee required under Section 2.07(b) and accrued and unpaid interest and principal. Each such
prepayment pursuant to the immediately foregoing clause (ii) shall be applied first, to outstanding Term C Loans (if any), second, to
outstanding Term B Loans (if any) and third, to outstanding Term A Loans. Each such prepayment shall be applied to the Loans of the
Lenders in accordance with their respective Applicable Percentages in respect of each of the relevant Facilities.
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(v) Declined Proceeds. Each Lender may reject all or a portion of its share of any mandatory prepayment of Loans required to
be made pursuant to this Section 2.03(b) (such declined amounts, the “Declined Proceeds”) by providing written notice (each, a
“Rejection Notice”) to the Administrative Agent no later than 3:00 p.m. two (2) Business Days prior to the date of such prepayment.
Each Rejection Notice from a given Lender shall specify the principal amount of the mandatory repayment of Loans to be rejected by
such Lender. If a Lender fails to deliver a Rejection Notice to the Administrative Agent within the time frame specified above or such
Rejection Notice fails to specify the principal amount of the Loans to be rejected, any such failure will be deemed an acceptance of the
total amount of such mandatory prepayment of Loans. Any Declined Proceeds shall be offered to the Lenders not so declining such
prepayment on a pro rata basis in accordance with the amounts of the Loans of such Lender (with such non-declining Lenders having the
right to decline any prepayment with Declined Proceeds by providing written notice to the Administrative Agent no later than 3:00 p.m.
one (1) Business Day prior to the date of such prepayment). If a non-declining Lender fails to deliver notice to the Administrative Agent
within the time frame specified, any such non-declining Lender shall be deemed to have declined the additional proceeds. To the extent
such non-declining Lenders elect to decline their share of such Declined Proceeds, any Declined Proceeds remaining thereafter shall be
retained by the Borrower.
(vi) Repatriation. Notwithstanding the foregoing terms of this Section 2.03(b), to the extent any or all of the Net Cash
Proceeds of any Disposition by, or receipt of the Net Cash Proceeds of any Involuntary Disposition or Extraordinary Receipts by, a
Subsidiary that is a Non-U.S. Subsidiary otherwise giving rise to a prepayment pursuant to this Section 2.03(b), is prohibited by any
applicable local requirements of Law from being repatriated to the Borrower or any Subsidiary that is a U.S. Subsidiary including
through the repayment of intercompany Indebtedness (each, a “Repatriation”; with “Repatriated” having a correlative meaning), provided
that the Borrower and its Subsidiaries shall take all commercially reasonable actions available under local Law to permit such
Repatriation, or if the Repatriation of any such amount would reasonably be expected to result in material adverse tax consequences with
respect to the Borrower and its Subsidiaries, taken as a whole, an amount equal to the portion of such Net Cash Proceeds so affected
(such amount, the “Excluded Prepayment Amount”), will not be required to be applied to prepay Loans at the times provided in this
Section 2.03(b); provided, that if and to the extent any such Repatriation ceases to be prohibited, restricted or delayed by applicable local
requirements of Law or such Repatriation ceases, to result in material adverse tax consequences with respect to the Borrower and its
Subsidiaries, taken as a whole (taking into account any foreign tax credit or benefit actually received in connection with such
Repatriation), at any time following the date on which the applicable mandatory prepayment pursuant to this Section 2.03(b) was
otherwise required to be made, the Borrower shall promptly pay an amount equal to such portion of the Excluded Prepayment Amount to
the Lenders, which payment shall be applied in accordance with Section 2.03(b)(iv). Notwithstanding anything to the contrary contained
herein or in any other Loan Document, for the avoidance of doubt, nothing in this Section 2.03(b) shall require the Borrower to cause any
amounts to be repatriated to the United States.
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(c) Change of Control. Upon the occurrence of a Change of Control, the Borrower shall, unless otherwise directed by the Required
Lenders, on the date of the occurrence of such Change of Control (i) prepay the Outstanding Amount of the Loans together with all accrued and unpaid
interest thereon plus the prepayment or repayment premium, if any, required by Section 2.03(d), and the exit fee required under Section 2.07(b) plus all
other Obligations, (ii) in the event such Change of Control occurs (or a definitive agreement in respect of such Change of Control is entered into)
during the Term Loan B Availability Period, pay to the Lenders an amount equal to [***] and (iii) in the event such Change of Control occurs (or
a definitive agreement in respect of such Change of Control is entered into) during the Term Loan C Availability Period, pay to the Lenders an
amount equal to [***] (it being understood and agreed that the payment pursuant to this clause (c) shall be in addition to any other right and remedy that
the Administrative Agent or any other Secured Party has as a result of an Event of Default arising from the occurrence of such Change of Control).
(d) Prepayment and Repayment Premiums. Notwithstanding anything to the contrary in this Agreement or any other Loan Document,
if all or any portion of the Loans are repaid, prepaid, or required to be repaid or prepaid (including by acceleration, including automatic acceleration
triggered by any insolvency proceeding pursuant to Section 9.01(f)), pursuant to this Section 2.03, Article IX or otherwise, then, in all cases, the
Borrower shall pay to the Lenders, for their respective ratable accounts, on the date on which such repayment or prepayment is paid or required to be paid,
in addition to the other Obligations so repaid, prepaid or required to be repaid or prepaid, a prepayment or repayment premium equal to: (i) with respect to
any prepayment or repayment paid or required to be paid on or prior to the second anniversary of the date of the Borrowing of such Loan, an amount
equal to the Make-Whole Amount with respect to such prepayment or repayment, (ii) with respect to any prepayment or repayment paid or required to be
paid after the second anniversary of the date of the Borrowing of such Loan, but on or prior to the third anniversary of the date of the Borrowing of such
Loan, two percent (2.00%) of the principal amount of such Loan that is prepaid or required to be prepaid, (iii) with respect to any prepayment or
repayment paid or required to be paid after the third anniversary of the date of the Borrowing of such Loan, but on or prior to the fourth anniversary of the
date of the Borrowing of such Loan, one percent (1.00%) of the principal amount of such Loan that is prepaid or required to be prepaid and (iv) with
respect to any prepayment or repayment paid or required to be paid after the fourth anniversary of the date of the Borrowing of such Loan, zero percent
(0.00%) of the principal amount of such Loan that is prepaid or required to be prepaid.
(e) Failure to Draw.
(i) (x) If the Term B Borrowing has not occurred during the Term B Availability Period and (y) [***], the Borrower shall,
unless otherwise directed by the Required Lenders, pay to the Lenders on the last date of the Term B Availability Period an amount equal
to [***].
(ii) (x) If the Term C Borrowing has not occurred during the Term C Availability Period and (y) [***], the Borrower shall,
unless otherwise directed by the Required Lenders, pay to the Lenders on the last date of the Term C Availability Period an amount equal
to [***].
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2.04 Termination of Commitments.
(a) Voluntary. The Borrower may, upon written notice to the Administrative Agent during (i) the Term B Availability Period, terminate
in full the Term B Commitments or (ii) the Term C Availability Period, terminate in full the Term C Commitments; provided, that: (x) any such notice
shall be received by the Administrative Agent not later than 9:00 a.m. five (5) Business Days prior to the date of termination and (y) the Borrower
shall, unless otherwise directed by the Required Lenders, on the date of such termination (1) in connection with a termination of the Term B
Commitments, pay to the Lenders an amount equal to [***] and (2) in connection with a termination of the Term C Commitments, pay to the
Lenders an amount equal to [***]. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable. Upon any termination of the
Term B Commitments or the Term C Commitments, the Commitments of each Appropriate Lender shall be reduced by such Lender’s Applicable
Percentage of such reduction amount. The Borrower may not terminate the Term A Commitments.
(b) Mandatory. The Term A Commitments will be automatically and permanently reduced to zero upon the Term A Borrowing
pursuant to Section 2.01. The Term B Commitments will be automatically and permanently reduced to zero upon the Term B Borrowing pursuant to
Section 2.01. The Term C Commitments will be automatically and permanently reduced to zero upon the Term C Borrowing pursuant to Section 2.01. The
Term A Commitments shall be automatically and permanently reduced to zero on the date that the Term A Availability Period shall end. The Term B
Commitments shall be automatically and permanently reduced to zero on the date that the Term B Availability Period shall end. The Term C
Commitments shall be automatically and permanently reduced to zero on the date that the Term C Availability Period shall end.
Notwithstanding anything to the contrary in this Agreement or any other Loan Document, if all or any portion of the Commitments are
terminated pursuant to Article IX, then the Borrower shall pay to the Lenders, for their respective ratable accounts, on the date on which such
termination occurs (1) in connection with a termination of the Term B Commitments, pay to the Lenders an amount equal to the Make-Whole
Amount plus the commitment fee required under Section 2.07(a) plus the exit fee required under Section 2.07(b), which amount shall be calculated
as if the Term B Loan Borrowing had occurred and the full amount (which amount shall be $[***]) of the Term B Loan had been drawn and
repaid in full, in each case, on the date of such termination and (2) in connection with a termination of the Term C Commitments, pay to the
Lenders an amount equal to the Make-Whole Amount plus the commitment fee required under Section 2.07(a) plus the exit fee required under
Section 2.07(b) which amount shall be calculated as if the Term C Loan Borrowing had occurred and the full amount (which amount shall be
$[***]) of the Term C Loan had been drawn and repaid in full, in each case, on the date of such termination.
For the avoidance of doubt, in the event the Borrower (i) voluntarily prepays all outstanding Loans pursuant to Section 2.03(a) or (ii) is
required to prepay all outstanding Loans pursuant to Section 2.03(b), any of the Term B Commitments and Term C Commitments that are then in
effect shall automatically terminate in full upon any such prepayment and the amounts set forth in clauses (y)(1) and (2) of Section 2.04(a) shall be
immediately due and payable to the Lenders.
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2.05 Repayment of Loans.
The Borrower shall repay the outstanding principal amount of the Loans, together with all accrued and unpaid interest thereon, the prepayment
and repayment premiums required by Section 2.03(d) (provided, for clarity, that such premiums under Section 2.03(d) shall not be due and payable as a
result of a repayment made pursuant to this Section 2.05 due to the occurrence of the date set forth in clause (a) of the definition of “Maturity Date”), the
exit fee required under Section 2.07(b) and all other outstanding Obligations, on the Maturity Date. Loans repaid or prepaid may not be reborrowed.
2.06 Interest; Other Amounts.
(a) Pre-Default Rate. Subject to the provisions of subsection (b) below, during any Interest Period each Loan shall bear interest during
such Interest Period on the outstanding principal amount thereof either, (i) if such Interest Period (A) ends on or before the last day of the eighth (8th) full
fiscal quarter ending after the Term A Borrowing Date and a Cash Pay Election is made pursuant to Section 2.06(d) for such Interest Period or (B) begins
after the last day of the eighth (8th) full fiscal quarter ending after the Term A Borrowing Date, at a rate equal to the sum of (x) Three-Month LIBOR for
such Interest Period plus (y) 8.25% per annum, or (ii) if such Interest Period ends on or before the last day of the eighth (8th) full fiscal quarter ending
after the Term A Borrowing Date and a PIK Election is made pursuant to Section 2.06(d) for such Interest Period, at a rate equal to the sum of (x) Three-
Month LIBOR for such Interest Period plus (y) 10.25%, per annum.
(b) Default Rate. Notwithstanding anything the contrary set forth in Section 2.06(a), (i) upon the occurrence of and during the
continuance of any Event of Default during any Interest Period all outstanding Obligations shall bear interest during the continuance of such Event of
Default at an interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws and (ii) accrued and unpaid
interest (including interest on past due interest) shall be due and payable in cash on demand. The interest rate shall be recalculated and, if necessary,
adjusted for each Interest Period, in each case pursuant to the terms hereof.
(c) Interest Generally. Subject to Section 2.06(b), interest on each Loan shall be due and payable in cash in arrears on each Interest
Payment Date unless a PIK Election is made pursuant to Section 2.06(d) and at such other times as may be specified herein. Interest hereunder shall be
due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law.
(d) PIK Interest Election. For each Interest Period ending on or before the last day of the eighth (8th) full fiscal quarter ending after the
Term A Borrowing Date, the Borrower hereby elects (such election, a “PIK Election”) that, so long as (x) no Default or Event of Default has occurred and
is continuing and (y) the Borrower has not, at least five (5) Business Days prior to the beginning of such Interest Period, provided the Administrative
Agent a written election indicating that it will decline the PIK Election for such Interest Period and interest on any Loan accrued during such Interest
Period shall be due and payable in cash in arrears on the applicable Interest Payment Date (a “Cash Pay Election”), interest on any Loan accrued during
such Interest Period may be paid in kind (“PIK Interest”) by capitalizing the entire amount of such PIK Interest with the unpaid principal amount of such
Loan outstanding on the last day of such Interest Period (each, a “PIK Interest Payment”). Following each such increase in the principal amount of such
Loan as a result of any PIK Interest Payment, such Loans will bear interest on such increased principal amount from and after the date of each such PIK
Interest Payment and each reference to such Loan shall include such PIK Interest for all purposes of the Loan Documents.
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2.07 Fees.
(a) Commitment Fee. The Borrower shall pay to the Lenders, for their respective ratable accounts, on the date of each Borrowing (or a
deemed Borrowing pursuant to Section 2.03 or Section 2.04), a commitment fee in an amount equal to one percent (1.00%) of the principal amount of
the Loans borrowed (or deemed borrowed) on such date. Such fee shall be fully earned when paid and shall be non-refundable for any reason
whatsoever. It is understood and agreed that Athyrium, the Administrative Agent and the Lenders reserve the right to allocate, in whole or in part, to their
respective Affiliates, the fees payable to such Persons hereunder in such manner as Athyrium, the Administrative Agent, the Lenders and such Affiliates
shall agree in their sole discretion.
(b) Exit Fee. If all or any portion of the Loans are repaid, prepaid, or required to be repaid or prepaid (including by acceleration) or
deemed repaid or prepaid, pursuant to Section 2.03, Section 2.04, Section 2.05, Article IX or otherwise, then, in all cases, the Borrower shall pay to the
Lenders, for their respective ratable accounts, on the date on which such repayment or prepayment is repaid, paid or, required to be repaid or prepaid or
deemed repaid or prepaid, as the case may be, in addition to the other Obligations so prepaid, repaid or, required to be prepaid or repaid or deemed
repaid or prepaid, an exit fee in an amount equal to two percent (2.00%) of the principal amount of such Loan prepaid, repaid or, required to be prepaid
or repaid or deemed repaid or prepaid, as the case may be, on such date.
2.08 Evidence of Debt.
The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender in the ordinary course of
business. The accounts or records maintained by each Lender shall be conclusive absent manifest error of the amount of Loans made by the Lenders to the
Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to the Obligations. Upon the request of any Lender made through the Administrative
Agent, the Borrower shall execute and deliver to such Lender a promissory note, which shall evidence such Lender’s Loans in addition to such accounts or
records. Each such promissory note shall (a) in the case of the Term A Loans, be in the form of Exhibit B-1 (a “Term A Note”), (b) in the case of the Term
B Loans, be in the form of Exhibit B-2 (a “Term B Note”) and (c) in the case of the Term C Loans, be in the form of Exhibit B-3 (the “Term C Note”). Each
Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.
2.09 Computation of Interest.
All computations of interest shall be made on the basis of a 360-day year and actual days elapsed. Interest shall accrue on each Loan for the day on
which such Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which such Loan or such portion is paid.
2.10 Payments Generally.
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(a) General. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction (subject to
Section 3.01) for any counterclaim, defense, recoupment or setoff. Subject to Section 9.03, all payments of principal, interest, prepayment and repayment
premiums and fees on the Loans and all other Obligations payable by any Loan Party under the Loan Documents shall be due, without any presentment
thereof, directly to the Lenders, at the respective Lending Offices of the Lenders; provided, that, if at the time of any such payment a Lender is a
Defaulting Lender, such Defaulting Lender’s pro rata share of such payment shall be made directly to the Administrative Agent. The Loan Parties will
make such payments in Dollars, in immediately available funds not later than 2:00 p.m. on the date due, marked for attention as indicated, or in such other
manner or to such other account in any United States bank as the Lenders may from time to time direct in writing. All payments received by the Lenders
after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue in respect of such
succeeding Business Day. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected in computing interest.
(b) Obligations of Lenders are Several. The obligations of the Lenders hereunder to make Loans and to make payments pursuant to
Section 12.04(d) are several and not joint. The failure of any Lender to make any Loan or to make any payment under Section 12.04(d) on any date
required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the
failure of any other Lender to so make its Loan or to make its payment under Section 12.04(d).
(c) Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds to make any Loan in any particular
place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds to make any Loan in any particular place or
manner.
2.11 Sharing of Payments by Lenders.
If any Lender shall, by exercising any right of setoff or otherwise, obtain payment in respect of any principal of or interest on its portion of any of
the Loans or prepayment or repayment premium or exit fees in connection therewith resulting in such Lender’s receiving payment of a proportion of the
aggregate amount of the Loans and accrued interest thereon and prepayment or repayment premium or exit fees in connection therewith greater than its pro
rata share thereof as provided herein, then such Lender shall (a) notify the Administrative Agent of such fact and (b) purchase for cash at face value
participations in the portions of the Loans of the Other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of, accrued interest on and prepayment and
repayment premiums or exit fees in connection with their respective portions of the Loans and other amounts owing them; provided, that:
(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price shall be restored to the extent of such recovery, without interest; and
(ii) the provisions of this Section 2.11 shall not be construed to apply to (x) any payment made by or on behalf of the Borrower
pursuant to and in accordance with the express terms of this Agreement (including the application of funds arising from the existence of a
Defaulting Lender) or (y) any payment obtained by a Lender as consideration for the assignment of or sale of any participation in any of its
portion of the Loans to any assignee or participant, other than an assignment to the Borrower or any Subsidiary (as to which the provisions of this
Section shall apply).
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Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
2.12 Defaulting Lenders.
then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(a) Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender,
(i) Waivers and Amendment. The Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect
to this Agreement shall be restricted as set forth in Section 12.01.
(ii) Reallocation of Payments. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the
account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article IX or otherwise, and including any amounts
made available to the Administrative Agent by that Defaulting Lender pursuant to Section 12.08), shall be applied at such time or times as may
be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the
Administrative Agent hereunder; second, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any
Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the
Administrative Agent; third, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account
and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; fourth, to the payment of any amounts
owing to the Lenders as a result of any judgment of a court of competent jurisdiction obtained by any Lender against that Defaulting Lender as a
result of that Defaulting Lender’s breach of its obligations under this Agreement; fifth, so long as no Default or Event of Default exists, to the
payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against
that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and sixth, to that Defaulting Lender
or as otherwise directed by a court of competent jurisdiction; provided, that, if (x) such payment is a payment of the principal amount of any
Loans in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans were made at a time when the
conditions set forth in Section 5.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of all non-Defaulting Lenders
on a pro rata basis prior to being applied to the payment of any Loans of that Defaulting Lender. Any payments, prepayments, repayments or
other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this
Section 2.12 (a)(ii) shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
(b) Defaulting Lender Cure. If the Borrower and the Administrative Agent agree in writing in their sole discretion that a Defaulting
Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective
date specified in such notice and subject to any conditions set forth therein, that Lender will cease to be a Defaulting Lender; provided, that, no
adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting
Lender; provided, further, that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to
Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender having been a Defaulting Lender.
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ARTICLE III
TAXES
3.01 Taxes.
(a) All payments of principal and interest on the Loans and all other amounts payable hereunder by a Loan Party to any Recipient shall
be made free and clear of and without deduction or withholding for or on account of any present or future income, excise, stamp, documentary, property
or franchise taxes and other taxes, fees, duties, levies, assessments, withholding taxes or other charges of any nature whatsoever (including interest and
penalties thereon), in each case, imposed by any taxing authority (“Taxes”), unless required by applicable Law. If any withholding or deduction of any
Taxes from any payment by or on account of any obligation of any Loan Party hereunder is required by applicable Law (any such Taxes, excluding (w)
Taxes imposed on or measured by net income, branch profits taxes and franchise taxes, in each case imposed by the jurisdiction (or any political
subdivision thereof) under or in which a Recipient is organized, has its principal office or applicable lending office or otherwise conducts business or with
which a Recipient has a present or former connection (other than solely as the result of entering into any of the Loan Documents or taking any action
thereunder), (x) U.S. back-up withholding and other withholding Taxes imposed on amounts payable to or for the account of a Recipient with respect to
an applicable interest in any Loan or Commitment pursuant to a Law in effect on the date on which such Recipient acquires such interest in the Loans or
Commitment, except in each case to the extent that, pursuant to this Section 3.01, amounts with respect to such taxes were payable by such Recipient’s
assignor immediately before such Recipient became a party hereto, (y) Taxes that would not have been imposed but for the failure of a Recipient to
provide the Borrower with any certification, form or other documentation (including without limitation an IRS Form W-9 or IRS Form W-8) establishing
an exemption from such Taxes and (z) any withholding tax imposed under FATCA (all non-excluded items shall hereinafter be referred to as “Indemnified
Taxes”, and Taxes described in clauses (w)-(z) shall hereinafter be referred to as “Excluded Taxes”), then (i) the applicable Withholding Agent shall be
entitled to make such withholding or deduction and shall pay directly to the relevant Governmental Authority the full amount required to be so withheld
or deducted within the time allowed and in the minimum amount required by applicable law, (ii) the applicable Withholding Agent shall promptly forward
to the Administrative Agent an official receipt or other documentation satisfactory to the Administrative Agent evidencing such payment to such
Governmental Authority and (iii) the sum payable by the applicable Loan Party shall be increased by such additional amount or amounts as is necessary to
ensure that the net amount actually received by the applicable Recipient will equal the full amount such Recipient would have received had no such
withholding or deduction for Indemnified Taxes been required.
(b) The Borrower shall indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified
Taxes (including Indemnified Taxes imposed on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be
withheld or deducted from a payment by such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such taxes
were correctly or legally imposed or asserted by the relevant Governmental Authority.
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(c) Each Lender shall execute and deliver to the Borrower on or prior to the date that such Lender becomes a party hereto (and from
time to time thereafter upon the reasonable request of the Borrower), one or more (as the Borrower may reasonably request) duly completed and executed
copies of any forms, certificates or documents reasonably requested by the Borrower certifying as to such Lender’s entitlement to any available exemption
from or reduction of withholding or deduction of taxes. In addition, any Lender, if reasonably requested by the Borrower, shall deliver such other
documentation prescribed by applicable law or reasonably requested by the Borrower as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender is subject to backup withholding or information reporting requirements. No Loan Party shall be required to pay
additional amounts to any Lender pursuant to this Section 3.01 with respect to taxes attributable to the failure of such Lender to comply with this
paragraph.
(d) Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes
obsolete or inaccurate in any respect, it shall promptly update such form or certification or promptly notify the Administrative Agent and the Borrower of
its inability to do so.
(e) Each of the parties to the Agreement shall, within ten (10) days of a reasonable request by another party to the Agreement, supply
to that other party
(i) such forms, documentation and other information relating to its status under FATCA as that other party reasonably requests for the
purposes of that other Party’s compliance with FATCA, and
(ii) such forms, documentation and other information relating to its status as that other Party reasonably requests for the purposes of
that other Party’s compliance with any other law, regulation, or exchange of information regime, such as the Common Reporting Standard.
(f) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has
been indemnified pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall pay to the indemnifying party
an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such
refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such
indemnified party the amount paid over pursuant to this clause (f) (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the
contrary in this clause (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (f) the
payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax
subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or
additional amounts with respect to such Tax had never been paid. This clause (f) shall not be construed to require any indemnified party to make available
its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.
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(g) If, due to a change in Sections 871(h) or 881(c) of the Internal Revenue Code (or any successor provisions) after the date a Person
becomes an Indirect Lender under this Agreement, any withholding is required to be made by a Lender or any Affiliate thereof to such Indirect Lender
attributable to payments made by any Loan Party hereunder, such Loan Party shall pay to such Lender such additional amount or amounts as is necessary
to ensure that the net amount actually received by any Indirect Lender will equal the full amount such Indirect Lender would have received had no such
withholding or deduction been required; provided that in the event additional amounts are due in respect of an Indirect Lender, immediately before such
Indirect Lender transfers a direct or indirect interest in a Lender to a transferee and withholding is required to be made by a Lender or any Affiliate to such
transferee Indirect Lender attributable to payments made by any Loan Party hereunder, a Loan Party shall be required to pay additional amounts pursuant
to this Section in an amount not exceeding the additional amounts payable prior to the transfer by the transferor Indirect Lender; provided, further that no
such additional amounts shall be payable by a Loan Party to the extent such withholding could have been avoided by any Indirect Lender and each entity
in the chain of ownership between such Indirect Lender and the Lender providing Internal Revenue Service Forms W-9, W-8ECI, W-8BEN, W-8BEN-E
or W-8IMY (as applicable) or any successor forms thereto, to the Lender or other entity in the chain of ownership between such Indirect Lender and the
Lender, as applicable.
3.02 Survival.
All of the Loan Parties’ obligations under this Article III shall survive termination of the Commitments, prepayment or repayment of all
Obligations hereunder and the resignation or replacement of the Administrative Agent.
ARTICLE IV
GUARANTY
4.01 The Guaranty.
Each of the Guarantors hereby jointly and severally guarantees to each Secured Party and the Administrative Agent as hereinafter provided, as
primary obligor and not as surety, the prompt payment of the Obligations of the Borrower and any other Guarantors in full when due (whether at stated
maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that
if any of the Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the
Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of
payment or renewal of any of the Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment,
by acceleration or otherwise) in accordance with the terms of such extension or renewal.
Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents, the obligations of each Guarantor under
this Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations
subject to avoidance under the Debtor Relief Laws or any comparable provisions of any applicable state or federal law.
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4.02 Obligations Unconditional.
The obligations of the Guarantors under Section 4.01 are joint and several, absolute and unconditional, irrespective of the value, genuineness,
validity, regularity or enforceability of any of the Loan Documents, or any other agreement or instrument referred to therein, or any substitution, release,
impairment or exchange of any other guarantee of or security for any of the Obligations, and, to the fullest extent permitted by applicable law, irrespective
of any law or regulation or other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor, it being the intent of this Section 4.02 that the obligations of the Guarantors hereunder shall be absolute and unconditional under any and all
circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the
Borrower or any other Guarantor for amounts paid under this Article IV until such time as the Obligations (other than contingent indemnification
obligations for which no claim has been asserted) have been paid in full and the Commitments have expired or terminated. Without limiting the generality
of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the
liability of any Guarantor hereunder, which shall remain absolute and unconditional as described above:
Obligations shall be extended, or such performance or compliance shall be waived;
(a) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the
in the Loan Documents shall be done or omitted;
(b) any of the acts mentioned in any of the provisions of any of the Loan Documents, or any other agreement or instrument referred to
(c) the maturity of any of the Obligations shall be accelerated, or any of the Obligations shall be modified, supplemented or amended
in any respect, or any right under any of the Loan Documents including any change in the purpose of, an extension of or increase in any facility or the
addition of any new facility under the Loan Documents or other document, or any other agreement or instrument referred to in the Loan Documents shall
be waived or any other guarantee of any of the Obligations or any security therefor shall be released, impaired or exchanged in whole or in part or
otherwise dealt with;
(d) any Lien granted to, or in favor of, any Secured Party as security for any of the Obligations shall fail to attach or be perfected;
any Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Guarantor); or
(e) any of the Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of
(f) any insolvency or similar proceedings.
With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all
notices whatsoever, and any requirement that the Secured Parties exhaust any right, power or remedy or proceed against any Person under any of the Loan
Documents, or any other agreement or instrument referred to in the Loan Documents, or against any other Person under any other guarantee of, or security
for, any of the Obligations.
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4.03 Reinstatement.
The obligations of the Guarantors under this Article IV shall be automatically reinstated if and to the extent that for any reason any payment by or
on behalf of any Person in respect of the Obligations is rescinded or must be otherwise restored by any holder of any of the Obligations, whether as a result
of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Secured Parties on demand for all
reasonable costs and expenses (including, without limitation, the fees, charges and disbursements of counsel) incurred by the Secured Parties in connection
with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law.
4.04 Certain Additional Waivers.
Each Guarantor agrees that such Guarantor shall have no right of recourse to security for the Obligations, except through the exercise of rights of
subrogation pursuant to Section 4.02 and through the exercise of rights of contribution pursuant to Section 4.06.
4.05 Remedies.
The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Secured Parties, on the other
hand, the Obligations may be declared to be forthwith due and payable as provided in Section 9.02 (and shall be deemed to have become automatically due
and payable in the circumstances provided in said Section 9.02) for purposes of Section 4.01 notwithstanding any stay, injunction or other prohibition
preventing such declaration (or preventing the Obligations from becoming automatically due and payable) as against any other Person and that, in the event
of such declaration (or the Obligations being deemed to have become automatically due and payable), the Obligations (whether or not due and payable by
any other Person) shall forthwith become due and payable by the Guarantors for purposes of Section 4.01. The Guarantors acknowledge and agree that
their obligations hereunder are secured in accordance with the terms of the Collateral Documents and that the Secured Parties may exercise their remedies
thereunder in accordance with the terms thereof.
4.06 Rights of Contribution.
The Guarantors agree among themselves that, in connection with payments made hereunder, each Guarantor shall have contribution rights against
the other Guarantors as permitted under applicable law. Such contribution rights shall be subordinate and subject in right of payment to the obligations of
such Guarantors under the Loan Documents and no Guarantor shall exercise such rights of contribution until all Obligations (other than contingent
indemnification obligations for which no claim has been asserted) have been paid in full and the Commitments have been terminated.
4.07 Guarantee of Payment; Continuing Guarantee.
The guarantee in this Article IV is a guaranty of payment and not of collection, is a continuing guarantee, and shall apply to all Obligations
whenever arising.
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4.08 Limitations.
The guarantee in this Article IV insofar as it is from BioCryst Ireland Limited does not apply to any liability to the extent that it would result in
such guarantee constituting unlawful financial assistance within the meaning of Section 82 of the Companies Act.
4.09 Guarantor Intent
Without prejudice to generality of Section 4.02, each Guarantor expressly confirms that it intends that this Guaranty shall extend from time to time
to any (however fundamental) variation, increase, extension or addition of or to any of the Loan Documents, Collateral and/or any facility or amount made
available under any of the Loan Documents for the purposes of or in connection with any of the following: business acquisitions of any nature; increasing
working capital; enabling investor distributions to be made; carrying out restructurings; refinancing existing facilities; refinancing any other indebtedness;
making facilities available to new borrowers; any other variation or extension of the purposes for which any such facility or amount might be made
available from time to time; and any fees, costs and/or expenses associated with any of the foregoing.
ARTICLE V
CONDITIONS PRECEDENT TO BORROWINGS
5.01 Conditions to Initial Borrowing.
This Agreement shall become effective upon, and the obligation of each Lender to make its portion of the Loans to be advanced on the Closing
Date is subject to, satisfaction of the following conditions precedent:
(a) Loan Documents. Receipt by the Administrative Agent of executed counterparts of this Agreement and the other Loan Documents,
each properly executed by a Responsible Officer of the signing Loan Party (or, in the case of a Loan Party incorporated in Ireland, properly in the manner
specified in the resolutions of the board of directors thereof) and each other party to such Loan Documents, in each case in form and substance satisfactory
to the Administrative Agent and the Lenders.
(b) Opinions of Counsel. Receipt by the Administrative Agent of favorable opinions of legal counsel to the Loan Parties or in the case
of BioCryst Ireland Limited, legal counsel to the Administrative Agent, addressed to the Administrative Agent and each Lender, dated as of the Closing
Date, and in form and substance satisfactory to the Administrative Agent and its counsel.
Financial Statements and such other reports, statements and due diligence items as the Administrative Agent or any Lender shall request.
(c) Financial Statements; Due Diligence. The Administrative Agent shall have received the Audited Financial Statements, the Interim
(d) No Material Adverse Effect. Since the date of the Audited Financial Statements, there shall not have occurred any event or
condition that has had or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
arbitrator or Governmental Authority that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.
(e) Litigation. There shall not exist any action, suit, investigation or proceeding pending or threatened in any court or before an
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(f) Organization Documents, Resolutions, Etc. Receipt by the Administrative Agent of the following, each of which shall be pdf scans,
in form and substance satisfactory to the Administrative Agent and its legal counsel:
(i) copies of the Organization Documents of each Loan Party certified to be true and complete as of a recent date by the appropriate
Governmental Authority of the state or other jurisdiction of its incorporation or organization, where applicable, and certified by a secretary or
assistant secretary of such Loan Party to be true and correct as of the Closing Date;
(ii) such certificates of resolutions, shareholder resolutions or other action, incumbency certificates and/or other certificates of
Responsible Officers of each Loan Party as the Administrative Agent may require evidencing the identity, authority and capacity of each
Responsible Officer thereof and each Responsible Financial Officer thereof authorized to act as a Responsible Officer or a Responsible Financial
Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party; and
(iii) such documents and certifications as the Administrative Agent may require to evidence that each Loan Party is duly organized,
incorporated or formed, and is validly existing, in good standing and qualified to engage in business in its state of organization or formation,
including certificates of good standing or status in all applicable jurisdictions (which shall exclude, for the avoidance of doubt, Ireland).
substance satisfactory to the Administrative Agent:
(g) Perfection and Priority of Liens. Receipt by the Administrative Agent of the following, each of which shall be in form and
(i) searches of Uniform Commercial Code filings in the jurisdiction of formation of each Loan Party or where a filing would need to be
made in order to perfect the Administrative Agent’s security interest in the Collateral, copies of the financing statements on file in such
jurisdictions, evidence that no Liens exist other than Permitted Liens;
(ii) UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent’s sole discretion, to perfect
the Administrative Agent’s security interest in the Collateral;
(iii) searches of ownership of, and Liens on, the IP Rights of each Loan Party in the appropriate governmental offices;
(iv) duly executed IP Security Agreements as are necessary, in the Administrative Agent’s sole discretion, to perfect the Administrative
Agent’s security interest in the IP Rights of the Loan Parties;
(v) [reserved];
(vi) [reserved];
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(vii) [reserved];
(viii) perfection actions, including, without limitation, searches, certifications, notices and any other items required pursuant to or
reasonably requested in connection with the Collateral Documents to be executed on the Closing Date; and
(ix) agreement between Irish legal counsel to the Administrative Agent and Irish legal counsel to BioCryst Ireland Limited on the
wording of the short and further particulars for each security filing to be made in the Irish Companies Registration Office.
(h) [Reserved].
(i) Closing Certificate. Receipt by the Administrative Agent of a certificate signed by a Responsible Officer of the Borrower
certifying, as of the Closing Date, (i) that the conditions specified in Sections 5.01(d), (e) and (k) and 5.02(a) and (b) have been satisfied, (ii) that the
Borrower and its Subsidiaries (after giving effect to the Transactions and the incurrence of Indebtedness related thereto) are Solvent on a consolidated
basis, (iii) that the Borrower and its Subsidiaries have no Indebtedness for borrowed money, other than Indebtedness permitted by Section 8.03, (iv) that
neither the Borrower nor any Subsidiary has outstanding any Disqualified Capital Stock and (v) as true and complete an attached description of all
intercompany Indebtedness of the Borrower and its Subsidiaries.
(j) Existing Indebtedness. All of the Existing Indebtedness shall be repaid in full and all security interests related thereto shall be
terminated on or prior to the Closing Date, in each case, evidenced by payoff letters and lien releases reasonably satisfactory to the Administrative Agent.
(k) Governmental and Third Party Approvals. The Borrower and its Subsidiaries shall have received all material governmental,
shareholder and third-party consents and approvals necessary in connection with the transactions contemplated by this Agreement, the other Loan
Documents, the Royalty Financing Documents and the other transactions contemplated hereby and all applicable waiting periods shall have expired
without any action being taken by any Person that could reasonably be expected to restrain, prevent or impose any material adverse conditions on the
Borrower or any of its Subsidiaries or such other transactions or that could seek to threaten any of the foregoing, and no law or regulation shall be
applicable which could reasonably be expected to have such effect.
(l) Corporate Structure and Capitalization. The capital and ownership structure of the Borrower on the Closing Date, on a pro forma
basis after giving effect to the transactions contemplated by the Loan Documents and the 2020 RP Royalty Financing Documents, shall be reasonably
satisfactory to the Administrative Agent.
with respect to the proceeds of the Loan to be made on the Closing Date.
(m) Letter of Direction. Receipt by the Administrative Agent of a satisfactory letter of direction containing funds flow information
or under the other Loan Documents on or before the Closing Date.
(n) Fees. Receipt by Athyrium and its Affiliates, the Administrative Agent and the Lenders of any fees required to be paid hereunder
(o) Costs; Expenses. The Borrower shall have paid all reasonable and documented expenses, fees and charges of the Lenders and
Administrative Agent incurred in connection with the Loan Documents, including all documented expenses, fees, charges and disbursements of counsel to
the Lenders and Administrative Agent and all due diligence expenses of Athyrium and its Affiliates and the Lenders, in each case, incurred on or prior to
the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute their reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the closing proceedings (provided, that, such estimate shall not thereafter preclude a final
settling of accounts between the Borrower, the Lenders and the Administrative Agent), in each case, to the extent an invoice therefor is sent at least one
(1) Business Day prior to the Closing Date.
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(p) Royalty Financing Documents.
(i) The 2020 RP Royalty Financing Documents shall have been executed and delivered and the transactions thereunder fully
consummated substantially concurrently with the execution and delivery of this Agreement.
(ii) Receipt by the Administrative Agent of the 2020 RP Royalty Financing Documents, each in form and substance satisfactory to
Administrative Agent and the Lenders in their sole discretion.
(iii) The Borrower shall deliver a certificate of a Responsible Officer to Administrative Agent certifying that (A) Administrative Agent
has received a true, correct and complete executed copy of each 2020 RP Royalty Financing Document, (B) the Borrower and its Subsidiaries are
in compliance in all material respects with the 2020 RP Royalty Financing Documents to which it is a party, and such Person has not received any
notice of default or termination thereunder and (C) no 2020 RP Royalty Financing Document has been amended or waived or modified in any
manner, without the written consent of the Administrative Agent and the Lenders.
(q) [Reserved].
(r) Termination of MDCP Licenses. Receipt by the Administrative Agent of satisfactory evidence that all agreements, licenses, permits
and assignments in favor of MDCP or providing MDCP any right or interest in any IP Rights of the Borrower or any Subsidiary, including without
limitation that certain License and Services Agreement between the Borrower and MDCP, dated as of September 23, 2016, as amended restated or
otherwise modified from time to time, have been terminated and released.
(s) Other. Receipt by the Administrative Agent and the Lenders of such other documents, instruments, agreements and information as
requested by the Administrative Agent or any Lender, including, but not limited to, information regarding litigation, tax, accounting, labor, insurance,
pension liabilities (actual or contingent), real estate leases, material contracts, debt agreements, property ownership, environmental matters, contingent
liabilities and management of the Borrower and its Subsidiaries; such information may include, if requested by the Administrative Agent or any Lender,
asset appraisal reports and written audits of accounts receivable, inventory, payables, controls and systems.
Without limiting the generality of the provisions of the last paragraph of Section 11.03, for purposes of determining compliance with the
conditions specified in this Section 5.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the
Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
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5.02 Conditions to all Borrowings. The obligation of each Lender to honor any Loan Notice is subject to the following conditions precedent:
(a) Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party contained in
Article VI or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall
be true and correct in all material respects (and in all respects if any such representation or warranty is already qualified by materiality or reference to
Material Adverse Effect) on and as of the date of such Borrowing, except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material respects (and in all respects if any such representation or warranty is already
qualified by materiality or reference to Material Adverse Effect) as of such earlier date, and except that for purposes of this Section 5.02, the
representations and warranties contained in subsections (a) and (b) of Section 6.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 7.01.
the proceeds thereof.
(b) No Default. No Default or Event of Default shall exist, or would result from such proposed Borrowing or from the application of
condition that has had or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect.
(c) No Material Adverse Effect. Since the date of the Audited Financial Statements, there shall not have occurred any event or
(d) Loan Notice. The Administrative Agent shall have received a Loan Notice in accordance with the requirements hereof.
(e) Term A Draw Conditions. With respect to the Term A Borrowing, the Term A Draw Conditions shall have been satisfied.
(f) Term B Draw Conditions. With respect to the Term B Borrowing, the Term B Draw Conditions shall have been satisfied.
(g) Term C Draw Conditions. With respect to the Term C Borrowing, the Term C Draw Conditions shall have been satisfied.
Each Loan Notice submitted by the Borrower shall be deemed to be a representation and warranty that the conditions specified in Section 5.02
have been satisfied as of the date of the applicable Borrowing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Administrative Agent and the Lenders, on the Closing Date, the Amendment No. 1 Effective
Date, the date of each Borrowing and each other date required by a Loan Document, that:
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6.01 Existence, Qualification and Power.
Each Loan Party and each of its Subsidiaries (a) is duly organized, incorporated or formed, validly existing and (where such concept exists in the
case of Non-U.S. Subsidiaries) in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and
authority and all requisite Permits, governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and
(ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party and to consummate the Transactions to which it is a party,
and (c) is duly qualified and is licensed and in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or
the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so
could not reasonably be expected to have a Material Adverse Effect.
6.02 Authorization; No Contravention.
The execution, delivery and performance by each Loan Party of each Loan Document, and Royalty Financing Document to which such Person is
party have been duly authorized by all necessary corporate or other organizational action, and do not (a) contravene the terms of any of such Person’s
Organization Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made
under (i) the JPR Indenture or the other Deal Documents (as defined in the JPR Indenture) or any indenture, credit agreement, or promissory note
evidencing Indebtedness or any other material Contractual Obligation to which such Person is a party or affecting such Person or the properties of such
Person or any of its Subsidiaries or (ii) any order, judgment, injunction, writ or decree of any Governmental Authority or any arbitral award to which such
Person or its property is subject, or (c) violate any applicable Law (including, without limitation, Regulation U or Regulation X issued by the FRB).
6.03 Governmental Authorization; Other Consents.
No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is
necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other
Loan Document other than (a) those that have already been obtained and are in full force and effect, (b) filings to perfect the Liens created by the Collateral
Documents and (c) the filing of any applicable reports under securities laws.
6.04 Binding Effect.
Each Loan Document has been duly executed and delivered by each Loan Party that is party thereto. Each Loan Document constitutes a legal,
valid and binding obligation of each Loan Party that is party thereto, enforceable against each such Loan Party in accordance with its terms, subject to
applicable Debtor Relief Laws or other Laws affecting creditors’ rights generally and subject to general principles of equity and subject in the case of each
Irish Subsidiary, to the Legal Reservations.
6.05 Financial Statements; No Material Adverse Effect.
(a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, (ii) fairly present in all material respects the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted therein, and (iii) show all material indebtedness and other material
liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including material liabilities for taxes, commitments and
Indebtedness.
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(b) The Interim Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein, (ii) fairly present in all material respects the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments, and (iii) show all material indebtedness and other material liabilities, direct or
contingent, of the Borrower and its Subsidiaries as of the date thereof, including material liabilities for taxes, material commitments and
Indebtedness.
(c) From the date of the Audited Financial Statements to and including the Closing Date, there has been no Disposition by any Loan
Party or any Subsidiary, or any Involuntary Disposition, of any material part of the business or property of any Loan Party or any Subsidiary, and
no purchase or other acquisition by any of them of any business or property (including any Equity Interests of any other Person) material to any
Loan Party or any Subsidiary, in each case, which is not reflected in the foregoing financial statements or in the notes thereto and has not
otherwise been disclosed in writing to the Lenders on or prior to the Closing Date.
(d) The financial statements delivered pursuant to Section 7.01(a) and (b) have been prepared in accordance with GAAP (except as may
otherwise be permitted under Section 7.01(a) or (b), as applicable) and present fairly in all material respects (on the basis disclosed in the
footnotes to such financial statements) the consolidated financial condition, results of operations and cash flows of the Borrower and its
Subsidiaries as of the dates thereof and for the periods covered thereby.
(e) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate,
that has had or could reasonably be expected to have a Material Adverse Effect.
6.06 Litigation.
There are no actions, suits, proceedings, claims or disputes pending, threatened or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, by or against any Loan Party or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or
pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or (b) either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
6.07 No Default.
(a) Neither any Loan Party nor any Subsidiary is (i) in default under or with respect to any Material Contract (A) as of the Closing
Date and (B) after the Closing Date in a manner that could reasonably be expected to result in a material adverse effect on any Product Development and
Commercialization Activities, or (ii) in default under or with respect to any other Contractual Obligation that, in the case of this clause (ii), could
reasonably be expected to have a Material Adverse Effect.
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(b) No Default has occurred and is continuing.
6.08 Ownership of Property; Liens.
Each Loan Party and its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property
necessary or used in the ordinary conduct of its business. The property of each Loan Party and its Subsidiaries is subject to no Liens, other than Permitted
Liens.
6.09 Environmental Compliance.
(a) Each of the Facilities and all operations at the Facilities are in compliance in all material respects with all applicable
Environmental Laws, and there is no violation in any material respect of any Environmental Law with respect to the Facilities or the Businesses, and there
are no conditions relating to the Facilities or the Businesses, that could give rise to liability that, individually or in the aggregate, could reasonably be
expected to exceed the Threshold Amount under any applicable Environmental Laws.
(b) None of the Facilities contains, or has previously contained, any Hazardous Materials at, on or under the Facilities in amounts or
concentrations that constitute or constituted a violation in any material respect of Environmental Laws, or could reasonably be expected to give rise to
liability under Environmental Laws that, individually or in the aggregate, could exceed the Threshold Amount.
(c) Neither any Loan Party nor any Subsidiary has received any written or verbal notice of, or inquiry from any Governmental
Authority regarding, any violation, alleged violation, non-compliance, liability or potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Facilities or the Businesses that could reasonably be expected to give rise to liability that, individually or in
the aggregate, could exceed the Threshold Amount, nor does any Responsible Officer of any Loan Party have knowledge or reason to believe that any
such notice will be received or is being threatened.
(d) Hazardous Materials have not been transported or disposed of from the Facilities, or generated, treated, stored or disposed of at, on
or under any of the Facilities or any other location, in each case by or on behalf of any Loan Party or any Subsidiary in violation in any material respect of
any applicable Environmental Law, or in a manner that could reasonably be expected to give rise to liability under any applicable Environmental Law
that, individually or in the aggregate, could exceed the Threshold Amount.
(e) No judicial proceeding or governmental or administrative action is pending or, to the knowledge of the Loan Parties, threatened,
under any Environmental Law to which any Loan Party or any Subsidiary is or will be named as a party, nor are there any consent decrees or other
decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law
with respect to any Loan Party, any Subsidiary, the Facilities or the Businesses.
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(f) There has been no release or threat of release of Hazardous Materials at or from the Facilities, or arising from or related to the
operations (including, without limitation, disposal) of any Loan Party or any Subsidiary in connection with the Facilities or otherwise in connection with
the Businesses, in violation in any material respect of Environmental Laws, or in amounts or in a manner that could give rise to liability under
Environmental Laws that could reasonably be expected to, individually or in the aggregate, exceed the Threshold Amount.
6.10 Insurance.
(a) The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies that are
not Affiliates of such Persons, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar
businesses and owning similar properties in localities where the Borrower or its applicable Subsidiary operates. The insurance coverage of the Borrower
and its Subsidiaries as in effect on the Closing Date is outlined as to carrier, policy number, expiration date, type, coverage amounts and deductibles on
Schedule 6.10.
(b) The Borrower and its Subsidiaries maintain, if available, fully paid flood hazard insurance on all real property that is located in a
special flood hazard area in the United States and that constitutes Collateral on such terms and in such amounts as required by The National Flood
Insurance Reform Act of 1994 or as otherwise required by the Administrative Agent or the Required Lenders.
6.11 Taxes.
(a) Each of the Loan Parties and their Subsidiaries have filed all federal, state and other material tax returns and reports required to be
filed by it, and have paid all federal, state and other material taxes, assessments, governmental fees and other governmental charges levied or imposed
upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate
proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP and the failure to make such payment
pending such contest could not reasonably be expected to result in a Material Adverse Effect. There is no proposed tax assessment against any Loan Party
or any Subsidiary that would, if made, exceed the Threshold Amount.
(b) Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement with any Person that is not a Loan Party
(other than any agreement the primary purpose of which is not the sharing of taxes).
any Taxes that could reasonably be expected to result in liabilities of a Loan Party or Subsidiary in an amount in excess of the Threshold Amount.
(c) As of the Closing Date, no claims or investigations are pending, or to the knowledge of any Loan Party, threatened with respect to
6.12 ERISA Compliance.
(a) Each Plan is in compliance, in both form and operation, in all material respects with the applicable provisions of ERISA, the
Internal Revenue Code and other federal or state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Internal
Revenue Code has received a current favorable determination letter (or is entitled to rely on a current advisory or opinion letter issued to a volume
submitter or prototype plan provider) from the Internal Revenue Service to the effect that the form of such Plan is qualified under Section 401(a) of the
Internal Revenue Code and the trust related thereto has been determined by the Internal Revenue Service to be exempt from federal income tax under
Section 501(a) of the Internal Revenue Code or an application for such a letter is currently pending with the Internal Revenue Service. To the knowledge
of the Loan Parties, nothing has occurred that would prevent, or cause the loss of, such tax-qualified status.
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(b) There are no pending or, to the knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred and none of the Borrower and any ERISA Affiliate is aware of any fact, event or circumstance
that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan, (ii) the Borrower and each ERISA Affiliate
has met all material and applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding
standards under the Pension Funding Rules has been applied for or obtained, (iii) as of the most recent valuation date for any Pension Plan, the funding
target attainment percentage (as defined in Section 430(d)(2) of the Internal Revenue Code) is sixty percent (60%) or higher and none of the Borrower and
any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such
plan to drop below sixty percent (60%) as of the next valuation date, (iv) none of the Borrower and any ERISA Affiliate has incurred any liability to the
PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid, (v) none of the Borrower and
any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA, and (vi) no Pension Plan has been
terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to
cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.
(d) None of the Borrower and any ERISA Affiliate has established or otherwise has any liability with respect to a “welfare plan”, as
such term is defined in Section 3(1) of ERISA, that either provides post-employment welfare benefits other than as required by Section 4980B of the
Internal Revenue Code (or similar state law) or is a health or life insurance plan that is not fully insured by a third party insurance company.
6.13 Subsidiaries and Capitalization; Management Fees.
(a) Set forth on Schedule 6.13(a) is a complete and accurate list as of the Closing Date of each Subsidiary of any Loan Party and JPR
Royalty Sub, together with (i) jurisdiction of organization, (ii) number of shares of each class of Equity Interests outstanding, (iii) number and percentage
of outstanding shares of each class owned (directly or indirectly) by any Loan Party or any Subsidiary, (iv) number and effect, if exercised, of all
outstanding options, warrants, rights of conversion or purchase and all other similar rights with respect thereto and (v) identification of each Subsidiary
that is an Excluded Subsidiary, a Non-U.S. Regulatory Approval Subsidiary and/or an Immaterial Non-U.S. Subsidiary.
(b) Set forth on Schedule 6.13(b) is a true and complete table showing the authorized and issued capitalization of each of the
Borrower, its Subsidiaries and JPR Royalty Sub as of the Closing Date on a fully diluted basis. All issued and outstanding Equity Interests of the
Borrower and each of its Subsidiaries are duly authorized and validly issued, fully paid, non-assessable, free and clear of all Liens and such Equity
Interests were issued in compliance with all applicable Laws. As of the Closing Date, except as described on Schedule 6.13(b) or the Borrower’s
Organizational Documents, there are no outstanding commitments or other obligations of the Borrower or any Subsidiary to issue, and no rights of any
Person to acquire, any shares of any Equity Interests of the Borrower or any of its Subsidiaries. There are no agreements (voting or otherwise) among the
Borrower’s equity holders with respect to any other aspect of the Borrower’s or any Subsidiary’s affairs, except as set forth on Schedule 6.13(b) or as
contained in the Borrower’s Organizational Documents.
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(c) As of the Closing Date, no Loan Party, nor any of their respective Subsidiaries, directly or indirectly, are obligated to pay any
management, consulting, transaction or similar advisory fees (other than normal and reasonable compensation (including in the form of Equity Interests)
and reimbursement of expenses of officers and directors in the ordinary course of business) to or for the account of any officer, director or holder (or any
Affiliate of any holder) of at least 5% of the Equity Interests of such Person.
6.14 Margin Regulations; Investment Company Act.
(a) No Loan Party is engaged and no Loan Party will engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or
carrying margin stock. Following the application of the proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower
only or of the Borrower and its Subsidiaries on a consolidated basis) will be margin stock.
(b) No Loan Party, any Person Controlling any Loan Party, or any Subsidiary is or is required to be registered as an “investment
company” under the Investment Company Act of 1940.
6.15 Disclosure.
Each Loan Party has disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is subject, and all other matters known to it, that, either individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether written or oral) (other than forward-
looking information and projections and information of a general economic nature and general information about the Loan Parties’ industry) by or on
behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder or under any other Loan Document (in each case, as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any fact necessary to make the statements therein, in the light of the circumstances under which
they were made and taken as a whole, not misleading. Each Loan Party represents, with respect to projections, estimates, budgets and other forward-
looking information, only that such information was prepared in good faith based on assumptions believed to be reasonable at the time such projections
were prepared.
6.16 Compliance with Laws.
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Each Loan Party and each Subsidiary is in compliance with the requirements of all Laws and all judgments, orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which (a) such requirement of Law or judgment, order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith could not reasonably be expected to have a
Material Adverse Effect.
6.17 Intellectual Property; Licenses, Etc.
(a) Schedule 6.17 Part (a) sets forth a complete and accurate list of the following as of the Closing Date: (i) all Copyrights and all
Trademarks of any Loan Party or any Subsidiary, that are registered, or in respect of which an application for registration has been filed or recorded, with
the United States Patent and Trademark Office or the United States Copyright Office or with any other Governmental Authority (or comparable
organization or office established in any country or pursuant to an international treaty or similar international agreement for the filing, recordation or
registration of interests in intellectual property), together with relevant identifying information with respect to such Copyrights and Trademarks, (ii) all
Patents of any Loan Party or any Subsidiary that are issued, or in respect of which an application has been filed or recorded, with the United States Patent
and Trademark Office or with any other Governmental Authority (or comparable organization or office established in any country or pursuant to an
international treaty or similar international agreement for the filing, recordation or registration of interests in intellectual property), together with relevant
identifying information with respect to such Patents, (iii) all Domain Names owned by any Loan Party or any Subsidiary or which any Loan Party or any
Subsidiary is licensed, authorized or otherwise granted rights under or to, or owned by a Person on behalf of any Loan Party or any Subsidiary, together
with relevant identifying information with respect to such Domain Names, (iv) each Copyright License, each Patent License and each Trademark License
of any Loan Party or any Subsidiary and (v) each other Material IP Right of any Loan Party or any Subsidiary, in each case with respect to this clause (v),
other than Trade Secrets.
(b) All Material IP Rights (other than Material IP Rights that are not material or are no longer used or useful in any material respect in
the business of the Borrower or any of its Subsidiaries) are in full force and effect, and have not expired, lapsed or been forfeited, cancelled or abandoned.
Each of the Borrower and the Subsidiaries, have, since taking title to the Material IP Rights, performed all acts and have paid all required annuities, fees,
costs, expenses and taxes to maintain the Material IP Rights in full force and effect in each of the Key Territories, as applicable, or have caused others to
do the same. All documents filed or recorded with a patent office or other relevant intellectual property registry for registration, recordation or issuance of
Material IP Rights in each of the Key Territories have been duly and properly filed and recorded. None of the Material IP Rights have been or are subject
to any pending or outstanding injunction, directive, order, judgment, or other disposition of dispute that adversely restricts, or when any such pending
dispute is concluded may adversely restrict, the use, transfer, registration, licensing or other exploitation of any such Material IP Rights in any of the Key
Territories, or otherwise adversely affects, or may adversely affect, the scope, validity, use, right to use, registrability, or enforceability of such Material IP
Rights in any of the Key Territories. No action or proceeding is pending that could reasonably be expected to result in any of the foregoing.
(c) The Borrower or a Subsidiary owns or has a valid license or other valid right to use all Material IP Rights, free and clear of any and
all Liens other than Permitted Liens. To the extent any of the Material IP Rights were authored, developed, conceived or created, in whole or in part, for or
on behalf of the Borrower or a Subsidiary by any Person, then the Borrower or the Subsidiary or their predecessors in interest, as applicable, has entered
into a written agreement with such Person in which such Person has assigned all right, title and interest in and to such Material IP Rights to the Borrower
or such Subsidiary, or their predecessors in interest, including the right to sue for and collect past damages, as applicable. Except as otherwise indicated on
Schedule 6.17 Part (b), each of the Borrower and each Subsidiary is the sole and exclusive owner of all right, title and interest in and to all such Material
IP Rights that are owned by it.
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(d) Neither the Borrower nor any Subsidiary has made any assignment or agreement in conflict with the security interest in any of the
Material IP Rights of the Borrower or any Subsidiary hereunder and no license agreement with respect to any of the Material IP Rights conflicts with the
security interest granted to the Administrative Agent, on behalf of the Lenders, pursuant to the terms of the Collateral Documents. Except as described in
Schedule 6.17 Part (c), and except for software that is commercially available to the public, no Loan Party is a party to, nor is bound by, any inbound
license or other similar agreement, the failure, breach or termination of which could reasonably be expected to cause a Material Adverse Effect, or that
prohibits or otherwise restricts the Loan Parties from granting a security interest in the applicable Loan Party’s interest in such license or agreement or any
other property.
(e) To the Loan Parties’ knowledge, no Person is infringing, misappropriating, violating, or diluting any Material IP Rights (i) as of
the Closing Date and (ii) after the Closing Date in a manner that could reasonably be expected to result in a material adverse effect on any Product
Development and Commercialization Activities, and as of the Closing Date, no Loan Party has given notice to any third party alleging that such third
party is infringing, misappropriating, violating, or diluting, any Material IP Rights.
(f) With respect to each Copyright License, Trademark License and Patent License listed on Schedule 6.17 Part (a)(iv) that comprise
Material IP Rights, such agreement (i) is in full force and effect and is binding upon and enforceable against the Borrower and the Subsidiaries party
thereto and all other parties thereto in accordance with its terms, (ii) has not been amended or otherwise modified and (iii) has not suffered a default or
breach thereunder, in each case of the foregoing clauses (i), (ii) and (iii), (A) as of the Closing Date, and (B) after the Closing Date, except as could not
reasonably be expected to result in a material adverse effect on any Product Development and Commercialization Activities. To the Loan Parties’
knowledge, neither the Borrower nor any of the Subsidiaries has taken any action that would permit any other Person party to any such license agreement
to have, and no such Person otherwise has, any defenses, counterclaims or rights of setoff thereunder (1) as of the Closing Date and (2) after the Closing
Date, that could reasonably be expected to result in a material adverse effect on any Product Development and Commercialization Activities.
(g) Except as set forth on Schedule 6.17 Part (d), (i) no written claim, and no other claim known to the Borrower or any Subsidiary has
been made that alleges that the Material IP Rights, or the conduct or operation of its business of the Borrower or the Subsidiaries, including the
development, manufacture, use, sale, provision or other commercialization of any Product or Service, infringes, misappropriates, violates, or dilutes any
intellectual property or proprietary or other rights of that third party, in each case, (A) as of the Closing Date and (B) after the Closing Date that could be
reasonably expected to result in a material adverse effect on any Product Development and Commercialization Activities and (ii) there is no basis for such
a claim known to the Borrower or any Subsidiary.
value and confidentiality of their respective Confidential Information and Trade Secrets, including any source code for Proprietary Software.
(h) The Borrower and the Subsidiaries have used commercially reasonable efforts and precautions to protect their interests in, and the
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(i) Except as set forth on Schedule 6.17 Part (f):
(A) as of the Closing Date the consummation of the transactions contemplated hereby and, except as otherwise permitted by
Section 7.18(b), the exercise by the Administrative Agent or the Lenders of any right or remedy set forth in the Loan Documents will not
constitute a breach or violation of, or otherwise affect the enforceability or approval of, (i) any licenses associated with Material IP Rights
or (ii) any Material Required Permits; and
(B) at any time after the Closing Date, except with respect to Excluded Property, the consummation of the transactions
contemplated hereby and, except as otherwise permitted by Section 7.18(b), the exercise by the Administrative Agent or the Lenders of
any right or remedy set forth in the Loan Documents will not constitute a breach or violation of, or otherwise affect the enforceability or
approval of, (i) any licenses associated with IP Rights or (ii) any Required Permits.
6.18 Solvency.
The Borrower is Solvent on an individual basis, and the Borrower and its Subsidiaries are Solvent on a consolidated basis.
6.19 Perfection of Security Interests in the Collateral.
The Collateral Documents create valid security interests in, and Liens on, the Collateral purported to be covered thereby, which security interests
and Liens will be, upon the timely and proper filings, deliveries, notations and other actions contemplated in the Collateral Documents, perfected security
interests and Liens (to the extent that such security interests and Liens can be perfected by such filings, deliveries, notations and other actions contemplated
in the Collateral Documents), prior to all other Liens other than Permitted Liens.
6.20 Business Locations.
Set forth on Schedule 6.20(a) is a list of all real property that is owned or leased by the Loan Parties as of the Closing Date (with (x) a description
of each real property that is Excluded Property, (y) a designation of whether such real property is owned or leases and (z) if any Loan Party maintains
books and records at such real property). Set forth on Schedule 6.20(b) is the tax payer identification number and organizational identification number of
each Loan Party as of the Closing Date. The exact legal name and jurisdiction of organization of (a) the Borrower is as set forth on Schedule 6.20(b) and
(b) each Guarantor is (i) as set forth on Schedule 6.20(b) or (ii) as set forth on Schedule 1 to the Joinder Agreement pursuant to which such Guarantor
became a party hereto. Except as set forth on Schedule 6.20(c), no Loan Party has during the five years preceding the Closing Date (i) changed its legal
name, (ii) changed its jurisdiction of organization, or (iii) been party to a merger, amalgamation, consolidation or such other structural change.
6.21 Sanctions Concerns; Anti-Corruption Laws; PATRIOT Act.
(a) Sanctions Concerns. No Loan Party, nor any Subsidiary, nor JPR Royalty Sub, nor, to the knowledge of the Loan Parties and their
Subsidiaries, any director, officer, employee, agent, Affiliate or representative thereof, is an individual or entity that is, or is owned or controlled by, any
individual or entity that is (i) currently the subject or target of any Sanctions, (ii) included on OFAC’s List of Specially Designated Nationals, HMT’s
Consolidated List of Financial Sanctions Targets and the Investment Ban List, or any similar list enforced by any other relevant sanctions authority or (iii)
located, organized or resident in a Designated Jurisdiction.
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(b) Anti-Corruption Laws. The Loan Parties, their Subsidiaries and JPR Royalty Sub have conducted their business in compliance
with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other applicable
jurisdictions, and have instituted and maintained policies and procedures designed to promote and achieve compliance with such Laws.
(c) PATRIOT Act. To the extent applicable, each of the Loan Parties, their Subsidiaries and JPR Royalty Sub is in compliance, in all
material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto and (ii) the PATRIOT Act.
6.22 Material Contracts.
Except for the Organization Documents of the Loan Parties and the other agreements set forth on Schedule 6.22 as of the Closing Date there are
no (a) employment agreements covering the management of the Borrower or any Subsidiary, (b) collective bargaining agreements or other labor
agreements covering any employees of the Borrower or any Subsidiary, (c) agreements for managerial, consulting or similar services to which the
Borrower or any Subsidiary is a party or by which it is bound, (d) agreements regarding the Borrower or any Subsidiary, its assets or operations or any
investment therein to which any of its equity holders is a party or by which it is bound, (e) real estate leases, licenses of IP Rights or other lease or license
agreements to which the Borrower or any Subsidiary is a party, either as lessor or lessee, or as licensor or licensee (other than licenses arising from the
purchase of “off the shelf” products), (f) customer or supply agreements to which the Borrower or any Subsidiary is a party, in each case with respect to the
preceding clauses (a), (c), (d), (e) and (f) solely to the extent the breach, default or the termination of such agreement, lease or license could reasonably be
expected to result in a material adverse effect on Product Development and Commercialization Activities or (g) any other agreements or instruments to
which the Borrower or any Subsidiary is a party, and the breach, nonperformance or cancellation of which, or the failure of which to renew, could
reasonably be expected to have a Material Adverse Effect. Schedule 6.22 sets forth, with respect to each real estate lease agreement to which the Borrower
or any Subsidiary is a party as of the Closing Date, the address of the subject property and the annual rental (or, where applicable, a general description of
the method of computing the annual rental). The consummation of the transactions contemplated by the Loan Documents will not give rise to a right of
termination in favor of any party to any Material Contract. Each Material Contract (a) is in full force and effect and is binding upon and enforceable against
the Borrower and its Subsidiaries party thereto and, to the knowledge of any Loan Party, all other parties thereto in accordance with its terms, and (b) is not
currently subject to any material breach or default by the Borrower or any Subsidiary or, to the knowledge of any Loan Party, any other party thereto. None
of the Borrower nor any of its Subsidiaries has taken or failed to take any action that would permit any other Person party to any Material Contract to have,
and, to the knowledge of any Loan Party, no such Person otherwise has, any defenses, counterclaims or rights of setoff thereunder (1) as of the Closing
Date and (2) after the Closing Date that could reasonably be expected to result in a material adverse effect on any Product Development and
Commercialization Activities. As of the Closing Date, none of the Material Contracts are non-assignable by their terms (other than those certain
agreements separately noted in Schedule 6.22 as being non-assignable) or as a matter of law, or prevent the granting of a security interest therein.
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6.23 Regulatory Compliance.
Except for the matters disclosed on Schedule 6.23:
(a) The Borrower and its Subsidiaries have obtained all Material Required Permits, or have contracted with third parties holding
Material Required Permits to obtain any and all rights, in each case necessary for the conduct of the Businesses or for compliance with all applicable Laws
and all such Material Required Permits or rights thereto are in full force and effect.
(b) The Borrower and its Subsidiaries have not received any written communication from any Governmental Authority regarding, and
there are no facts or circumstances that are likely to give rise to, (A) any material adverse change in any Material Required Permit, or any failure to
materially comply with any Laws or any term or requirement of any Material Required Permit, (B) any revocation, withdrawal, suspension, hold,
cancellation, material limitation, termination or material modification of any Material Required Permit or (C) any pending or threatened enforcement
action seeking to seize any Product, enjoin manufacture or distribution, or halt the receipt, processing, or production of products, components, or raw
materials due to alleged nonconformance with cGMPs or the requirements associated with any Material Required Permit.
(c) None of the officers, directors, employees, shareholders, agents, or Affiliates of the Borrower or any Subsidiary or, to the Loan
Parties’ knowledge, any other Person involved in the development of (including seeking regulatory approval for) any Product or Service, has been
convicted of any crime or engaged in any conduct for which debarment is authorized by 21 U.S.C. Section 335a or disqualification as a clinical
investigator under 21 C.F.R. § 312.70 or any similar applicable Laws, and neither the Borrower nor any Subsidiary nor any of its officers, employees or, to
knowledge of any Loan Party, agents or contractors has engaged in any conduct that would reasonably be expected to result in debarment or
disqualification as a clinical investigator.
(d) None of the officers, directors, employees, shareholders, agents, or Affiliates of the Borrower or any Subsidiary or, to the Loan
Parties’ knowledge, any consultant or independent contractor engaged by the Loan Parties, has made an untrue statement of material fact or fraudulent
statement to the FDA, CMS or any other Governmental Authority or failed to disclose a material fact required to be disclosed to the FDA, CMS or any
other Governmental Authority, committed an act, made a statement, or failed to make a statement, in each case that could reasonably be expected to
provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56
Fed. Reg. 46191 (September 10, 1991) or for any other Government Authority to invoke a similar policy or Law.
(e) All applications, notifications, submissions, information, claims, reports and statistics and other data and conclusions derived
therefrom, utilized as the basis for or submitted in connection with any and all requests for a Material Required Permit from the FDA, CMS or any other
Governmental Authority relating to the Borrower or any Subsidiary, their business operations, Products and Services, when submitted to the FDA, CMS
or any other Governmental Authority, were true, complete and correct in all material respects as of the date of submission, and any necessary or required
updates, changes, corrections or modifications to such applications, submissions, information and data have been properly and timely submitted to the
FDA, CMS or any other Governmental Authority. The Material Required Permits issued by the FDA, CMS or any other Governmental Authority for the
Products and Services are valid and supported by proper research, design, testing, analysis and disclosure.
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(f) All preclinical and clinical trials that have been conducted and/or are being conducted by or on behalf of the Borrower and its
Subsidiaries, including those trials whose results and data have been submitted to any Governmental Authority, including the FDA and its counterparts
worldwide, are being or have been conducted in compliance in all material respects with the required experimental protocols, procedures and controls and
otherwise in compliance with applicable Laws, including cGLP and cGCP, the Animal Welfare Act, all applicable similar Laws in other jurisdictions, and
all Laws relating to the protection of human subjects. Neither the Borrower nor any Subsidiary has received any written notice that the FDA, any other
Governmental Authority, or any institutional review board has recommended, initiated, or threatened to initiate any action to suspend or terminate any
clinical trial sponsored by the Borrower or its Subsidiaries, including a full or partial clinical hold, or to otherwise restrict the preclinical research on or
clinical study of any Product.
(g) Neither the Borrower nor any Subsidiary nor any of its officers and employees has received any written notice that any
Governmental Authority, including without limitation the FDA, the Office of the Inspector General of HHS or the United States Department of Justice has
commenced recommended or threatened to initiate any action against the Borrower or a Subsidiary or their respective officers, directors, employees,
shareholders or agents and Affiliates, or to the knowledge of the Loan Parties, their licensees, manufacturers and contractors, seeking to enjoin from
conducting business at any facility owned or used by any of them (including the Facilities) or for any material civil penalty, injunction, seizure or criminal
action.
(h) All manufacturing operations relating to the Products conducted by or on behalf of the Borrower and its Subsidiaries have been
and are being conducted in compliance with applicable provisions of cGMP as required by 21 U.S.C. § 351(a)(2)(B) and as set forth in 21 C.F.R. Parts
210 and 211 and applicable guidance documents, as amended from time to time. Neither the Borrower nor any Subsidiary nor to the Loan Parties’
knowledge, any third party conducting services on behalf of the Borrower or its Subsidiaries, has received from the FDA a Warning Letter, Form FDA-
483, Untitled Letter, other written correspondence or written notice setting forth allegedly objectionable observations or alleged violations of Laws
enforced by the FDA, or any comparable correspondence from any state or local authority with regard to any Product, Service or Facilities, or the
manufacture, testing, processing, packaging, supply, promotion, labeling, commercialization, import, export, sale, distribution, or holding of any Product
or Service, or any comparable correspondence from any foreign counterpart of the FDA, or any comparable correspondence from any foreign counterpart
of any state or local authority.
(i) Neither the Borrower nor any Subsidiary (A) has initiated in any recalls, field notifications, Market Withdrawals, warnings, “Dear
Doctor” letters, investigator notices, safety alerts, “serious adverse event” reports or other notice of action, including as a result of any Risk Evaluation
and Mitigation Strategy proposed by the FDA, relating to an alleged material safety issue or regulatory compliance issue relating to the Products or
Services issued by the Borrower or any Subsidiary, any clinical investigator, and/or other third party (“Safety Notices”), (B) has knowledge of any
complaints with respect to the Products, Services or Facilities which, if true, could reasonably be expected to result in a liability in excess of the Threshold
Amount, and (C) has knowledge of any facts that would be reasonably likely to result in (1) a material Safety Notice with respect to the Products or
Services, or (2) a termination or suspension of developing and testing of any of the Products or Services.
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(j) All Products, Services, Facilities and Material Required Permits in relation thereto in existence as of the Closing Date are listed on
Schedule 1.01 and the Borrower has delivered to the Lenders on or prior to the Closing Date copies of all Material Required Permits relating to such
Products, Services or Facilities issued or outstanding as of the Closing Date.
(k) Each Product is not adulterated or misbranded in any material respect within the meaning of the FDCA.
(l) Each Product is not an article prohibited from introduction into interstate commerce under any provisions of the FDCA.
(m) With respect to each Product and Service, (a) each such Product and Service has been and shall be tested, developed,
manufactured, handled, packaged, stored, supplied, imported, owned, warehoused, marketed, commercialized, promoted, sold, labeled, furnished,
distributed, marketed and provided in accordance in all material respects with all applicable Permits and Laws, (b) all material reports, notices, or other
submissions required to be submitted to Governmental Authority under applicable Law have been timely submitted, and (c) all records required to be
maintained under applicable Law have been and are being lawfully maintained in all material respects.
(n) Without limiting the generality of Section 6.23(a) and (b) above, with respect to any Product or Service being researched,
developed, tested, manufactured, handled, labeled, packaged, stored, supplied, promoted, distributed, marketed, commercialized, imported, exported, sold,
or provided by or on behalf of the Borrower and its Subsidiaries, the Borrower and its Subsidiaries, and the applicable third parties, have received, and
such Product or Service shall be the subject of, all Material Required Permits necessary in connection with the research, development, testing,
manufacture, handling, labeling, packaging, storage, supply, promotion, distribution, marketing, commercialization, import, export, sale, or provision of
such Product or Service as such activities are being conducted by or on behalf of the Borrower or such Subsidiary, and, neither the Borrower nor any
Subsidiary nor to the Loan Parties’ knowledge, any third party, has received any notice from any applicable Government Authority, specifically including
the FDA, that such Government Authority is conducting an investigation or review of (A) the Borrower and its Subsidiaries’ or any applicable third
party’s manufacturing, operations, facilities and processes for such Product or Service which have disclosed any material deficiencies or violations of
Laws or the Material Required Permits related to the manufacture or processes related to such Product or Service, or (B) that any such Material Required
Permit has been revoked or withdrawn, nor has any such Governmental Authority issued any order or recommendation to restrict or enjoin the
development, testing or manufacturing of such Product or Service by the Borrower and its Subsidiaries.
(o) Without limiting the generality of Section 6.23(a) and (b) above, with respect to any Product or Service marketed, sold,
commercialized or provided by or on behalf of the Borrower or any of its Subsidiaries, the Borrower and its Subsidiaries, and the applicable third parties,
shall have received, and such Product or Service shall be the subject of, all Material Required Permits necessary in connection with the marketing, sale,
commercialization or provision of such Product or Service as currently being marketed, sold or commercialized by or on behalf of the Borrower and its
Subsidiaries, and, neither the Borrower nor any Subsidiary nor to the Loan Parties’ knowledge, any third party, has received any notice from any
applicable Governmental Authority, specifically including the FDA, that such Governmental Authority is conducting an investigation or review of any
such Material Required Permit or that any such Material Required Permit has been revoked or withdrawn, nor has any such Governmental Authority
issued any order or recommendation to restrict or enjoin the marketing, sale, commercialization or provision of such Product or Service or that such
Product or Service be withdrawn from the marketplace.
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(p) Each of the Facilities is duly registered or licensed under the applicable Laws of the jurisdiction where the Facility is located. The
Facilities and the services provided at such Facilities are qualified for participation in the Government Reimbursement Programs, and each Loan Party and
each of their Subsidiaries is entitled to reimbursement under the Government Reimbursement Programs for services rendered at such Facilities to qualified
beneficiaries. To the knowledge of any Loan Party, all Persons providing professional health care services for or on behalf of any Loan Party (either as an
employee or independent contractor) are appropriately licensed in every jurisdiction in which they hold themselves out as professional health care
providers.
(q) Each Loan Party and each of their respective Subsidiaries has received and maintain accreditation in good standing and without
impairment by all applicable Accrediting Organizations, to the extent required by Law (including any equivalent regulation) or the terms of any Operating
Lease pertaining to any Facility. No Loan Party nor any of its respective Subsidiaries has received any notice or communication from any Accrediting
Organization that a Facility is (i) subject to or is required to file a plan of correction with respect to any accreditation survey, or (ii) in danger of losing its
accreditation due to a failure to comply with a plan of correction.
(r) Any Operating Lease has been approved by all necessary Governmental Authorities. Under applicable Laws in the jurisdiction in
which each Facility is located, the reimbursement rate of the applicable Loan Party under any applicable Governmental Reimbursement Program is not
affected by the rental rates under the Operating Lease. The rentals provided for under the Operating Lease comply with all applicable Laws and do not
exceed the sums permitted to be paid under applicable Laws.
(s) No Loan Party, nor any of its respective Subsidiaries, nor any of their respective officers, nor, to the knowledge of any Loan Party,
any of their respective employees, agents or contractors, have engaged in any activity which is not in compliance in all material respects with any
applicable Healthcare Laws. To the knowledge of each Loan Party and its respective Subsidiary, there are no pending and there have been no threatened
investigations, subpoenas, civil investigative demands, actions, suits or proceedings by any Governmental Authority with respect to any alleged violation
by Loan Party or Subsidiary of any Healthcare Laws, except to the extent that any such investigations, subpoenas, civil investigative demands, actions,
suits or proceedings could not reasonably be expected, either individually or in the aggregate, to have a material adverse effect on any Product
Development and Commercialization Activities and could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse
Effect.
(t) Each Loan Party and each of their respective Subsidiaries has timely filed or caused to be timely filed all material cost reports
required by any Government Reimbursement Program to have been filed or made with respect to the operations of the Loan Parties. No Loan Party nor
any of their Subsidiaries (i) has retained a material overpayment received from, or failed to refund any material amount due to any Government
Reimbursement Program in violation of any applicable Laws, or (ii) has received, except to the extent the same has been promptly reported to the
Lenders, written notice of, or has knowledge of, any material overpayment or refund due to any Third Party Payor.
(u) No Loan Party nor any of its Subsidiaries nor any of their respective officers, directors, or employees nor, to the knowledge of any
Loan Party, any owner, partner, agent, or other Person with a “direct or indirect ownership interest” (as that phrase is defined in 42 C.F.R. § 420.201) in
any Loan Party or any Subsidiary of any Loan Party, has (i) been has been excluded, debarred, suspended or been otherwise determined to be, or
identified as, ineligible to participate in any healthcare or contracting program of any Governmental Authority, including without limitation, under 42
U.S.C. §§ 1320a-7 or 1320a-7a; (ii) (ii) is the subject of any investigation or review regarding their participation in any such program, (iii) has been
convicted of any crime relating to any such program but not yet excluded, debarred, suspended or otherwise declared ineligible, or (iv) engaged in any
activities which are prohibited, or are cause for civil penalties, or grounds for mandatory or permissive exclusion, debarment or suspension pursuant to
any of these authorities.
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(v) Each Loan Party and each of their respective Subsidiaries is in compliance in all material respects with HIPAA to the extent
applicable.
(w) [Reserved].
(x) No Loan Party nor any of their Subsidiaries, nor any officer, director, partner, agent or managing employee of any Loan Party or
any Subsidiary of any Loan Party, is a party to or bound by any individual integrity agreement, corporate integrity agreement, corporate compliance
agreement, deferred prosecution agreement, or other formal or informal agreement with any Governmental Authority concerning compliance with
Healthcare Laws or the requirements of any Material Required Permit.
6.24 Labor Matters.
There are no existing or, to the knowledge of the Loan Parties, threatened strikes, lockouts or other labor disputes involving the Borrower or any
Subsidiary that singly or in the aggregate could reasonably be expected to have a Material Adverse Effect. Hours worked by and payment made to
employees of the Borrower and its Subsidiaries are not in violation in any material respect of the Fair Labor Standards Act or any other applicable law, rule
or regulation dealing with such matters.
6.25 Affected Financial Institution.
No Loan Party or any of their Subsidiaries is an Affected Financial Institution.
6.26 Ranking of Loans.
The Indebtedness represented by the Loans and the other Obligations under the applicable Loan Documents of each Loan Party is intended to
constitute senior secured Indebtedness, and accordingly is, and shall be, at all times while the Loans and the other Obligations remain outstanding or the
Lenders have any outstanding Commitments hereunder, pari passu or senior in right of payment with all Indebtedness (if any) of such Loan Party.
6.27 Consummation of the Royalty FinancingFinancings.
.The transactions contemplated by the 2020 RP Royalty Financing Documents have been or concurrently with the Term A Borrowing will be
consummated in all material respects pursuant to the provisions of the 2020 RP Royalty Financing Documents, true and complete copies of which have
been delivered to Administrative Agent, and in all material respects in compliance with all applicable Law. The transactions contemplated by the 2021
RP Royalty Financing Documents and the Omers Royalty Financing Documents have been or concurrently with the effectiveness of Amendment
No. 1 will be consummated in all material respects pursuant to the provisions of the 2021 RP Royalty Financing Documents and the Omers
Royalty Financing Documents, respectively, true and complete copies of which have been delivered to Administrative Agent, and in all material
respects in compliance with all applicable Law.
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6.28 Regulation H.
No real property subject to a Mortgage is a Flood Hazard Property unless the Administrative Agent shall have received the following: (a) the
applicable Loan Party’s written acknowledgment of receipt of written notification from the Administrative Agent (i) as to the fact that such Mortgaged
Property is a Flood Hazard Property and (ii) as to whether the community in which each such Flood Hazard Property is located is participating in the
National Flood Insurance Program, (b) copies of insurance policies or certificates of insurance of the applicable Loan Party evidencing flood insurance
reasonably satisfactory to the Administrative Agent and naming the Administrative Agent as loss payee on behalf of the Lenders and (c) such other flood
hazard determination forms, notices and confirmations thereof as requested by the Administrative Agent. All flood hazard insurance policies required
hereunder have been obtained and remain in full force and effect, and the premiums thereon have been paid in full.
6.29 Data Privacy.
In connection with its collection, storage, transfer (including without limitation, any transfer across national borders) and/or use of any personally
identifiable information from any individuals, including, any customers, prospective customers, employees and/or other third parties, each Loan Party is
and has been in compliance with all applicable laws in all relevant jurisdictions, the Loan Parties’ privacy policies, and the requirements of any contract or
codes of conduct to which the each Loan Party is a party, except as could not reasonably be expected to result in liability, individually or in the aggregate,
in excess of the Threshold Amount. Each Loan Party is and has been in compliance with all laws relating to data loss, theft and breach of security
notification obligations, except as could not reasonably be expected to result in liability, individually or in the aggregate, in excess of the Threshold
Amount.
6.30 Centre of Main Interests and Establishments.
For the purposes of Regulation (EU) 2015/848 of 20 May 2015 on insolvency proceedings (recast) (the “Regulation”), BioCryst Ireland Limited’s
centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in its jurisdiction of incorporation and it has no “establishment” (as
that term is used in Article 2(10) of the Regulations) in any other jurisdiction.
6.31 JPR Royalty Sub.
(a) (i) JPR Royalty Sub does not have any Indebtedness (other than the Indebtedness under the JPR Indenture), (ii) none of the
property, assets and revenues of JPR Royalty Sub is subject to a Lien (other than Liens of the Trustee (as defined in the JPR Indenture as in effect on the
date hereof) on the Collateral (as defined in the JPR Indenture as in effect on the date hereof) pursuant to the JPR Indenture) and (iii) none of the
Borrower and its Subsidiaries Guarantees or is otherwise liable for any of the Indebtedness or other obligations of JPR Royalty Sub.
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(b) (i) None of the Indebtedness and other liabilities of JPR Royalty Sub under the JPR Indenture and other Deal Documents (as
defined in the JPR Indenture) are recourse to the Borrower and its Subsidiaries (other than the pledge by the Borrower of its membership interests in JPR
Royalty Sub pursuant to the “Pledge and Security Agreement” (as defined in the JPR Indenture as in effect on the date hereof), it being understood that
the only recourse to the Borrower is (x) such membership interests and no other assets of the Borrower or any of its Subsidiaries and (y) pursuant to the
expense reimbursement obligations set forth in Section 12.1 of such “Pledge and Security Agreement” and the indemnification obligations set forth in
Section 19.1 of such “Pledge and Security Agreement”) and (ii) as of the Closing Date, none of the holders of such Indebtedness and any trustee or agent
acting on behalf of such holders has taken any action to accelerate such Indebtedness or otherwise enforce its rights or exercise its remedies under any of
the JPR Indenture and other Deal Documents.
6.32 Royalty and Other Payments.
As of the ClosingAmendment No. 1 Effective Date, except as set forth on Schedule 6.32, neither the Borrower, nor any of its Subsidiaries, is
obligated to pay any royalty, milestone payment, deferred payment or any other contingent payment in respect of any Key Product (except pursuant to the
Royalty FinancingFinancings).
6.33 Non-Competes.
As of the Closing Date, neither the Borrower, nor any of its Subsidiaries, nor, to the Borrower’s knowledge, any of their respective directors,
officers or employees, is subject to a non-compete agreement that will, or could reasonably be expected to, materially interfere with any of the Product
Commercialization and Development Activities, including the development, commercialization or marketing of any Key Product.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitments hereunder, or any Loan or other Obligation hereunder shall remain unpaid or unsatisfied
(other than contingent indemnification obligations for which no claim has been asserted), each Loan Party shall and shall cause each Subsidiary to:
7.01 Financial Statements; Lender Calls.
(a) Deliver to the Administrative Agent and each Lender, as soon as available, and in any event within one hundred twenty (120) days
after the end of each fiscal year of the Borrower (or, if earlier, when required to be filed with a Governmental Authority), a consolidated balance sheet of
the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in
shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in
reasonable detail and prepared in accordance with GAAP, audited and accompanied by an unqualified report and opinion of an independent certified
public accountant of nationally recognized standing acceptable to the Required Lenders, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception
as to the scope of such audit (except as may be required as a result of (I) any breach or anticipated breach of any of the financial covenants in Section 8.16
or Section 8.17 or (II) the impending maturity of the Loans or the impending expiration of the Commitments solely in the case of the audit delivered with
respect to the fiscal year immediately prior to the fiscal year during which such maturity or expiration is scheduled hereunder to occur); and
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(b) Deliver to the Administrative Agent and each Lender, as soon as available, and in any event within forty-five (45) days after the
end of each fiscal quarter of each fiscal year of the Borrower, including the final fiscal quarter of each fiscal year (or, if earlier, when required to be filed
with a Governmental Authority), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal quarter and for the portion of the
Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year
and the corresponding portion of the previous fiscal year, all in reasonable detail and certified by a Responsible Financial Officer of the Borrower as fairly
presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes.
(c) Upon the request of the Administrative Agent, Borrower shall conduct quarterly conference calls that the Lenders may attend to
discuss the financial condition and results of operations of Borrower and its subsidiaries for the most recently ended measurement period for which
financial statements have been delivered pursuant to Section 7.01(a) and Section 7.01(b), at a date and time to be determined by Administrative Agent, in
consultation with the Borrower, and with reasonable advance notice to the Borrower and Lenders.
7.02 Certificates; Other Information.
Deliver to the Administrative Agent and each Lender, in form and detail satisfactory to the Administrative Agent and the Required Lenders:
(a) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b) (i) a duly completed Compliance
Certificate signed by a Responsible Financial Officer of the Borrower, certifying compliance with the covenant set forth in Section 8.16 and, if the Term C
Borrowing Date shall have occurred and for so long as the Borrower has not exercised the Cure Right in accordance with Section 9.04, Section 8.17, and
(ii) a written summary, such as the summary included within the financial statements delivered pursuant to Section 7.01(a), describing how any changes in
GAAP during such period directly and materially impacted such financial statements;
(b) as soon as practicable, and in any event not later than sixty (60) days after the commencement of each fiscal year of the Borrower,
an annual business plan and budget of the Borrower and its Subsidiaries for the then current fiscal year containing, among other things, projections for
each quarter of such fiscal year, in form and substance reasonably satisfactory to the Administrative Agent;
(c) promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication
sent to the equity holders of any Loan Party, and copies of any annual, regular, periodic and special reports and registration statements which a Loan Party
may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, and not otherwise required to be delivered
to the Administrative Agent pursuant hereto;
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(d) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), solely to the extent written notice
to the Administrative Agent of such event was not previously provided, including in connection with any mandatory prepayment of the Loans pursuant to
Section 2.03(b), a certificate of a Responsible Financial Officer of the Borrower containing information regarding (w) the acquisition or establishment of
any Deposit Account by any Loan Party or any Government Account Debtor Account by any Loan Party, (x) all Dispositions, Involuntary Dispositions,
Acquisitions and Extraordinary Receipts that occurred during the period covered by such financial statements in an amount greater than $[***], (y) the
amount of all Debt Issuances that occurred during the period covered by such financial statements and (z) any Material Contracts entered into (together
with copies of such Material Contracts) during the period covered by such financial statements;
(e) promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the Board of Directors (or the audit committee of the Board of Directors) of the Borrower by independent accountants in
connection with the accounts or books of the Borrower or any Subsidiary, or any audit of any of them;
(f) promptly after the furnishing thereof, copies of any notice of default or any material statement or report furnished to any holder of
debt securities of any Loan Party or any Subsidiary pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required
to be furnished to the Lenders pursuant to Section 7.01 or any other clause of this Section 7.02;
(g) promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, (i)
copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any
investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary
thereof and (ii) copies of any material written correspondence or any other material written communication from the FDA, CMS or any other similar
regulatory body;
(h) within [***] following the occurrence of any facts, events or circumstances known to any Loan Party or any Subsidiary, whether
threatened, existing or pending, that would make any of the representations and warranties contained in Section 6.23 untrue, incomplete or incorrect in
any material respect (together with such supporting data and information as shall be necessary to fully explain to the Lenders the scope and nature of the
fact, event or circumstance), and shall provide to the Lenders within five (5) Business Days of any Lender’s request, such additional information as any
Lender shall reasonably request regarding such disclosure;
compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request;
(i) promptly, such additional information regarding the business, financial or corporate affairs of any Loan Party or any Subsidiary, or
(j) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), a certificate of a Responsible
Officer of the Borrower (i) listing (A) all applications by any Loan Party, if any, for Copyrights, Patents or Trademarks made since the date of the prior
certificate (or, in the case of the first such certificate, the Closing Date), (B) all issuances of registrations or letters on existing applications by any Loan
Party for Copyrights, Patents and Trademarks received since the date of the prior certificate (or, in the case of the first such certificate, the Closing Date),
(C) all Trademark Licenses, Copyright Licenses and Patent Licenses entered into by any Loan Party since the date of the prior certificate (or, in the case of
the first such certificate, the Closing Date), (D) such supplements to Schedule 6.17 as are necessary to cause such schedule to be true and complete as of
the date of such certificate and (ii) with respect to any insurance coverage of any Loan Party or any Subsidiary that was renewed, replaced or modified
during the period covered by such financial statements, such updated information with respect to such insurance coverage as is required to be included on
Schedule 6.10;
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(k) (i) concurrently with the delivery of the financial statements referred to in Sections 7.01(a) and (b), the Borrower shall give written
notice to the Lenders of the manufacturing, sale, development, testing or marketing of any new Product for which an investigational new drug application
or similar application has been filed with the FDA or other Government Authority, as applicable. or new Service, or the opening of any new Facility, in
each case by the Borrower or any Subsidiary during such period to which such financial statements relate (which notice shall include a brief description of
such Product, Service or Facility) along with a copy of an updated Schedule 1.01 and, (ii) at the request of the Administrative Agent, the Borrower shall
provide to the Administrative Agent and the Lenders copies of all Material Required Permits relating to such new Product, Service or Facility and/or the
Borrower’s or the applicable Subsidiary’s manufacture, sale, development, testing or marketing thereof (if applicable) issued or outstanding as of such
date;
(l) concurrently with the delivery thereof to theany Buyer pursuant to the Royalty Financing Documents or any buyer or purchaser
pursuant to the Other Royalty Financing Documents, as applicable, and solely to the extent such information is not otherwise required to be furnished to
the Administrative Agent or Lenders pursuant to Section 7.01 or any other clause of this Section 7.02, a copy of (i) any report, notice or other information
delivered to theany Buyer pursuant to Section 6.1 or 6.2(b) of theeach Royalty FinancingPurchase Agreement and (ii) any other report, notice or other
information delivered pursuant to any Royalty Financing Document or Other Royalty Financing Document, as applicable; and
(m) promptly, and in any event within [***] after (i) receipt or delivery thereof by any Loan Party or any Subsidiary, copy of any
notice of default or termination delivered under the Royalty Financing Documents or Other Royalty Financing Documents and (ii) any Loan Party
becomes aware thereof, notice of the occurrence of any default under the Royalty Financing Documents or Other Royalty Financing Documents.
Documents required to be delivered pursuant to Section 7.01(a) or (b) or Section 7.02 may be delivered electronically and if so delivered, shall be deemed
to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at
the website address listed on Schedule 12.02, or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or intranet website, if any,
to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative
Agent, including if filed with the SEC through EDGAR); provided, that: (x) the Borrower shall deliver paper copies of such documents to the
Administrative Agent or any Lender upon its request to the Borrower, and shall continue to deliver such paper copies until a written request to cease
delivering paper copies is given by the Administrative Agent or such Lender and (y) other than with respect the financial statements required to be
delivered pursuant to Section 7.01(a) or (b), the Borrower shall notify the Administrative Agent and each Lender (by facsimile or electronic mail) of the
posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. The
Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event
shall have no responsibility to monitor compliance by the Borrower with any such request for delivery by a Lender, and each Lender shall be solely
responsible for requesting delivery to it or maintaining its copies of such documents.
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The Borrower hereby acknowledges that certain of the Lenders may have personnel who do not wish to receive material non-public information with
respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-
related activities with respect to such Persons’ securities. The Borrower hereby agrees that if requested by the Administrative Agent it will, following the
receipt of such request, (x) in good faith, identify that portion of the materials and/or information provided by, or to be provided by, or on behalf of the
Borrower hereunder that does not constitute material non-public information with respect to the Borrower or its Affiliates or their respective securities (the
“Public Borrower Materials”) and (y) clearly and conspicuously mark all Public Borrower Materials “PUBLIC” which, at a minimum, shall mean that the
word “PUBLIC” shall appear prominently on the first page thereof (it being understood that by marking Public Borrower Materials “PUBLIC,” the
Borrower shall be deemed to have authorized the Administrative Agent, any Affiliate thereof and the Lenders to treat such Public Borrower Materials as
not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes
of United States federal and state securities laws (provided, however, that to the extent such Public Borrower Materials constitute Information, they shall be
treated as set forth in Section 12.07)).
7.03 Notices.
(a) Promptly (and in any event, within [***]) notify the Administrative Agent and each Lender of the occurrence of any Default.
reasonably be expected to result in a Material Adverse Effect.
(b) Promptly (and in any event, within [***]) notify the Administrative Agent and each Lender of any matter that has resulted or could
(c) Promptly (and in any event, within [***]) notify the Administrative Agent and each Lender of the occurrence of any ERISA Event.
(d) As soon as reasonably practicable, but in any event no later than the day on which the delivery of the financial statements referred
to in Sections 7.01(a) and (b) are delivered or required to be delivered, notify the Administrative Agent and each Lender of any material change in
accounting policies or financial reporting practices by the Borrower or any Subsidiary.
(e) Promptly (and in any event, within [***]) notify the Administrative Agent and each Lender of any litigation, arbitration or
governmental investigation or proceeding not previously disclosed by a Loan Party which has been instituted or, to the knowledge of the Loan Parties, is
threatened against the Borrower or any Subsidiary or to which any of the properties of any thereof is subject which could reasonably be expected to result
in losses and/or expenses in excess of the Threshold Amount.
(f) (i) Promptly (and in any event, within [***] following receipt by, or delivery by, a Loan Party, Subsidiary or JPR Royalty Sub, as
the case may be), copies of (A) any notice alleging any breach of any Material Contract, in each case, by any party thereto and (B) any termination of (or
notice of such termination with respect to) any Material Contract and (ii) concurrently with the delivery of the next financial statements referred to in
Sections 7.01(a) and (b) which are delivered following receipt by, or delivery by, a Loan Party, as the case may be, copies of (A) any material written
notice or material written correspondence relating to, or involving, the Material Contracts, (B) any new Material Contract entered into and (C) any
amendment of any Material Contract, the JPR Indenture or any other Deal Document (as defined in the JPR Indenture).
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(g) Promptly (and in any event within [***]) notify the Administrative Agent and each Lender of any return, recovery, dispute or
claim related to any Product, Service or inventory that involves more than $[***].
(h) Promptly (and in any event, within [***] of the occurrence of or any Loan Party learning of, as applicable) notify the
Administrative Agent and each Lender of (i) any Governmental Authority, including but not limited to the FDA or CMS, is conducting or has conducted
(A) an investigation of any of the Facilities of any Loan Party or any Subsidiary thereof, processes for any Product and/or in the development or provision
of Services, which investigation has disclosed any material deficiencies or violations of Laws and/or the Material Required Permits (including cGMP
compliance) related to such Facilities, Products or Services or (B) an investigation or review of any Material Required Permit (other than routine reviews
in the ordinary course of business associated with the renewal of a Required Permit, routine pre-approval inspections and similar FDA visits and which
could not reasonably be expected to result in a Material Adverse Effect), (ii) development, testing, manufacturing, marketing, sale and/or provision of any
Product or Services that is material to the businesses operated by the Borrower and its Subsidiaries should cease, be suspended, or be interrupted, or the
FDA or any institutional review board (or ethics committee) should provide written notice recommending or requiring any such cessation, suspension, or
interruption, (iii) if a Product or Service that is material to the businesses operated by the Borrower and its Subsidiaries has been approved for marketing
and sale, any marketing or sales of such Product or Service should cease or be interrupted or such Product or Service should be withdrawn from the
marketplace, or the FDA, CMS or any other Governmental Authority should provide written notice threatening, recommending or initiating any such
cessation, interruption, or withdrawal, (iv) any Material Required Permit has been revoked or withdrawn, (v) adverse clinical test results with respect to
any Product or Service have occurred, (vi) any Market Withdrawals or other forms of retrieval from the marketplace of any Product or Service from any
market (other than discrete batches or lots that are not material in quantity or amount and are not made in conjunction with a larger recall) have been
conducted (or requested by the FDA, CMS or any other Governmental Authority), (vii) the occurrence of any violation of any applicable Laws by the
Borrower or any of the other Subsidiaries in the development or provision of Products or Services, and record keeping and reporting to the FDA, CMS or
any other Governmental Authority that could reasonably be expected to require or lead to an investigation, corrective action or enforcement, regulatory or
administrative action, (viii) all fines or penalties imposed by any Governmental Authority under any Healthcare Law against any Loan Party or any of its
Subsidiaries, or (ix) any significant failures in the manufacturing of any Product such that the amount of such Product successfully manufactured in
accordance with all specifications thereof and the required payments to be made by or to the applicable Loan Party or Subsidiary therefor in any month
shall decrease significantly with respect to the quantities of such Product and payments produced in the prior month (each event described in the foregoing
clauses (i) through (viii), a “Regulatory Reporting Event”).
(i) Promptly (and in any event, within [***] of the occurrence of or any Loan Party learning of, as applicable) notify the
Administrative Agent and each Lender of (x) any holder of the Indebtedness under the JPR Indenture and the other Deal Documents or any trustee or
agent acting on behalf of such holders taking any action to accelerate such Indebtedness or otherwise enforce its rights or exercise its remedies under any
of the JPR Indenture and other Deal Documents and (y) any proceeding under any Debtor Relief Law relating to JPR Royalty Sub or to all or any material
part of its property that is instituted.
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Each notice pursuant to this Section 7.03 shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the
occurrence referred to therein and stating what action the applicable Loan Party has taken and proposes to take with respect thereto. Each notice pursuant to
Section 7.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached. With
respect to any Regulatory Reporting Event, the Loan Parties shall provide to the Administrative Agent and the Lenders such further information (including
copies of such documentation) as the Administrative Agent or any Lender shall reasonably request with respect to such Regulatory Reporting Event.
7.04 Payment of Obligations.
Pay and discharge, prior to delinquency, all of its obligations and liabilities, including: (a) all federal, state and other material tax liabilities,
assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate
proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the applicable Loan Party or Subsidiary and the
failure to make such payment pending such contest could not reasonably be expected to result in a Material Adverse Effect and (b) all lawful claims which,
if unpaid, would by law become a Lien upon its property (other than a Permitted Lien).
7.05 Preservation of Existence, Etc.
in a transaction permitted by Section 8.04 or Section 8.05.
(a) Preserve, renew and maintain in full force and effect its legal existence under the Laws of the jurisdiction of its organization except
(b) Preserve, renew and maintain in full force and effect its good standing under (i) the Laws of the jurisdiction of its organization, and
(ii) except to the extent the failure to do so could not reasonably be expected to have a Material Adverse Effect, each other jurisdiction where it conducts
its Business (in each case where such concept exists in such jurisdiction in the case of Non-U.S. Subsidiaries).
(c) Take all reasonable action to maintain all rights, privileges, permits, licenses and franchises the failure of which to maintain could
reasonably be expected to result in a Material Adverse Effect.
7.06 Maintenance of Properties.
(a) Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good
working order and condition, ordinary wear and tear and impact of casualty event excepted.
be expected, either individually or in the aggregate, to have a Material Adverse Effect.
(b) Make all necessary repairs thereto and renewals and replacements thereof, except where the failure to do so could not reasonably
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(c) Use the standard of care typical in the industry in the operation and maintenance of its Facilities.
7.07 Maintenance of Insurance.
(a) Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types
and in such amounts as are customarily carried under similar circumstances by such other Persons.
(b) Without limiting the foregoing, (i) maintain, if available, fully paid flood hazard insurance on all real property that is located in a
special flood hazard area and that constitutes Collateral, on such terms and in such amounts as required by The National Flood Insurance Reform Act of
1994 or as otherwise required by the Administrative Agent, (ii) furnish to the Administrative Agent evidence of the renewal (and payment of renewal
premiums therefor) of all such policies prior to the expiration or lapse thereof, and (iii) furnish to the Administrative Agent prompt written notice of any
redesignation of any such improved real property into or out of a special flood hazard area.
(c) Cause the Administrative Agent and its successors and/or assigns to be named as lender’s loss payee or mortgagee as its interest
may appear, and/or additional insured with respect to any such insurance providing liability coverage or coverage in respect of any Collateral, and cause
each provider of any such insurance to agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the
Administrative Agent, that it will give the Administrative Agent thirty (30) days (or such lesser amount as the Administrative Agent may agree to in its
sole discretion) prior written notice before any such policy or policies shall be altered or canceled.
(d) Promptly notify the Administrative Agent of any real property subject to a Mortgage that is, or becomes, a Flood Hazard Property.
7.08 Compliance with Laws.
Comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in
such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted, or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.
7.09 Books and Records.
(a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied
shall be made of all financial transactions and matters involving the assets and business of such Loan Party or such Subsidiary, as the case may be.
having regulatory jurisdiction over such Loan Party or such Subsidiary, as the case may be.
(b) Maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority
7.10 Inspection Rights.
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Permit representatives and independent contractors of the Administrative Agent and each Lender to visit and inspect any of its properties, to
examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with
its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours
and as often as may be desired, upon reasonable advance notice to the Borrower; provided, however, so long as no Event of Default exists, the Borrower
shall only be required to reimburse the Administrative Agent (but not any Lender) for one such visit and inspection in any fiscal year; provided, further,
however, when an Event of Default exists, the Administrative Agent or any Lender (or any of their respective representatives or independent contractors)
may do any of the foregoing at the expense of the Borrower at any time during normal business hours, as often as desired and without advance notice.
7.11 Use of Proceeds.
Use the proceeds of the Loans (i) refinance the existing Indebtedness of the Borrower, (ii) to support the launch activities and commercialization
efforts for Orladeyo, (iii) to fund research and development and (iv) for other general corporate purposes, provided, that, in no event shall the proceeds of
the Loans be used in contravention of any Law or of any Loan Document.
7.12 Additional Subsidiaries.
Within thirty (30) days after the acquisition or formation of any Subsidiary (including, without limitation, upon the formation of any Subsidiary
that is a Delaware Divided LLC) (it being understood that any Excluded Subsidiary ceasing to be an Excluded Subsidiary but remaining a Subsidiary shall
be deemed to be the acquisition of a Subsidiary for purposes of this Section):
(a) notify the Administrative Agent thereof in writing, together with the (i) jurisdiction of organization, (ii) number of shares of each
class of Equity Interests outstanding, (iii) number and percentage of outstanding shares of each class owned (directly or indirectly) by the Borrower or any
Subsidiary and (iv) number and effect, if exercised, of all outstanding options, warrants, rights of conversion or purchase and all other similar rights with
respect thereto; and
(b) cause such Person (other than any Excluded Subsidiary) to (i) to become a Guarantor by executing and delivering to the
Administrative Agent a Joinder Agreement or such other documents as the Administrative Agent shall reasonably request for such purpose, and (ii)
deliver to the Administrative Agent documents of the types referred to in Sections 5.01(f)-(h) (or, in the case of any Non-U.S. Subsidiary, comparable
security documents, including local law equity pledge or similar agreements) in order to grant Liens to the Administrative Agent for the benefit of the
Secured Parties in all assets of, and the Equity Interests in, such Subsidiary constituting Collateral and favorable opinions of counsel to such Persons
(which shall cover, among other things, the legality, validity, binding effect and enforceability of the documentation referred to in clause (i) or (ii), as
applicable), all in form, content and scope reasonably satisfactory to the Administrative Agent; provided that an Exempt Immaterial Subsidiary shall not
be required to deliver any Collateral Documents (other than an equity pledge or similar agreement granting Liens to the Administrative Agent for the
benefit of the Secured Parties in the Equity Interests in such Exempt Immaterial Subsidiary) governed by the laws of the jurisdiction in which such
Exempt Immaterial Subsidiary is organized until such Exempt Immaterial Subsidiary ceases to constitute an Exempt Immaterial Subsidiary.
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7.13 ERISA Compliance. Do, and cause each of its ERISA Affiliates to do, each of the following: (a) maintain each Plan, both in form and
operation, in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code and other federal or state law, (b)
cause each Plan that is qualified under Section 401(a) of the Internal Revenue Code to maintain such qualification, and (c) make all required contributions
to any Plan subject to Section 412, Section 430 or Section 431 of the Internal Revenue Code.
7.14 Pledged Assets.
(a) Equity Interests. To secure the Obligations, cause (i) 100% of the issued and outstanding Equity Interests of each U.S. Subsidiary
(including, without limitation, each U.S. Subsidiary that is a Delaware Divided LLC) directly owned by any Loan Party and (ii) 65% (or such greater
percentage that, (A) could not reasonably be expected to cause the undistributed earnings of such Non-U.S. Subsidiary as determined for United States
federal income tax purposes to be treated as a deemed dividend to such Non-U.S. Subsidiary’s United States parent and (B) could not reasonably be
expected to cause any material adverse tax consequences) of the issued and outstanding Equity Interests entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) and 100% of the issued and outstanding Equity Interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-
2(c)(2)) in each Non-U.S. Subsidiary directly owned by any Loan Party, in each case, to be subject at all times to a first priority, perfected Lien in favor of
the Administrative Agent, for the benefit of the Secured Parties, pursuant to the terms and conditions of the Collateral Documents. In connection with the
foregoing, the Borrower shall cause to be delivered to Administrative Agent opinions of counsel requested by the Administrative Agent and any filings
and deliveries necessary to perfect the security interests in such Equity Interests, all in form and substance satisfactory to the Administrative Agent.
(b) Other Property. Cause all property (other than Excluded Property) of each Loan Party (including each Loan Party that is a
Delaware Divided LLC) to be subject at all times to first priority, perfected and, in the case of real property (whether leased or owned), title insured Liens
in favor of the Administrative Agent to secure the Obligations pursuant to the Collateral Documents or, with respect to any such property acquired
subsequent to the Closing Date, such other additional security documents, including Real Property Security Documents, as the Administrative Agent shall
request (subject to Permitted Liens), and in connection with the foregoing, deliver to the Administrative Agent such other documentation as the
Administrative Agent may request, including filings and deliveries necessary to perfect such Liens, Organization Documents, resolutions, Real Property
Security Documents and favorable opinions of counsel to such Persons and the Lenders, all in form, content and scope reasonably satisfactory to the
Administrative Agent.
7.15 Compliance with Material Contracts.
Comply with each Material Contract of such Person, except where the failure to so comply could not reasonably be expected, either individually
or in the aggregate, to have a material adverse effect on any Product Development and Commercialization Activities.
7.16 Deposit Accounts.
(a) [Reserved].
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(b) (i) Cause all Deposit Accounts of the Loan Parties (other than (A) deposit accounts established solely as payroll purposes, (B) the
Government Account Debtor Account, (C) the HSBC Cash Collateral Accounts and (D) other Deposit Accounts holding less than $[***] in the aggregate
at any time for all such Deposit Accounts under this clause (D)) at all times to be subject to Deposit Account Control Agreements in form and substance
satisfactory to the Administrative Agent or solely in the case of a Loan Party that is a Non-U.S. Subsidiary, to be subject to a first priority, perfected
security interest in favor of the Administrative Agent for the benefit of the Secured Parties, and (ii) cause all payments owing by a Government Account
Debtor to a Loan Party to be deposited into the Government Account Debtor Account, which account shall (x) be subject to irrevocable standing
instructions causing all funds therein to be transferred via an automatic immediate intrabank transfer by the close of each Business Day to a Deposit
Account subject to a Deposit Account Control Agreement or solely in the case of a Loan Party that is a Non-U.S. Subsidiary, to a Deposit Account subject
to a first priority, perfected security interest in favor of the Administrative Agent for the benefit of the Secured Parties, and (y) not be used for any purpose
other than receiving funds from Government Account Debtors and other account debtors of the Loan Parties.
7.17 Regulatory Compliance.
(a) Without limiting the generality of Section 7.08, in connection with the research, development, testing, manufacture, handling,
labeling, packaging, storage, supply, promotion, distribution, marketing, commercialization, marketing, commercialization, import, export, sale or
provision of each and any Product or Service by the Borrower or any Subsidiary, or the operation of any Facility, the Borrower or such Subsidiary shall
comply with all Required Permits at all times issued by any Government Authority, specifically including the FDA and CMS, with respect to such
research, development, testing, manufacture, handling, labeling, packaging, storage, supply, promotion, distribution, marketing, commercialization,
import, export, sales or provision of such Product or Service by the Borrower or such Subsidiary, in each case, except where the failure to do any of the
foregoing (x) could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect and (y) could not reasonably be
expected, either individually or in the aggregate, to have a material adverse effect on any Product Development and Commercialization Activities.
(b) The Borrower and each Subsidiary shall (i) take all necessary action to timely renew and maintain all Material Required Permits,
accreditations and qualifications which are necessary or material to the conduct of its business, or to receive payment for all applicable Services, (ii) be
and remain in compliance with all Third Party Arrangements and Healthcare Laws and all requirements for participation in, and for licensure required to
provide the goods or services that are reimbursable under, all Third Party Payor Arrangements and Government Reimbursement Programs; and (iii) use
commercially reasonable efforts to cause all Persons providing professional health care services for or on behalf of any Loan Party or Subsidiary (either as
an employee or independent contractor) to comply with all applicable material Healthcare Laws in the performance of their duties, and to maintain in full
force and effect all professional licenses required to perform such duties.
(c) All preclinical and clinical trials that have been conducted and/or are being conducted by or on behalf of the Borrower and its
Subsidiaries, including those trials whose results and data have been submitted to any Governmental Authority, including the FDA and its counterparts
worldwide, are being or have been conducted in compliance in all material respects with the required experimental protocols, procedures and controls and
otherwise in compliance with applicable Laws, including cGLP and cGCP, the Animal Welfare Act, and all applicable similar Laws in other jurisdictions.
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(d) Each Loan Party and each of their respective Subsidiaries shall maintain a corporate and health care regulatory compliance
program (“RCP”) which addresses the requirements of all applicable Healthcare Laws and includes the following components: (i) standards of conduct
and policies and procedures for compliance with Healthcare Laws; (ii) a specific officer within high-level personnel identified as having overall
responsibility for compliance with such standards of conduct and policies and procedures; (iii) training and education programs which effectively
communicate the compliance standards and procedures to employees and agents, including Healthcare Laws; (iv) auditing and monitoring systems and
reasonable steps for achieving compliance with such standards of conduct and policies and procedures including publicizing a reporting system to allow
employees and other agents to anonymously report criminal or suspect conduct and potential compliance problems; (v) disciplinary guidelines and
consistent enforcement of compliance policies including discipline of individuals responsible for the failure to detect violations of the RCP; and (vi)
mechanisms to promptly respond to detected violations of the RCP. Each Loan Party and each of their respective Subsidiaries shall modify such RCPs
from time to time, as may be necessary to ensure continuing compliance with all material applicable Healthcare Laws. Upon request, the Lenders (and/or
their consultants) shall be permitted to review such RCPs.
participation agreements with Government Account Debtors with respect to the business of the Loan Parties.
(e) Borrower shall provide to Lenders upon request, an accurate, complete and current list of all Third Party Payor Arrangements and
(f) Borrower shall promptly furnish or cause to be furnished to the Lenders copies of (i) all reports of investigational/inspectional
observations issued to and received by the Loan Parties or any of their Subsidiaries, and issued by any Governmental Authority relating to such Person’s
business, (ii) copies of all establishment investigation/inspection reports issued to and received by Loan Parties or any of their Subsidiaries and issued by
any Governmental Authority, (iii) copies of all warning and untitled letters, subpoenas, civil investigative demands, as well as other material documents
received by Loan Parties or any of their Subsidiaries from the FDA, CMS, HHS, the United States Department of Justice, or any other Governmental
Authority relating to or arising out of the conduct applicable to the business of the Loan Parties or any of their Subsidiaries that asserts past or ongoing
lack of compliance with any applicable Laws and Healthcare Laws, (iv) copies of any written recommendation from any Governmental Authority in any
Key Territory, Ireland, Japan or the European Union (or any agency thereof) or the competent authority of a European Union member state, that any Loan
Party or any of its respective Subsidiaries, or any obligor to which any Loan Party or any of its respective Subsidiaries provides Products or Services,
should have its licensure, provider or supplier number, or accreditation suspended, revoked, or limited in any way, or any penalties or sanctions imposed
and (v) notice of any material investigation or material audit or similar proceeding by the FDA, CMS, any other Governmental Authority in any Key
Territory, Ireland, Japan or the European Union (or any agency thereof) or the competent authority of a European Union member state.
(g) Each Loan Party and each of their respective Subsidiaries will at all times be in compliance in all material respects with HIPAA to
the extent applicable.
(h) [Reserved].
(i) Cause all Facilities to operate in material compliance with applicable Laws except to the extent that any non-compliance could not
reasonably be expected, either individually or in the aggregate, to result in (x) a material adverse effect on any Product Development and
Commercialization Activities and (y) a Material Adverse Effect.
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(j) If any Facility is currently accredited by an Accrediting Organization, each Loan Party and each of their respective Subsidiaries
will (i) maintain such accreditation in good standing and without limitation or impairment, (ii) promptly submit to the Accrediting Organization a plan of
correction for any deficiencies listed on any accreditation survey report, and (iii) cure all such deficiencies within such time frame as is necessary to
preserve and maintain in good standing and without limitation or impairment such accreditation, in each case, except to the extent that the failure to do so
could not reasonably be expected, either individually or in the aggregate, to result in (x) a material adverse effect on any Product Development and
Commercialization Activities and (y) a Material Adverse Effect.
(k) Borrower shall provide the Administrative Agent (i) prior written notice of any material change to the terms of its normal billing
payment and reimbursement policies and procedures with respect thereto (including, without limitation, the amount and timing of finance charges, fees
and write-offs) and (ii) within a reasonable time written notice of any change in a Government Reimbursement Program that materially impacts the
Borrower’s normal billing payment policies and procedures or expected reimbursement amounts, together with a description of the expected impacts.
(l) The Loan Parties shall maintain in full force and effect, and free from restrictions, probations, conditions or known conflicts which
would materially impair the use or operation of any Facility for its current use, except to the extent that the failure to do so could not reasonably be
expected, either individually or in the aggregate, to result in (x) a material adverse effect on any Product Development and Commercialization Activities
and (y) a Material Adverse Effect.
7.18 Intellectual Property; Consent of Licensors.
(a) (i) Maintain in full force and effect or pursue the prosecution of, as the case may be, and pay all costs and expenses relating to, all
Material IP Rights owned or controlled by such Loan Party or its respective Subsidiaries, except for any such Material IP Rights that are no longer used or
useful in any material respect in the business of the Borrower and its Subsidiaries, taken as a whole; (ii) notify the Administrative Agent, promptly after
learning thereof, of any material infringement, misappropriation or other violation by any Person of its Material IP Rights; (iii) use commercially
reasonable efforts to pursue, enforce, and maintain in full force and effect legal protection for all Material IP Rights, including Patents, developed or
controlled by such Loan Party or any of its respective Subsidiaries, except for any such Material IP Rights that are no longer used or useful in any material
respect in the business of the Borrower and its Subsidiaries, taken as a whole; and (iv) notify the Administrative Agent, promptly after learning thereof, of
any claim by any Person that the conduct of the Businesses infringes any Material IP Rights of that Person and, if requested by the Administrative Agent,
use commercially reasonable efforts to resolve such claim, in each case of this clause (iv), other than with respect to Material IP Rights that are obsolete or
no longer used or useful in the conduct of the business of Borrower and its Subsidiaries, taken as a whole, or the cost of maintaining any such Material IP
Rights that are immaterial would outweigh the benefit to Borrower and its Subsidiaries of so maintaining.
(b) Promptly after entering into or becoming bound by any material license or similar material agreement (other than (i) over-the-
counter software that is commercially available to the public and (ii) any license agreement relating to IP Rights that are not Material IP Rights) after the
Closing Date, the Loan Parties shall (i) provide written notice to the Administrative Agent of the material terms of such license or similar agreement and
(ii) in good faith take such commercially reasonable actions (which commercially reasonable actions, for the avoidance of doubt, shall not include
payment of any fees or other amounts or making any material concessions with respect to the terms of such license or agreement by such Loan Party) as
the Administrative Agent or Required Lenders may reasonably request to obtain the consent of, or waiver by, any Person whose consent or waiver is
necessary for the Administrative Agent to be granted and perfect a valid security interest in such license or agreement and to fully exercise its rights under
any of the Loan Documents in the event of a disposition or liquidation of the rights, assets or property that is the subject of such license or agreement;
provided, that, the failure to obtain any such consent or waiver shall not by itself constitute a Default.
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7.19 Anti-Corruption Laws. Conduct its business in compliance with the United States Foreign Corrupt Practices Act of 1977, the UK Bribery
Act 2010 and other similar anti-corruption legislation in other jurisdictions and maintain policies and procedures designed to promote and achieve
compliance with such Laws.
7.20 Post-Closing Obligations. Within the time periods set forth therefor on Schedule 7.20 (or such longer periods of time as may be agreed to
by the Administrative Agent in its sole discretion), deliver to the Administrative Agent such documents, instruments, certificates or agreements as are listed
on Schedule 7.20 or take such actions as are described on Schedule 7.20, in each case in form and substance reasonably satisfactory to the Administrative
Agent.
7.21 JPR Royalty Sub - Indenture.
(a) Until discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof, the Borrower hereby agrees that it
shall, to the extent required by the JPR Indenture and other Deal Documents (as defined in the JPR Indenture), and all agreements and documents entered
into from time to time in connection therewith (including, without limitation, any amendments or modifications thereof) and not otherwise prohibited
pursuant to the terms of the Loan Documents, perform (i) [reserved], (ii) such administrative activities necessary to maintain the continuing existence of
JPR Royalty Sub, such as completing required annual registration or report filings with state filing offices, and (iii) such activities in the ordinary course
of business incidental to its ownership of the equity interests of JPR Royalty Sub, to the extent that failure perform any of the foregoing activities
described in clauses (a)(i), (ii) and (iii) could reasonably be expected to result in a Material Adverse Effect.
(b) Until discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof, it shall constitute a breach of this
Section 7.21 by the Borrower if (i) JPR Royalty Sub shall (A) transact or engage in any activities, business or operations or consummate any transactions
other than the performance of its obligations and activities reasonably incidental thereto under the JPR Indenture and the other Deal Documents, and all
agreements and documents entered into from time to time in connection therewith (including, without limitation, any amendments or modifications
thereof), (B) amend the terms of the JPR Indenture or the other Deal Documents in a manner that is materially adverse to the Administrative Agent or any
Lender or that could reasonably be expected to result in a Material Adverse Effect, (C) allow its Organization Documents to be modified in a manner (1)
that is adverse to the Administrative Agent or any Lender in any material respect, (2) that could reasonably be expected to result in a Material Adverse
Effect or (3) that would have the effect of eliminating or modifying any of the “special purpose entity” restrictions set forth in such Organization
Documents, (D) violate the “special purpose entity” restrictions set forth in such Organization documents in any material respect, (E) merge or consolidate
with any other Person, (F) own any assets other than the Purchased Assets (as defined in the JPR Indenture), (G) create, incur, assume or suffer to exist
any Indebtedness (other than the Indebtedness under the JPR Indenture) and (H) create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired (other than Liens of the Trustee (as defined in the JPR Indenture as in effect on the date
hereof) on the Collateral (as defined in the JPR Indenture as in effect on the date hereof) pursuant to the JPR Indenture) or (ii) any Loan Party or any
Subsidiary shall, directly or indirectly, (A) make any Investment in JPR Royalty Sub, (B) sell, transfer, license, lease or dispose of any asset or property of
such Loan Party or Subsidiary to JPR Royalty Sub or (C) Guarantee or otherwise become liable for any Indebtedness or other liability of JPR Royalty Sub
(other than the pledge by the Borrower of its membership interests in JPR Royalty Sub pursuant to the “Pledge and Security Agreement” (as defined in the
JPR Indenture as in effect on the date hereof), it being understood that the only recourse to the Borrower is (I) such membership interests and no other
assets of the Borrower or any of its Subsidiaries and (II) pursuant to the expense reimbursement obligations set forth in Section 12.1 of such “Pledge and
Security Agreement” and the indemnification obligations set forth in Section 19.1 of such “Pledge and Security Agreement”).
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(c) Following discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof, the Borrower shall, within [***]
or, if not then permitted pursuant to the JPR Indenture or other Deal Documents, within [***] of such first date thereafter as may be permitted under the
JPR Indenture and such other Deal Documents, and at its election, either (a) dissolve JPR Royalty Sub and liquidate its assets into the Borrower or (b)
take such actions required by Administrative Agent to cause JPR Royalty Sub to become a Guarantor under the Loan Documents pursuant to Section 7.12
with respect to newly formed or acquired Subsidiaries.
7.22 Restrictions on Cash. Without limiting the restrictions set forth in Sections 7.21 or 8.18, respectively, the Loan Parties shall ensure that the
total amount of cash and Cash Equivalents held by all Subsidiaries of the Borrower that are not Loan Parties does not, as of the end of each fiscal quarter,
exceed $[***] in the aggregate.
7.23 People with Significant Control Regime. Each of the Loan Parties shall within the relevant timeframe, comply with any notice it receives
pursuant to Part 21A of the Companies Act 2006 from any company incorporated in the United Kingdom whose shares are the subject of Collateral
Documents and promptly provide the Administrative Agent with a copy of that notice.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Lender shall have any Commitments hereunder, any Loan or other Obligation hereunder shall remain unpaid or unsatisfied (other
than contingent indemnification obligations for which no claim has been asserted), no Loan Party shall, nor shall it permit any Subsidiary to, directly or
indirectly:
8.01 Liens.
Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, other than
the following:
(a) Liens pursuant to any Loan Document;
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(b) Liens existing on the date hereof and listed on Schedule 8.01;
(c) Liens (other than Liens imposed under ERISA) for taxes, assessments or governmental charges or levies not yet delinquent or
which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on
the books of the applicable Person in accordance with GAAP;
(d) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided, that, such Liens secure only
amounts not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good
faith by appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established; provided further, that, such
Liens do not have priority over any of the Administrative Agent’s Liens on the Collateral and the aggregate amount secured by all such Liens does not at
any time exceed the Threshold Amount;
(e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and
other social security legislation, other than any Lien imposed by ERISA;
appeal bonds, indemnity and performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and
substantial in amount, and which do not materially interfere with the ordinary conduct of the business of the applicable Person;
(g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not
Event of Default under Section 9.01(h);
(h) Liens securing judgments, decrees or attachments (or appeal or other surety bonds relating to such judgments) not constituting an
(i) Liens securing Indebtedness permitted under Section 8.03(e); provided, that: (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness, (ii) the Indebtedness secured thereby does not exceed the cost (negotiated on an arm’s
length basis) of the property being acquired on the date of acquisition and (iii) such Liens attach to such property concurrently with or within ninety (90)
days after the acquisition thereof;
(j) licenses, sublicenses, leases or subleases (other than relating to intellectual property) granted to others in the ordinary course of
business not interfering in any material respect with the business of any Loan Party or any of its Subsidiaries;
agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;
(k) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or
(l) normal and customary banker’s liens and rights of setoff upon deposits of cash in favor of banks or other depository institutions;
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(m) Liens of a collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection;
(n) Liens of sellers of goods to the Borrower and any of its Subsidiaries arising under Article 2 of the Uniform Commercial Code or
similar provisions of applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such
goods and related expenses;
(o) Permitted Licenses;
Security Agreement” (as defined in the JPR Indenture as in effect on the date hereof);
(p) solely with respect to the Borrower, the pledge of its membership interests in JPR Royalty Sub pursuant to the “Pledge and
(q) [reserved];
premiums permitted by Section 8.03(h);
(r) Liens granted in the ordinary course of business on the unearned portion of insurance premiums securing the financing of insurance
pursuant to clause (h) of the definition of Permitted Contingent Obligations;
(s) Liens in favor of HSBC Bank on the HSBC Cash Collateral Accounts to the extent securing obligations of Borrower permitted
(t) cash collateral securing letters of credit permitted under clause (g) of the definition of “Permitted Contingent Obligations”;
provided that the aggregate amount of such cash collateral shall not exceed [***] percent ([***]%) of the face amount of the letter of credit it is securing;
and
(u) (i) the Back-Up Security Interests, subject to the Intercreditor Agreement and (ii) the backup security interests pursuant
to clause (i)(c)(y) of the definition of “Royalty Financing Restrictions”, subject to the intercreditor agreement entered into pursuant to
clause (i)(c)(y) of the definition of “Royalty Financing Restrictions”; and
(v) (u) other Liens securing obligations (other than obligations constituting Capital Leases, letters of credit or debt for borrowed
money) in an aggregate principal amount outstanding at any time not to exceed the Threshold Amount.
8.02 Investments.
Make any Investments, except:
(a) Investments held by a Loan Party or a Subsidiary in the form of cash or Cash Equivalents;
(b) Investments existing on date hereof and set forth in Schedule 8.02;
(c) Investments in any Person that is a Loan Party prior to giving effect to such Investment;
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Party;
(d) Investments by any Subsidiary of the Borrower that is not a Loan Party in any other Subsidiary of the Borrower that is not a Loan
(e) (x) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of
trade credit in the ordinary course of business, (y) Investments received in satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss and (z) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of business;
(f) Permitted Acquisitions;
(g) other Investments not exceeding the Threshold Amount in the aggregate at any one time outstanding; provided, that, no Investment
otherwise permitted by this clause (g) shall be permitted to be made if any Default has occurred and is continuing or would result therefrom; provided,
further, that any Investment by a Loan Party in a Non-U.S. Subsidiary that is not a Loan Party in reliance on this clause (g) shall be limited to cash and
Cash Equivalents;
extent that the aggregate amount of such Investments does not exceed $[***] at any time outstanding;
(h) Investments of cash and Cash Equivalents by Loan Parties in Non-U.S. Subsidiaries that are not Loan Parties, but solely to the
(i) [reserved];
course of any Loan Party; and
(j) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary
(k) Investments consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary
course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of the Borrower pursuant to employee
stock purchase plans or agreements approved by the Borrower’s board of directors, in an aggregate amount for all such Investments made in reliance of
this clause (k) not to exceed $[***] at any one time outstanding; provided, that, no Investment otherwise permitted by this clause (k) shall be permitted to
be made if any Default has occurred and is continuing or would result therefrom.
8.03 Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except:
(a) Indebtedness under the Loan Documents;
(b) Indebtedness of the Borrower and its Subsidiaries existing on the date hereof and described on Schedule 8.03 and renewals,
refinancings and extensions thereof; provided that no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing except by an amount equal to unpaid accrued interest and premium thereon and fees, commissions and
expenses (including upfront fees and original issue discount) reasonably incurred, in connection with such refinancing;
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(c) intercompany Indebtedness permitted under Section 8.02 (other than by reference to this Section 8.03 (or any sub-clause hereof));
(d) obligations (contingent or otherwise) of the Borrower or any Subsidiary existing or arising under any Swap Contract, provided,
that, such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks associated
with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the value of securities issued
by such Person, and not for purposes of speculation or taking a “market view”;
(e) purchase money Indebtedness (including obligations in respect of Capital Leases or Synthetic Leases) hereafter incurred by the
Borrower or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings and extensions thereof, provided, that, (i) no
Default or Event of Default has occurred and is continuing both immediately prior to and after giving effect thereto, (ii) the total of all such Indebtedness
for all such Persons taken together shall not exceed an aggregate principal amount of $[***] at any one time outstanding, (iii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed, and (iv) no such Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such refinancing except by an amount equal to unpaid accrued interest and premium thereon plus
other amounts owing or paid related to such Indebtedness, and fees, commissions and expenses (including upfront fees and original issue discount)
reasonably incurred, in connection with such refinancing;
(f) other unsecured Indebtedness hereafter incurred by the Borrower or any of its Subsidiaries in an aggregate amount not to exceed
$[***] at any one time outstanding;
(g) Permitted Contingent Obligations;
(h) Indebtedness incurred in the ordinary course of business not to exceed $[***] in the aggregate at any time outstanding owed to any
Person providing property, casualty, liability, or other insurance to the Loan Parties, including to finance insurance premiums, so long as the amount of
such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such insurance for the policy year in
which such Indebtedness is incurred and such Indebtedness is outstanding only during such policy year;
(i) Convertible Bond Indebtedness; and
(j) Attributable Indebtedness in respect of Capital Leases incurred pursuant to automobile leases entered into in the ordinary course of
business as part of employee compensation for employees based in Europe; provided that the aggregate amount of such Attributable Indebtedness incurred
pursuant to this clause (j) shall not exceed $[***] at any one time outstanding.
8.04 Fundamental Changes.
Merge, dissolve, liquidate, consolidate, with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person (including, in each case, pursuant to a Delaware LLC
Division); provided, that, notwithstanding the foregoing provisions of this Section 8.04 but subject to the terms of Sections 7.12 and 7.14, (a) the Borrower
may merge or consolidate with any of its direct Subsidiaries, provided that the Borrower shall be the continuing or surviving entity, (b) any Loan Party
(other than the Borrower) may merge or consolidate with any other Loan Party, (c) any Subsidiary that is not a Loan Party may be merged or consolidated
with or into any Loan Party, provided that such Loan Party shall be the continuing or surviving entity, (d) any Subsidiary that is not a Loan Party may be
merged or consolidated with or into any other direct Subsidiary of it that is not a Loan Party and (e) any Subsidiary that is not a Loan Party may dissolve,
liquidate or wind up its affairs at any time provided that such dissolution, liquidation or winding up could not reasonably be expected to have a Material
Adverse Effect and all of its assets and business are transferred to a Loan Party prior to or concurrently with such dissolution, liquidation or winding up;
provided, that, in the case of (a) through (d) above, the merging parties are organized in the same jurisdiction (it being understood that for this purpose,
States of the United States shall be deemed to be the same jurisdiction as each other).
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8.05 Dispositions.
Make any Disposition, except, so long as no Default or Event of Default shall have occurred and be continuing both immediately prior to and after
giving effect to such Disposition, (a) Permitted Licenses and dispositions of Inventory and Clinical Trial Material to licensees in connection with, and
pursuant to reasonable and customary terms of, a Permitted License (provided that such dispositions shall be limited to Inventory and Clinical Trial
Material related to the Product that is the subject of such Permitted License), (b) other Dispositions to the extent, in the case of this clause (b), (i) the
consideration paid in connection therewith shall be cash or Cash Equivalents paid contemporaneous with consummation of the transaction and shall be in
an amount not less than the fair market value of the property disposed of, (ii) such Disposition does not involve the sale, lease, license, transfer or other
disposition of the Equity Interests in any Subsidiary, any Products and/or any IP Rights, and (iii) the aggregate fair market value of all of the assets sold or
otherwise disposed of in such Disposition together with the aggregate fair market value of all assets sold or otherwise disposed of by the Borrower and its
Subsidiaries in all such transactions does not exceed $[***] per fiscal year of the Borrower, and (c) asset sales of the Specified Products to any Person that
is not an Affiliate of any Loan Party, Subsidiary or Affiliate of a Loan Party or Subsidiary (excluding, for the avoidance of doubt, the Disposition of any
Equity Interests of a Subsidiary), to the extent, in the case of this clause (c), that, the consideration paid in connection therewith shall be cash paid
contemporaneously with the consummation of the transaction and shall be in an amount not less than the fair market value of the property disposed;
provided, however, that this clause (c) shall not include any Disposition in the form of a separate license, sale, transfer or financing of a right to receive any
sales or revenue with respect to a Specified Product (or any IP Rights related to a Specified Product); provided further that, for the avoidance of doubt, the
foregoing proviso shall not restrict any Permitted License or Other Royalty Financing otherwise separately permitted pursuant to the terms of this
Agreement.
8.06 Restricted Payments.
Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:
(a) (i) each Subsidiary may make Restricted Payments to any Loan Party and (ii) each Subsidiary that is not a Loan Party may make
Restricted Payments to another Subsidiary that is not a Loan Party;
Capital Stock of such Person;
(b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the Qualified
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(c) the Borrower may make (i) any payment of cash in lieu of a fractional share in accordance with the terms of any indenture
governing Convertible Bond Indebtedness and (ii) subject to any subordination provisions applicable thereto, regularly scheduled interest payments as and
when due in accordance with the terms of any indenture governing Convertible Bond Indebtedness;
(d) (i) the Borrower may make cashless repurchases of its Equity Interests deemed to occur upon exercise of stock options or warrants
of such Equity Interests to represent a portion of the exercise price of such options or warrants and (ii) to the extent constituting a Restricted Payment, the
Borrower may acquire (or withhold) its Equity Interests pursuant to any employee stock option or similar plan in satisfaction of withholding or similar
taxes payable by any present or former officer, employee, director or member of management and the Borrower may make deemed repurchases in
connection with the exercise of stock options; and
(e) (i) the Borrower may (x) make the RP Royalty PaymentPayments on a quarterly basis to the 2020 RP Buyer and the 2021 RP
Buyer pursuant to Section 6.2(a) of 2021 RP Royalty Purchase Agreement, (y) make the Omers Royalty Payments on a quarterly basis to the
Omers Buyer pursuant to Section 6.2(a) of the Omers Royalty FinancingPurchase Agreement and (y) make any other payments to the applicable Buyer
required to be made under the 2020 RP Royalty Financing Documents as in effect on the date hereof and Amendment No. 1 Effective Date (and
excluding any payments, the obligation of which to make has been replaced by an obligation to make such payment pursuant to the 2021 RP
Royalty Financing Documents as in effect on the Amendment No. 1 Effective Date), the 2021 RP Royalty Financing Documents as in effect on the
Amendment No. 1 Effective Date and the OMERS Royalty Financing Documents as in effect on the Amendment No. 1 Effective Date and (ii)
subject to the Royalty Financing Restrictions, the Borrower may pay any revenue participation payment owing to the purchaser or buyer under any Other
Royalty Financing Document pursuant to any comparable section in such Other Royalty Financing Document.
8.07 Change in Nature of Business.
Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the
Closing Date or any business substantially related or incidental thereto.
8.08 Transactions with Affiliates and Insiders.
Enter into or permit to exist any transaction or series of transactions, with any officer, director or Affiliate of a Loan Party or a Subsidiary other
than (a) advances of working capital to any Loan Party, (b) [reserved], (c) intercompany transactions expressly permitted by Section 8.02, Section 8.03,
Section 8.04, Section 8.05 or Section 8.06 (in each case, other than by reference to this Section 8.08 (or any sub-clause hereof)), (d) normal and reasonable
compensation and reimbursement of expenses of officers and directors in the ordinary course of business (e) except as otherwise specifically limited in this
Agreement, other transactions which are entered into in the ordinary course of such Person’s business on terms and conditions substantially as favorable to
such Person as would be obtainable by it in a comparable arm’s-length transaction with a Person other than an officer, director or Affiliate and (f)
transactions solely between or among Loan Parties.
8.09 Burdensome Agreements.
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Enter into, or permit to exist, any Contractual Obligation that (a) encumbers or restricts the ability of any such Person to (i) make Restricted
Payments to any Loan Party, (ii) pay any Indebtedness or other obligations owed to any Loan Party, (iii) make loans or advances to any Loan Party, (iv)
transfer any of its property to any Loan Party, (v) pledge its property pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings
or extension thereof or (vi) act as a Loan Party pursuant to the Loan Documents or any renewals, refinancings, exchanges, refundings or extension thereof,
except (in respect of any of the matters referred to in clauses (i) through (v) above) for (1) this Agreement and the other Loan Documents, (2) any
document or instrument governing Indebtedness incurred pursuant to Section 8.03(e), provided, that, any such restriction contained therein relates only to
the asset or assets constructed or acquired in connection therewith, (3) customary provisions restricting assignment of any agreement entered into by the
Borrower or any Subsidiary in the ordinary course of business, or (4) customary restrictions and conditions contained in any agreement relating to the sale
of any property permitted under Section 8.05 pending the consummation of such sale s or (b) requires the grant of any security for any obligation if such
property is given as security for the Obligations.
8.10 Use of Proceeds.
Use the proceeds of any Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund
indebtedness originally incurred for such purpose.
8.11 Prepayment of Other Indebtedness,
Make (or give any notice with respect thereto) any voluntary or optional payment or prepayment or voluntary or optional redemption or
acquisition for value of (including without limitation, by way of depositing money or securities with the trustee with respect thereto before due for the
purpose of paying when due), refund, refinance or exchange of any Indebtedness of any Loan Party or any Subsidiary that is (or is required to be) (a)
subordinated in right of payment to the Obligations, (b) unsecured Indebtedness or (c) Indebtedness secured by Liens which are junior to the Liens securing
the Obligations, in the case of each of the foregoing clauses (a) through (c) except for (i) any settlement or conversion of Convertible Bond Indebtedness
solely with or into common stock of the Borrower and (ii) any payment of cash in lieu of a fractional share in accordance with the terms of any indenture
governing Convertible Bond Indebtedness in connection with the settlement or conversion of Convertible Bond Indebtedness permitted by clause (i) above
of this Section 8.11.
8.12 Organization Documents; Fiscal Year; Legal Name, Jurisdiction of Formation and Form of Entity; Certain Amendments.
(a) Amend, modify or change its Organization Documents in a manner materially adverse to the Lenders.
(b) Change its fiscal year.
(c) Without providing five (5) days prior written notice to the Administrative Agent and otherwise taking any steps that in the
Administrative Agent’s reasonable discretion would be necessary, appropriate or convenient in order to perfect and maintain perfection of the security
interests granted under the Security Documents, change its name, jurisdiction of organization or form of organization.
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(d) Amend, supplement, waive or otherwise modify (or permit the amendment, supplement, waiver or modification), or enter into any
forbearance from exercising any rights with respect to, (i) any Material Contract (other than any Royalty Financing Document or Other Royalty Financing
Document) if such amendment, supplement, waiver, other modification or forbearance could reasonably be expected to result in a material adverse effect
on any Product Development and Commercialization Activities, (ii) any document or other agreement evidencing Indebtedness in excess of the Threshold
Amount in a manner materially adverse to the Administrative Agent or any Lender or (iii) any Royalty Financing Document or Other Royalty Financing
Document, in each case, in a manner adverse to the Administrative Agent or any Lender.
Each Loan Party shall, prior to entering into any amendment, supplement, waiver or other modification of, or forbearance with respect to, any Royalty
Financing Document, Other Royalty Financing Document, other Material Contract or any document or other agreement evidencing Indebtedness in excess
of the Threshold Amount to the extent such amendment, supplement, waiver, modification or forbearance is not permitted by this Section 8.12, deliver to
Administrative Agent reasonably in advance of the execution thereof, any final or execution form copy of amendments, supplements, waivers or other
modifications to such documents, and, if approval of Administrative Agent is required by the terms of this Section 8.12 prior to the taking of any such
action, the Loan Parties agree not to take, nor permit any of its Subsidiaries to take, any such action with respect to any such documents without obtaining
such approval from Administrative Agent.
8.13 Ownership of Subsidiaries.
Notwithstanding any other provisions of this Agreement to the contrary, (a) permit any Person (other than any Loan Party or any Wholly-Owned
Subsidiary of the Borrower) to own any Equity Interests of any Subsidiary of any Loan Party, except to qualify directors where required by applicable law
or to satisfy other requirements of applicable law with respect to the ownership of Equity Interests of Non-U.S. Subsidiaries, (b) permit any Loan Party or
any Subsidiary to issue or have outstanding any shares of Disqualified Capital Stock or (c) create, incur, assume or suffer to exist any Lien (other than
Liens permitted under Section 8.01(a)) on any Equity Interests of any Subsidiary of any Loan Party.
8.14 Sale Leasebacks.
Enter into any Sale and Leaseback Transaction.
8.15 Sanctions; Anti-Corruption Laws.
(a) Directly or indirectly, use the proceeds of any Loan, or lend, contribute or otherwise make available such proceeds of any Loan to
any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of
Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transactions hereunder, whether as
a Lender, Administrative Agent or otherwise) of Sanctions.
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Practices Act of 1977, the UK Bribery Act 2010 and other similar anti-corruption legislation in other jurisdictions.
(b) Directly or indirectly, use the proceeds of any Loan for any purpose which would breach the United States Foreign Corrupt
8.16 Minimum Liquidity.
Permit the amount of Unrestricted Cash of the Loan Parties held in Deposit Accounts for which the Administrative Agent shall have received a
Deposit Account Control Agreement at any time to be less than:
(i) if only the Term A Borrowing has occurred: $15,000,000;
(ii) if the Term B Borrowing has occurred but the Term C Loan Borrowing has not occurred: $20,000,000;
(iii) if the Term C Borrowing has occurred (and the Cure Right has not been exercised pursuant to Section 9.04): $15,000,000; and
(iv) if the Cure Right has been exercised pursuant to Section 9.04: $20,000,000.
8.17 Minimum Orladeyo Consolidated U.S. Net Product Sales.
As of the last day of each fiscal quarter of the Borrower (a “Test Date”) beginning with the first Test Date occurring immediately after the Term C
Borrowing Date, permit Orladeyo Consolidated U.S. Net Product Sales for the four-fiscal quarter period ending on such Test Date to be less than the
amount set forth in the table below:
Test Date ending after Term C Loan Borrowing Date:
Minimum Orladeyo Consolidated U.S. Net Product Sales
First Test Date
Second Test Date:
Third Test Date:
Fourth Test Date and each Test Date thereafter:
8.18 MDCP.
$[***]
$[***]
$[***]
$[***]
(a) Permit MDCP to (a) conduct any business operations, (b) have any cash or other assets (including any licenses or permits) or any
liabilities (other than de minimis assets or liabilities as required by applicable Law), (c) own any Equity Interests of any Loan Party or any other
Subsidiary of any Loan Party or (d) operate any part of the business of any Loan Party or any other Subsidiary.
(b) Directly or indirectly, (A) make any Investment in MDCP or (B) sell, transfer, license, lease or dispose of any asset or property of
such Loan Party or Subsidiary to MDCP.
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
9.01 Events of Default.
Any of the following shall constitute an Event of Default:
(a) Non-Payment. The Borrower or any other Loan Party fails to pay (i) when and as required to be paid herein, any amount of
principal of any Loan (including any prepayment or repayment premium or exit fee due in connection with such principal amount), or (ii) within three
Business Days after the same becomes due, any interest on any Loan, any fee due hereunder or any other amount payable hereunder or under any other
Loan Document; or
7.02, 7.03, 7.05 (solely as to any Loan Party), 7.10, 7.11, 7.12, 7.14, 7.16, 7.17, 7.18(b), 7.19, 7.20, 7.21 or 7.22 or Article VIII; or
(b) Specific Covenants. Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 7.01,
(c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in subsection (a) or (b)
above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days after the earlier to occur of
the date on which (i) a Responsible Officer of any Loan Party becomes aware of such failure or (ii) written notice thereof shall have been given to any
Loan Party by the Administrative Agent or any Lender; or
(d) Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on
behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith
shall be incorrect or misleading in any material respect (and in all respects if any such representation or warranty is already qualified by materiality or
reference to Material Adverse Effect) when made or deemed made; or
(e) Cross-Default. (i) Any Loan Party or any Subsidiary (A) fails to make any payment beyond any applicable grace period (whether
by scheduled maturity, required repayment or prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than
Indebtedness hereunder, Indebtedness under Swap Contracts and Indebtedness under the JPR Indenture) having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more
than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or
contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is
to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of
such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, repay, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii)
there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such
Swap Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so
defined) under such Swap Contract as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event, the Swap
Termination Value owed by the Borrower or such Subsidiary as a result thereof is greater than the Threshold Amount; or
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(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries (i) institutes or consents to the institution of any proceeding
under any Debtor Relief Law, or(ii) makes an assignment for the benefit of creditors; or(iii) applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, Examiner or similar officer for it or for all or any material part of its property;or, (iv) is
adjudicated as insolvent or to be liquidated, (v) takes any corporate action for the purpose of any of (i) through (iv) of this Section 9.01(f), (vi) any
receiver, trustee, custodian, conservator, liquidator, rehabilitator, Examiner or similar officer is appointed without the application or consent of such
Person and the appointment continues undischarged or unstayed for sixty (60) calendar days; or, (vii) any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or
unstayed for sixty (60) calendar days, or (viii) an order for relief is entered in any such proceeding; or
(g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any of its Subsidiaries becomes unable or admits in writing its inability
or fails generally to pay its debts as they become due, or is declared to be unable to pay its debts under applicable Law, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released,
vacated or fully bonded within thirty (30) days after its issue or levy; or
(h) Judgments. There is entered against any Loan Party or any Subsidiary (i) one or more final judgments or orders for the payment of
money in an aggregate amount exceeding $[***] (to the extent not covered by independent third-party insurance as to which the insurer does not dispute
coverage) or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order or (B) such
judgment or order shall not have been vacated or discharged or stayed or bonded pending appeal within thirty (30) calendar days from entry thereof; or
(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount
in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in
excess of the Threshold Amount; or
(j) Invalidity of Loan Documents. Any Loan Document, at any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder, ceases to be in full force and effect; or any Loan Party or any other Person contests in any manner the
validity or enforceability of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any Loan Document, or
purports to revoke, terminate or rescind any Loan Document; or
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could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect; or
(k) Material Adverse Effect. There occurs any circumstance or circumstances that has had, either individually or in the aggregate, or
(l) Change of Control. There occurs any Change of Control; or
(m) Invalidity of Subordination Provisions. Any subordination provision in any document or instrument governing Indebtedness that
is purported to be subordinated to the Obligations or any subordination provision in any subordination agreement that relates to any Indebtedness that is to
be subordinated to the Obligations, or any subordination provision in any guaranty by any Loan Party of any such Indebtedness, shall cease to be in full
force and effect, or any Person (including any holder of any such Indebtedness) shall contest in any manner the validity, binding nature or enforceability
of any such provision; or
(n) Injunction. Any court order enjoins, restrains, or prevents any Loan Party from conducting any material part of its business for a
period of thirty (30) consecutive days during which a stay of enforcement of such court order, by reason of a pending appeal or otherwise, is not in effect;
or
(o) Regulatory Matters. If any of the following occurs: (i) the FDA, CMS, EMA, DEA, or any other Governmental Authority issues a
letter or other written communication asserting that any approved Product lacks a Material Required Permit or does not comply with applicable Law, in
each such case described in this clause (o), that causes such Loan Party or its applicable Subsidiary to discontinue, materially adversely alter or suspend
manufacturing, or cease distribution of any of its Material Products, or causes a delay in the manufacture or offering of any of its Material Products, that
could reasonably be expected, either individually or in the aggregate, to result in a material adverse effect on any Product Development and
Commercialization Activities; (ii) any involuntary or voluntary recall of any Material Product that could reasonably be expected, either individually or in
the aggregate, to have a Material Adverse Effect; or (iii) any Loan Party or any Subsidiary enters into a settlement agreement with the FDA, CMS, EMA,
DEA, or any other Governmental Authority that could reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect.;
or
(p) [Reserved].
(q) Third Party Payor Arrangements. If any of the following occurs: a Loan Party or any officer, director, chief operating officer, chief
financial officer, treasurer, secretary or senior vice president of a Loan Party (A) shall have been found guilty of an act of fraud or been convicted of a
felony crime that relates to any services provided by any Loan Party to a Third Party Payor or in connection with a Third Party Payor Arrangement or (B)
shall have been indicted for a felony crime relating to any services provided by any Loan Party to a Third Party Payor or in connection with a Third Party
Payor Arrangement; or
(r) Overpayment. If any Loan Party is found to have been overpaid by a Government Account Debtor by more than the Threshold
Amount during any period covered by an audit conducted by such Government Account Debtor, and such Loan Party has not within thirty (30) days after
its receipt of knowledge of such overpayment either (i) repaid or reserved for such overpayment in a manner reasonably acceptable to the Required
Lenders or (ii) notified the applicable Government Account Debtor or Governmental Authority and requested a repayment schedule for such
overpayment; or
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(s) Material Products. If any of the following occurs: (i) the FDA shall revoke, withdraw, suspend, cancel, materially adversely limit,
terminate or materially adversely modify any approved Required Permit related to any Material Product; (ii) any Governmental Authority (other than the
FDA) shall revoke, withdraw, suspend, cancel, materially limit, terminate or materially modify any approved Required Permit related to any Material
Product (in each case, a “Non-FDA Governmental Action”) and, in any such case, Consolidated Revenues shall decrease by greater than [***], as
assessed as at the end of each of the four fiscal quarters immediately following such Non-FDA Governmental Action by comparing Consolidated
Revenues for the four fiscal quarter period most recently ended prior to such Non-FDA Governmental Action for which the Borrower was required to
deliver financial statements pursuant to Section 7.01(a) or (b) as against Consolidated Revenues for the four fiscal quarter period ending on the applicable
date of assessment; or (iii) any Safety Notice is issued or initiated in connection with any Material Product after approval by the FDA or any other
Governmental Authority and Consolidated Revenues shall decrease by greater than [***], as assessed as at the end of each of the four fiscal quarters
immediately following the issuance or initiation of such Safety Notice by comparing Consolidated Revenues for the four fiscal quarter period most
recently ended prior to the issuance or initiation of such Safety Notice for which the Borrower was required to deliver financial statements pursuant to
Section 7.01(a) or (b) as against Consolidated Revenues for the four fiscal quarter period ending on the applicable date of assessment;
(t) Royalty Financing and Other Royalty Financings. (i) The Borrower or any Subsidiary fails to pay within [***] after the same
becomes due any amount owing under any Royalty Financing Document or any Other Royalty Financing Document, unless the amount of such payment
is otherwise being disputed in good faith by the Borrower or such Subsidiary, in accordance with the terms of such Royalty Financing Document or Other
Royalty Financing Documents, as applicable or (ii) any other material breach or default under any Royalty Financing Document or any Other Royalty
Financing Document occurs and continues unremedied for more than thirty (30) days; or
(u) Public Securities Exchange. The Borrower’s equity fails to remain registered with the SEC in good standing; or
on a national stock exchange in the United States (such as NASDAQ, NYSE, AMEX or any successor thereto); or
(v) Delisting. The Borrower fails to maintain at least one class of common shares of the Borrower which is subject to price quotations
(w) Non-Permitted License and Non-Permitted Royalty Financing. The Borrower or any Subsidiary enters into a Non-Permitted
License or a Non-Permitted Royalty Financing.
9.02 Remedies Upon Event of Default.
If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required
Lenders may take any or all of the following actions:
terminated;
(a) declare the commitment of each Lender to make Loans to be terminated, whereupon such commitments and obligations shall be
(b) declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, prepayment and repayment
premiums thereto (if any), the Make-Whole Amount and exit fees and all other amounts owing or payable hereunder or under any other Loan Document
(including the amounts payable pursuant to Section 2.04(b)) to be immediately due and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Loan Parties; and
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the Loan Documents;
(c) exercise on behalf of itself and the Lenders all rights and remedies available to the Administrative Agent and/or the Lenders under
provided, however, that upon the occurrence of an Event of Default under Section 9.01(f) or (g), the obligation of each Lender to make any Loans and
each of the Commitments shall automatically terminate, the unpaid principal amount of all outstanding Loans and all interest, prepayment and repayment
premiums, including the Make-Whole Amount, exit fees and other amounts as aforesaid shall automatically become due and payable, in each case
without further act of the Administrative Agent or any Lender.
Upon the Loans becoming due and payable under this Section 9.02, whether by declaration or acceleration (including automatic acceleration
triggered by any insolvency proceeding pursuant to Section 9.01(f)), all outstanding NotesLoans, accrued and unpaid interest, the prepayment and
repayment premiums required by Section 2.03(d), including the Make-Whole Amount, the exit fee required by Section 2.07(b) and the other Obligations
(including the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount) shall become immediately due and payable. If the
Obligations are accelerated for any reason (including automatic acceleration triggered by any insolvency proceeding pursuant to Section 9.01(f)), the
prepayment and repayment premiums required by Section 2.03(d), including the Make-Whole Amount, and the exit fee required by Section 2.07(b) and
the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount will also be due and payable as though such Obligations were
voluntarily drawn and/or prepaid and any discount on the Loans shall be deemed earned in full and, in each case, shall constitute part of the Obligations,
in view of the impracticability and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation
of each Lender’s lost profits as a result thereof. Any prepayment or repayment premium required by Section 2.03(d), including the Make-Whole Amount,
or the exit fee required by Section 2.07(b) and the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount, payable
pursuant to the preceding sentence shall be presumed to be the liquidated damages sustained by each Lender as the result of the early termination and the
Loan Parties agree that it is reasonable under the circumstances currently existing. The prepayment and repayment premiums required by Section 2.03(d),
including the Make-Whole Amount, and the exit fee required by Section 2.07(b) and the amounts payable pursuant to Section 2.04(b), including the
Make-Whole Amount, shall also be payable, and any discount on the Loans shall be deemed earned in full, in each case, in the event that the Obligations
(and/or this Agreement) are satisfied or released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other
means. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER AND THE OTHER LOAN PARTIES EXPRESSLY WAIVE THE
PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE
FOREGOING PREPAYMENT OR REPAYMENT PREMIUM, INCLUDING ANY MAKE-WHOLE AMOUNT, EXIT FEE, AMOUNT AND ANY
DISCOUNT ON THE LOANS IN CONNECTION WITH ANY SUCH ACCELERATION. The Borrower and the other Loan Parties expressly agree that
(i) the prepayment and repayment premiums required by Section 2.03(d), including the Make-Whole Amount, the exit fee required by Section 2.07(b),
the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount, and discount on the Loans provided for herein, are reasonable
and are the product of an arm’s length transaction between sophisticated business people, ably represented by counsel, (ii) the prepayment and repayment
premiums required by Section 2.03(d), including the Make-Whole Amount, the exit fee required by Section 2.07(b), the amounts payable pursuant to
Section 2.04(b), including the Make-Whole Amount, and discount on the Loans, shall be payable notwithstanding the then prevailing market rates at the
time payment is made, (iii) there has been a course of conduct between the Lenders and the Borrower and the other Loan Parties giving specific
consideration in this transaction for such agreement to pay the prepayment and repayment premiums required by Section 2.03(d), including the Make-
Whole Amount, the exit fee required by Section 2.07(b), the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount, and
discount on the Loans, (iv) the Borrower and the other Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph
and (v) the prepayment premium required by Section 2.03(d), including the Make-Whole Amount, the exit fee required by Section 2.07(b), the amounts
payable pursuant to Section 2.04(b), including the Make-Whole Amount, and any discount on the Loans represent a good faith, reasonable estimate
and calculation of the lost profits or damages of the Lenders and that it would be impractical and extremely difficult to ascertain the actual amount of
damages to the Lenders or profits lost by the Lenders as a result of any early termination. The Borrower and the other Loan Parties expressly acknowledge
that their agreement to pay the prepayment and repayment premiums required by Section 2.03(d) and, including the Make-Whole Amount, the exit fee
required by Section 2.07(b) and the amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount, as herein described and
discount on the Loans to the Lenders as herein described, is a material inducement to the Lenders to make the Loans hereunder. The Loan Parties further
acknowledge that each lender has a right to maintain its investment in the Loans free from repayment by the Loan Parties (except as herein
specifically provided for) and that the provision for payment of the prepayment or repayment premium required by Section 2.03(d), including the
Make-Whole Amount, or the exit fee required by Section 2.07(b) and the amounts payable pursuant to Section 2.04(b), including the Make-Whole
Amount, if the Loans are prepaid or accelerated (including automatic acceleration triggered by any insolvency proceeding pursuant to Section
9.01(f)) as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.
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9.03 Application of Funds.
After the exercise of remedies provided for in Section 9.02 (or after the Loans have automatically become immediately due and payable as set
forth in the proviso to Section 9.02), any amounts received by any Lender or the Administrative Agent on account of the Obligations shall be applied by the
Administrative Agent in the following order:
First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges
and disbursements of counsel to the Administrative Agent and amounts payable under Articles III and X) payable to the Administrative Agent in
its capacity as such;
Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest,
prepayment and repayment premiums and exit fees) payable to the Secured Parties (other than the Administrative Agent) (including fees, charges
and disbursements of counsel to the respective Secured Parties (other than the Administrative Agent)) arising under the Loan Documents and
amounts payable under Articles III and X, ratably among them in proportion to the respective amounts described in this clause Second payable to
them;
Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on and prepayment and repayment premiums
and the exit fee with respect to the Loans, ratably among the Lenders in proportion to the respective amounts described in this clause Third held by
them;
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Fourth, to payment of that portion of the Obligations constituting accrued and unpaid principal of the Loans, ratably among the Lenders
in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
9.04 Cure Right. Notwithstanding anything to the contrary contained herein, in the event the Loan Parties fail to comply with the minimum
Orladeyo Consolidated U.S. Net Product Sales requirement set forth in Section 8.17 as of any Test Date, the Borrower shall have a one-time right (the
“Cure Right”), to repay in full the entire amount of the Term C Loans outstanding at such time together with all accrued and unpaid interest thereon plus
the prepayment or repayment premium required by Section 2.03(d) and the exit fee required under Section 2.07(b) plus any other fees or amounts payable
hereunder at such time. The exercise of the Cure Right shall be subject to the following conditions: (a) the Borrower shall have delivered to the
Administrative Agent irrevocable written notice of the Borrower’s intent to exercise the Cure Right with respect to such Test Date not later than 9:00 a.m.
on the date at least five (5) Business Days in advance the Borrower making the Cure Right payment and (b) such Cure Right payment shall be made by the
Borrower no later than thirty (30) days after such Test Date. Following the exercise of the Cure Right and the repayment in full pursuant to this Section
9.04, no Default or Event of Default under Section 9.01(b) for the failure to perform the covenant contained in Section 8.17 shall be deemed to have existed
for so long as, on a pro forma basis, the Loan Parties are in compliance with the financial covenant set forth in Section 8.16(iv).
ARTICLE X
INCREASED COSTS AND INABILITY TO DETERMINE RATES
10.01 Increased Costs, Etc.
(a) Increased Costs Generally. If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against
assets of, deposits with or for the account of, or credit extended or participated in by, any Lender;
(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes and (B) Excluded Taxes) on its loans, loan principal,
commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii) impose on any Lender any other condition, cost or expense (other than Taxes) affecting this Agreement; and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining any Loan (or of maintaining its obligation to make any such
Loan), then, upon written demand of such Lender, the Borrower will pay to such Lender, as the case may be, such additional amount or amounts
as will compensate such Lender, as the case may be, for such additional costs incurred or reduction suffered.
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(b) Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such
Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on
such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or
the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in
Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender, as the case may be, such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.
(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such
Lender or its holding company, as the case may be, as specified in clause (a) or (b) of this Section and delivered to the Borrower shall be conclusive
absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(d) Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s right to demand such compensation, provided, that, the Borrower shall not be required to
compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine (9)
months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such
Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then
the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).
10.02 Mitigation Obligations; Replacement of Lenders.
(a) Designation of a Different Lending Office. If any Lender requests compensation under Section 10.01 or requires the Borrower to
pay any Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 or if any
Lender gives a notice pursuant to Section 10.04, then at the request of the Borrower such Lender shall, as applicable, use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or
10.01, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 10.04, as applicable, and (ii) in each case, would not
subject such Lender, as the case may be, to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
(b) Replacement of Lenders. If any Lender requests compensation under Section 10.01, or if the Borrower is required to pay any Taxes
or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01 and, in each case, such Lender
has declined or is unable to designate a different Lending Office in accordance with Section 10.02(a), the Borrower may replace such Lender in
accordance with Section 12.13.
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10.03 Inability to Determine Rates.
(a) If prior to the commencement of any Interest Period:
(i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (1) adequate
and reasonable means do not exist for ascertaining Three-Month LIBOR for such Interest Period; or
(ii) the Administrative Agent is advised by the Required Lenders that Three-Month LIBOR for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by as promptly as practicable thereafter. In the
event of any such determination, until the Administrative Agent has advised the Borrower that the circumstances giving rise to such notice no longer exist,
Three-Month LIBOR shall be determined by the Administrative Agent solely by reference to clause (ii) of the definition of Three-Month LIBOR.
(b) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, but without limiting
Section 10.03(a) above, upon the occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, the Administrative Agent and
the Borrower may amend this Agreement to replace Three-Month LIBOR with a Benchmark Replacement. Any such amendment with respect to a
Benchmark Transition Event will become effective at 5:00 p.m. on the fifth (5th) Business Day after the Administrative Agent has posted such proposed
amendment to all Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such
amendment from Lenders comprising the Required Lenders. Any such amendment with respect to an Early Opt-in Election will become effective on the
date that Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders accept such
amendment. No replacement of Three-Month LIBOR with a Benchmark Replacement pursuant to this Section 10.03 will occur prior to the applicable
Benchmark Transition Start Date.
(c) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the
Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the
contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become
effective without any further action or consent of any other party to this Agreement.
(d) Notices: Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the
Lenders of (i) any occurrence of a Benchmark Transition Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date
and Benchmark Transition Start Date, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement
Conforming Changes and (iv) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that
may be made by the Administrative Agent or Lenders pursuant to this Section 10.03, including any determination with respect to a tenor, rate or
adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be
conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in
each case, as expressly required pursuant to this Section 10.03.
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(e) Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability
Period, Three-Month LIBOR shall be determined by the Administrative Agent solely by reference to clause (ii) of the definition of Three-Month LIBOR
during such Benchmark Unavailability Period.
(f) Certain Defined Terms. As used in this Section 10.03:
“Benchmark Replacement” means the sum of: (a) the alternate benchmark rate (which may include Term SOFR) that has been selected
by the Administrative Agent and the Borrower giving due consideration to (i) any selection or recommendation of a replacement rate or the
mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for
determining a rate of interest as a replacement to Three-Month LIBOR for U.S. dollar-denominated syndicated credit facilities and (b) the
Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than 1.75% per annum, the
Benchmark Replacement will be deemed to be 1.75% per annum for the purposes of this Agreement.
“Benchmark Replacement Adjustment” means, with respect to any replacement of Three-Month LIBOR with an Unadjusted Benchmark
Replacement for each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment, (which
may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower giving due consideration to (i)
any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of
Three-Month LIBOR with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body or (ii) any evolving or then-
prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the
replacement of Three-Month LIBOR with the applicable Unadjusted Benchmark Replacement for U.S. dollar-denominated syndicated credit
facilities at such time.
“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or
operational changes (including changes to the definition of “Interest Period,” timing and frequency of determining rates and making payments of
interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of
such Benchmark Replacement and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with
market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if
the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of
administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).
“Benchmark Replacement Date” means the earlier to occur of the following events with respect to Three-Month LIBOR:
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(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or
publication of information referenced therein and (b) the date on which the administrator of Three-Month LIBOR permanently or indefinitely
ceases to provide Three-Month LIBOR; or
(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of
information referenced therein.
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to Three-Month LIBOR:
(1) a public statement or publication of information by or on behalf of the administrator of Three-Month LIBOR announcing that such
administrator has ceased or will cease to provide Three-Month LIBOR, permanently or indefinitely, provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide Three-Month LIBOR;
(2) a public statement or publication of information by the regulatory supervisor for the administrator of Three-Month LIBOR, the
U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for Three-Month LIBOR, a resolution authority
with jurisdiction over the administrator for Three-Month LIBOR or a court or an entity with similar insolvency or resolution authority over
the administrator for Three-Month LIBOR, which states that the administrator of Three-Month LIBOR has ceased or will cease to provide
Three-Month LIBOR permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor
administrator that will continue to provide Three-Month LIBOR; or
(3) a public statement or publication of information by the regulatory supervisor for the administrator of Three-Month LIBOR
announcing that Three-Month LIBOR is no longer representative.
“Benchmark Transition Start Date” means (a) in the case of a Benchmark Transition Event, the earlier of (i) the applicable Benchmark
Replacement Date and (ii) if such Benchmark Transition Event is a public statement or publication of information of a prospective event, the 90th
day prior to the expected date of such event as of such public statement or publication of information (or if the expected date of such prospective
event is fewer than 90 days after such statement or publication, the date of such statement or publication) and (b) in the case of an Early Opt-in
Election, the date specified by the Administrative Agent or the Required Lenders, as applicable, by notice to the Borrower, the Administrative
Agent (in the case of such notice by the Required Lenders) and the Lenders.
“Benchmark Unavailability Period” means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred
with respect to Three-Month LIBOR and solely to the extent that Three-Month LIBOR has not been replaced with a Benchmark Replacement, the
period (x) beginning at the time that such Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced
Three-Month LIBOR for all purposes hereunder in accordance with this Section 10.03 and (y) ending at the time that a Benchmark Replacement
has replaced Three-Month LIBOR for all purposes hereunder pursuant to this Section 10.03.
“Early Opt-in Election” means the occurrence of:
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(1) (i) a determination by the Administrative Agent or (ii) a notification by the Required Lenders to the Administrative Agent (with a
copy to the Borrower) that the Required Lenders have determined that U.S. dollar-denominated syndicated credit facilities being executed at
such time, or that include language similar to that contained in this Section 10.03 are being executed or amended, as applicable, to incorporate
or adopt a new benchmark interest rate to replace Three-Month LIBOR, and
(2) (i) the election by the Administrative Agent or (ii) the election by the Required Lenders to declare that an Early Opt-in Election has
occurred and the provision, as applicable, by the Administrative Agent of written notice of such election to the Borrower and the Lenders or
by the Required Lenders of written notice of such election to the Administrative Agent.
“Federal Reserve Bank of New York’s Website” means
the website of
the Federal Reserve Bank of New York at
http://www.newyorkfed.org, or any successor source.
“Relevant Governmental Body” means the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee
officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto.
“SOFR” with respect to any day means the secured overnight financing rate published for such day by the Federal Reserve Bank of New
York, as the administrator of the benchmark, (or a successor administrator) on the Federal Reserve Bank of New York’s Website.
“Term SOFR” means the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant
Governmental Body.
“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.
10.04 Illegality. If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is
unlawful, for any Lender to make or maintain any Loan whose interest is determined by reference to Three-Month LIBOR, or to determine or charge
interest rates based upon Three-Month LIBOR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to
purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the
Administrative Agent, (a) any obligation of such Lender to make or maintain or charge interest with respect to any such Loan whose interest is determined
by reference to Three-Month LIBOR shall be suspended, and (b) the interest rate on the Loans of such Lender shall, if necessary to avoid such illegality, be
determined by the Administrative Agent without reference to clause (y) in the definition of Three-Month LIBOR, in each case until such Lender notifies
the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice by the
Administrative Agent and the Borrower, all Loans of such Lender the interest rate on which is determined by reference to clause (y) in the definition of
Three-Month LIBOR shall be determined by the Administrative Agent without reference to clause (y) in the definition of Three-Month LIBOR, until such
Lender notifies the Administrative Agent and the Borrower that the circumstance giving rise to such determination no longer exist.
10.05 Survival. All of the Borrower’s obligations under this Article X shall survive termination of the Commitments, prepayment or repayment
of all Obligations hereunder and resignation of the Administrative Agent.
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ARTICLE XI
ADMINISTRATIVE AGENT
11.01 Appointment and Authority.
(a) Each of the Lenders hereby irrevocably appoints Athyrium Opportunities III Co-Invest 1 LP, a Delaware limited partnership, to act
on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on
its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions, powers and
discretion as are incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the
Borrower nor any other Loan Party shall have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the
term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any
fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead such term is used as a matter of market
custom, and is intended to create or reflect only an administrative relationship between contracting parties.
(b) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders hereby
irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and
all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such actions, powers and discretion as are
incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the
Administrative Agent pursuant to Section 11.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of
all provisions of this Article XI and Article XII, as though such co-agents, sub-agents and attorneys-in-fact were the “Administrative Agent” under the
Loan Documents as if set forth in full herein with respect thereto. The Administrative Agent is hereby authorized to enter into the Intercreditor Agreement
and any other intercreditor agreement or subordination agreement contemplated by the terms of this Agreement, and each Lender agrees to be bound by
the terms of the Intercreditor Agreement and such other intercreditor agreement or subordination agreement and directs the Administrative Agent to enter
into the Intercreditor Agreement and such other intercreditor agreement or subordination agreement, in each case, on behalf of the Secured Parties and
agrees that the Administrative Agent may take such actions on its behalf as is contemplated by the terms of the Intercreditor Agreement or such other
intercreditor agreement or subordination agreement.
11.02 Rights as a Lender.
The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent, and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated
or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its
Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally
engage in any kind of business with any Loan Party or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.
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11.03 Exculpatory Provisions.
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its
duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent:
(a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents),
provided, that, the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable law, including for the avoidance of doubt any action that may be
in violation of the automatic stay under any Debtor Relief Law or that may affect a forfeiture, modification or termination of property of a Defaulting
Lender in violation of any Debtor Relief Law; and
(c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable
for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as
the Administrative Agent or any of its Affiliates in any capacity.
The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary,
under the circumstances as provided in Section 12.01 and Section 9.02) or (ii) in the absence of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction by final and non-appealable judgment. The Administrative Agent shall be deemed not to have knowledge
of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender.
The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation
made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article V or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
11.04 Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it
to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement
made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the
Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan
Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
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11.05 Delegation of Duties.
The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document
by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and
all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. The Administrative Agent shall not
be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non-
appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents.
11.06 Resignation of Administrative Agent.
The Administrative Agent may resign as Administrative Agent at any time by giving thirty (30) days advance notice thereof to the Lenders and the
Borrower and, thereafter, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. Upon any such resignation, the
Required Lenders shall have the right, subject to the approval of the Borrower (so long as no Event of Default has occurred and is continuing; such
approval not to be unreasonably withheld), to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed
by the Required Lenders, been approved (so long as no Event of Default has occurred and is continuing) by the Borrower or have accepted such
appointment within thirty (30) days after the Administrative Agent’s giving of notice of resignation, then the Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent reasonably acceptable to the Borrower (so long as no Default or Event of Default has occurred and is
continuing). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor
Administrative Agent shall thereupon succeed to and become vested with all rights, powers, privileges and duties of the retiring Administrative Agent.
After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Section 11.06 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. If no successor has accepted appointment as
Administrative Agent by the date which is thirty (30) days following a retiring Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and the Required Lenders shall perform all of the duties of the Administrative Agent
hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. In the event that a new Administrative Agent is
appointed and such Administrative Agent is not an Affiliate of the holders of a majority in interest of the Loans, then the Borrower shall agree to pay to
such Administrative Agent the fees and expenses (such fees to be payable annually in advance) that such Administrative Agent may reasonably request in
connection with its appointment and service.
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11.07 Non-Reliance on Administrative Agent and Other Lenders.
Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their
Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder
or thereunder.
11.08 Administrative Agent May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall
be entitled and empowered, by intervention in such proceeding or otherwise:
(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other
Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and
the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the
Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Section 12.04)
allowed in such judicial proceeding; and
(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Section 12.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any
Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
11.09 Collateral and Guaranty Matters.
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The Lenders irrevocably authorize the Administrative Agent, at its option and in its discretion,
(a) to release any Lien on any Collateral granted to or held by the Administrative Agent under any Loan Document (i) upon payment
in full of all Obligations (other than contingent indemnification obligations for which no claim has been asserted) under the Loan Documents and the
termination of all unused Commitments, (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with
any sale or other Disposition permitted hereunder or any Involuntary Disposition, or (iii) as approved in accordance with Section 12.01;
any Lien on such property that is permitted by Section 8.01(i); and
(b) to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of
(c) to release any Guarantor from its obligations under the Guaranty (i) if such Person ceases to be a Subsidiary as a result of a
transaction permitted under the Loan Documents or (ii) upon payment in full of all Obligations (other than contingent indemnification obligations for
which no claim has been asserted) under the Loan Documents and the termination of all unused Commitments.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to
release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty,
pursuant to this Section 11.09. At any time that a Loan Party desires the Administrative Agent to take any action pursuant to this Section 11.09,
such Loan Party shall deliver a certificate signed by a Responsible Officer of such Loan Party stating that the action is permitted pursuant to this
Section 11.09 and the terms of this Agreement.
The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the
existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any
certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any
failure to monitor or maintain any portion of the Collateral.
ARTICLE XII
MISCELLANEOUS
12.01 Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or
any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the
case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, further, that:
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(a) no such amendment, waiver or consent shall:
(i) extend or increase the Commitment of a Lender (or reinstate any Commitment terminated pursuant to Section 9.02) without the
written consent of such Lender whose Commitment is being extended or increased (it being understood and agreed that a waiver of any condition
precedent set forth in Section 5.02 or of any Default or a mandatory reduction in Commitments is not considered an extension or increase in
Commitments of any Lender);
(ii) postpone any date fixed by this Agreement or any other Loan Document for any payment of principal (excluding mandatory
repayments and prepayments), interest, prepayment or repayment premiums, the exit fee, fees or other amounts due to the Lenders (or any of
them) or any scheduled or mandatory reduction of the Commitments hereunder or under any other Loan Document without the written consent of
each Lender entitled to receive such payment or whose Commitments are to be reduced;
(iii) reduce the principal of, the rate of interest specified herein on or the prepayment or repayment premiums or exit fees specified
herein for any Loan, or any fees or other amounts payable hereunder or under any other Loan Document without the written consent of each
Lender entitled to receive such payment of principal, interest, fees or other amounts; provided, however, that, only the consent of the Required
Lenders shall be necessary to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest at the Default
Rate;
(iv) change any provision of this Section 12.01(a), Section 2.11, the definition of “Required Lenders,” change the waterfall set forth in
Section 9.03 or otherwise or have the effect of changing the priority or pro rata treatment of any payments (including voluntary and mandatory
repayments and prepayments), Liens, proceeds of Collateral or reductions in Commitments (including as a result in whole or in part of allowing
the issuance or incurrence, pursuant to this Agreement or otherwise, of new loans or other Indebtedness having any priority over any of the
Obligations in respect of payments, Liens, Collateral or proceeds of Collateral, in exchange for any Obligations or otherwise), in each case,
without the written consent of each Lender directly affected thereby;
(v) release all or substantially all of the Collateral without the written consent of each Lender directly affected thereby, except to the
extent the release of the Collateral is expressly permitted by Section 11.09 (in which case such release may be made by the Administrative Agent
acting alone);
(vi) release the Borrower or, except in connection with a merger, amalgamation or consolidation permitted under Section 8.04, all or
substantially all of the Guarantors without the written consent of each Lender directly affected thereby, except to the extent the release of any
Guarantor is permitted pursuant to Section 11.09 (in which case such release may be made by the Administrative Agent acting alone);
(vii) advance the date fixed for, or increase, any scheduled installment of principal due to any of the Lenders under any Loan
Document, in each case, without the written consent of each Lender directly affected thereby;
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it being agreed that (X) all Lenders shall be deemed to be directly and adversely affected by an amendment, waiver or supplement described in the
preceding clause (iv), (v), (vi) or (vii) and (Y) notwithstanding anything to the contrary in the preceding clause (X), only those Lenders that have
not been provided a reasonable opportunity, as determined in the good faith judgment of Administrative Agent, to receive the most-favorable
treatment under or in connection with the applicable amendment, waiver or supplement described in the preceding clause (iv), (v), (vi) or (vii)
(other than the right to receive customary administrative agency, arranging, underwriting and other similar fees) that is provided to any other
Person, including the opportunity to participate on a pro rata basis on the same terms in any new loans or other Indebtedness permitted to be issued
as a result of such amendment, waiver or supplement, shall be deemed to be directly and adversely affected by such amendment, waiver or
supplement; and
(b) unless also signed by the Administrative Agent, no amendment, waiver or consent shall affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; provided, however, that, notwithstanding anything to the contrary herein, (i) no
Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent
which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than
Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender and
(y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender
more adversely than other affected Lenders shall require the consent of such Defaulting Lender, (ii) each Lender is entitled to vote as such Lender sees fit
on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy
Code of the United States supersedes the unanimous consent provisions set forth herein and (iii) the Required Lenders shall determine whether or not to
allow a Loan Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and such determination shall be binding on all of the
Lenders.
Notwithstanding anything to the contrary contained herein, (i) the Administrative Agent and the Borrower may make amendments contemplated by Section
10.03, (ii) the Borrowers and the Administrative Agent may, without the input or consent of any other Lender, make technical, administrative or operational
amendments to the Loan Documents as are advisable in their good faith judgment in connection with (A) the addition of Non-U.S. Subsidiaries as Loan
Parties and (B) the inclusion of the assets of such Non-U.S. Subsidiaries as Collateral, (iii) if the Administrative Agent and the Borrower have jointly
identified an obvious error or any error or omission of a technical or immaterial nature, in each case, in any provision of the Loan Documents (including,
for the avoidance of doubt, any exhibit, schedule or annex thereto), then the Administrative Agent and the Borrower shall be permitted to amend such
provision and such amendment shall become effective without any further action or consent of any other party to any Loan Document.
12.02 Notices and Other Communications; Facsimile Copies.
(a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and
except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by facsimile as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
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(i) if to the Borrower or any other Loan Party or the Administrative Agent, to the address, facsimile number, electronic mail address or
telephone number specified for such person on Schedule 12.02; and
(ii) if to any other Lender, to the address, facsimile number, electronic mail address or telephone number of its Lending Office (whether
specified on Schedule 12.02 or separately specified to the Borrower and the Administrative Agent).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have
been given when received; notices and other communications sent by facsimile shall be deemed to have been given when sent (except that, if not given
during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient).
Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as
provided in such subsection (b).
(b) Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided,
that, the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable
of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may each, in its discretion, agree to
accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided, that, approval of
such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received
upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail
or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed
receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available
and identifying the website address therefor; provided, that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the
normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next
business day for the recipient.
(c) Change of Address, Etc. Each of the Borrower, other Loan Parties, the Lenders and the Administrative Agent may change its
address, facsimile or telephone number for notices and other communications hereunder by notice to the other parties hereto. In addition, each Lender
agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name,
telephone number, facsimile number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire
instructions for such Lender.
(d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon
any notices (including telephonic or electronic Loan Notices) purportedly given by or on behalf of any Loan Party even if (i) such notices were not made
in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as
understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, each Lender and the
Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given
by or on behalf of a Loan Party. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the
Administrative Agent, and each of the parties hereto hereby consents to such recording.
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12.03 No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or
privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder
and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in
connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 11.01 for the
benefit of all the Secured Parties; provided, however, that, the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf
the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any
Lender from exercising setoff rights in accordance with Section 12.08 (subject to the terms of Section 2.11), or (c) any Lender from filing proofs of claim
or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and
provided, further, that, if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the
Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 11.01 and (ii) in addition to the matters set forth
in clauses (b) and (c) of the preceding proviso and subject to Section 2.11, any Lender may, with the consent of the Required Lenders, enforce any rights
and remedies available to it and as authorized by the Required Lenders.
12.04 Expenses; Indemnity; and Damage Waiver.
(a) Costs and Expenses. The Loan Parties shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent,
each Lender and their respective Affiliates (including the reasonable fees, charges and disbursements of counsel to the Administrative Agent or any
Lender), in connection with (A) the preparation, negotiation, execution and delivery of this Agreement and the other Loan Documents and (B) any
amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be
consummated) or the administration of this Agreement and the other Loan Documents and (ii) all out-of-pocket expenses incurred by the Administrative
Agent or any Lender (including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender) in connection with the
enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B)
in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in
respect of such Loans.
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(b) Indemnification by the Loan Parties. The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof) and
each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related expenses (including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who
may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other
Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or
the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its
Related Parties only, the administration of this Agreement and the other Loan Documents, (ii) any Loan or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Loan Party or any of its
Subsidiaries, or any Environmental Liability related in any way to a Loan Party or any of its Subsidiaries, or (iv) [***] or (vii) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a
third party or by the Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by
or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided, that, such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, if the Borrower or
other Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. Clauses
(a) and (b) of this Section 12.04 shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any
non-Tax claim.
(c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall (and shall cause each
Subsidiary to) not assert, and the Borrower hereby waives, and acknowledges that no other Person shall have, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or
thereby, any Loan or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the
use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information
transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.
(d) Reimbursement by Lenders. To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under
subsection (a) or (b) of this Section to be paid by them to the Administrative Agent (or any sub-agent thereof) or any Related Party thereof, each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent) or such Related Party, as the case may be, such Lender’s pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the Total Credit
Exposure at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be
made severally among them based on such Lender’s Applicable Percentage (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought), provided, further, that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the
case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), or against any Related Party thereof acting for the
Administrative Agent (or any such sub-agent) in connection with such capacity. The obligations of the Lenders under this subsection (d) are subject to the
provisions of Section 2.10(b).
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(e) Payments. All amounts due under this Section shall be payable not later than five (5) Business Days after demand therefor.
(f) Survival. The agreements in this Section and the indemnity provisions of Section 12.02(d) shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the Commitments and the repayment, prepayment, satisfaction or discharge of all
the other Obligations.
12.05 Marshalling; Payments Set Aside.
None of the Administrative Agent or the Lenders shall be under any obligation to marshal any assets in favor of any Loan Party or any other
Person or against or in payment of any or all of the Obligations. To the extent that any payment by or on behalf of any Loan Party is made to the
Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such
setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement
entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment had not
been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share
(without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b)
of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
12.06 Successors and Assigns; Transfers.
(a) Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon and
inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that the Borrower and the other
Loan Parties may not assign or otherwise transfer any of their respective rights or obligations hereunder or thereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of clause (b) of this Section, (ii) by way of participation in accordance with the provisions of clause (d) of this
Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of clause (e) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this
Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
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(b) Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including all or a portion of its Commitments under any Facility and the Loans at the time owing to
it (in each case with respect to any Facility)); provided, that, any such assignment shall be subject to the following conditions:
(i) Minimum Amounts.
(A) in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment with respect to
any Facility and/or the Loans with respect to any Facility at the time owing to it or contemporaneous assignments to related Approved
Funds that equal at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to
a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B) in any case not described in clause (b)(i)(A) of this Section, the aggregate amount of the applicable Commitment
(which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal
outstanding balance of the Loans with respect to any Facility of the assigning Lender subject to each such assignment, determined as
of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade
Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $[***] unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such
consent not to be unreasonably withheld or delayed);
(ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all of the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans or the Commitment assigned;
(iii) Required Consents. No consent shall be required for any assignment except to the extent required by clause (b)(i)(B) of this
Section and, in addition:
(A) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1)
an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund; provided, that, the Borrower shall be deemed to have consented to any such
assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after
having received notice thereof;
(B) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required
for assignments in respect of (i) any unfunded Commitment if such assignment is to a Person that is not a Lender with a Commitment in
respect of the applicable Facility, an Affiliate of such Lender or an Approved Fund with respect to such Lender or (ii) any Loan to a
Person that is not a Lender, an Affiliate of a Lender or an Approved Fund;
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(iv) Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption. The assignee, if it is not a Lender, shall deliver to the Administrative Agent such information, including notice information, as
the Administrative Agent shall reasonably require.
(v) No Assignment to Certain Persons. No such assignment shall be made (A) to the Borrower or any of the Borrower’s Affiliates or
Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries or any Person who, upon becoming a Lender hereunder, would constitute any
of the foregoing Persons described in this clause (B) or (C) to a natural Person.
(vi) Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no
such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall
make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which
may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with
the consent of the Borrower and the Administrative Agent, the applicable pro rata share of Loans previously requested but not funded by the
Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to (x) pay and satisfy in full all payment
liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon) and (y)
acquire (and fund as appropriate) its full pro rata share of all Loans in accordance with its Applicable Percentage. Notwithstanding the foregoing,
in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law
without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all
purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c) of this Section, from and after the effective date specified in
each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be
entitled to the benefits of Sections 3.01, 10.01 and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment.
Upon request, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this clause shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with clause (d) of this Section.
(c) Register. The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the
Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for
the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). Notwithstanding anything to the contrary in any Loan Document, the entries
in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name
is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. In addition, the Administrative Agent
shall maintain on the Register information regarding the designation, and revocation of designation, of any Lender as a Defaulting Lender. The Register
shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
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(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell
participations to any Person (other than a natural Person, a Defaulting Lender (or a holding company, investment vehicle or trust for, or owned and
operated for the primary benefit of a natural Person) or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Commitments and/or Loans owing to it);
provided, that, (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. For the avoidance of doubt, each Lender
shall be responsible for the indemnity under Section 12.04(d) without regard to the existence of any participation.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided, that, such agreement or
instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described
in clauses (i) through (vi) of Section 12.01(a) that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of
Section 3.01 (subject to the requirements and limitations therein (it being understood that the documentation required under Section 3.01(f) shall be
delivered to the participating Lender)) and Section 10.01 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section; provided, that, such Participant (A) agrees to be subject to the provisions of Sections 10.02 and 12.13 as if it were an assignee
under paragraph (b) of this Section and (B) shall not be entitled to receive any greater payment under Section 3.01 or 10.01, with respect to any
participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement
to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a
participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section
12.02 with respect to any Participant. To the fullest extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though
it were a Lender; provided, that, such Participant agrees to be subject to Section 2.11 as though it were a Lender. Each Lender that sells a participation
shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant
and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant
Register”); provided, that, no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any
Participant or any information relating to a Participant’s interest in any commitments, loans or its other obligations under any Loan Document) to any
Person except to the extent that such disclosure is necessary to establish that such commitment, loan or other obligation is in registered form under Section
5f.103-1(c) of the Treasury Regulations. Notwithstanding anything to the contrary in any Loan Document, the entries in the Participant Register shall be
conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such
participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its
capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
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(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this
Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided, that, no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.
12.07 Treatment of Certain Information; Confidentiality.
Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent required or requested by any
regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to
any other party hereto, (e) as may be reasonably necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or
any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any Participant, assignee or transferee (or its Related Parties) of, or
any prospective Participant, assignee or transferee (or its Related Parties) of, any of its rights and obligations under this Agreement or (ii) any actual or
prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to a Loan Party and
its obligations, this Agreement or payments hereunder, (g) on a confidential basis to (i) any rating agency in connection with rating the Borrower or its
Subsidiaries or the credit facilities provided hereunder or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and
monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, (h) with the consent of the Borrower, (i) to
the members of its investment committee (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature
of such Information and instructed to keep such Information confidential) or (j) to the extent such Information (x) becomes publicly available other than as
a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than the Loan Parties.
For purposes of this Section, “Information” means all information received from a Loan Party or any Subsidiary relating to the Loan Parties or any
Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a
nonconfidential basis, provided, that, in the case of information received from a Loan Party or any Subsidiary after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
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12.08 Set-off.
If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time
and from time to time, after obtaining the prior written consent of the Administrative Agent, to the fullest extent permitted by applicable law, to set off and
apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in
whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party
against any and all of the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to
such Lender or its Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan
Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch office or Affiliate of
such Lender different from the branch office or Affiliate holding such deposit or obligated on such indebtedness; provided, that, in the event that any
Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further
application in accordance with the provisions of Section 2.12 and, pending such payment, shall be segregated by such Defaulting Lender from its other
funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders and (y) the Defaulting Lender shall provide promptly to the
Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of
setoff. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after
any such setoff and application, provided, that, the failure to give such notice shall not affect the validity of such setoff and application.
12.09 Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall
not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall
receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid
principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender
exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense,
fee, or premium rather than interest, (b) exclude voluntary repayments or prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
12.10 Counterparts; Integration; Effectiveness.
This Agreement and each of the other Loan Documents may be executed in counterparts (and by different parties hereto in different counterparts),
each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan
Documents, and any separate letter agreements with respect to fees payable to Athyrium or its Affiliates, the Lenders or Administrative Agent, constitute
the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 5.01, this Agreement shall become effective when it shall have been executed
by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by fax transmission or e-mail transmission (e.g.,
“pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Documents or certificate. Without
limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Loan Document,
upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart.
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12.11 Survival of Representations and Warranties.
All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in
connection herewith or therewith shall survive the execution and delivery hereof and thereof and shall continue in full force and effect as long as any Loan
or other Obligation hereunder shall remain unpaid or unsatisfied and until all of the Commitments have been terminated in accordance with the terms
hereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation
made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any other Obligation hereunder
shall remain unpaid or unsatisfied and until all of the Commitments have been terminated in accordance with the terms hereof.
12.12 Severability.
If any provision (or portion of a provision) of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions (or portion of such provision) of this Agreement and the other Loan Documents shall not
be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions (or
portions of such provisions) with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable
provisions (or portion of such provisions). The invalidity of a provision (or portion of a provision) in a particular jurisdiction shall not invalidate or
render unenforceable such provision (or portion of such provision) in any other jurisdiction. Without limiting the foregoing provisions of this Section
12.12, if and to the extent that the enforceability of any provisions (or portions of such provisions) in this Agreement relating to Defaulting Lenders shall
be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions (or portions of such provisions) shall be
deemed to be in effect only to the extent not so limited.
12.13 Replacement of Lenders.
If the Borrower is entitled to replace a Lender pursuant to the provisions of Section 10.02 or if any Lender is a Defaulting Lender or a Non-
Consenting Lender, then the Borrower may, at its sole expense and effort, upon written notice to such Lender and the Administrative Agent, require such
Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 12.06),
all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 10.01) and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment),
provided, that:
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(a) such Lender shall have received payment of an amount equal to one hundred percent (100%) of (x) the outstanding principal of its
Loans, accrued interest thereon and all other amounts payable to it hereunder and under the other Loan Documents (other than repayment or prepayment
premiums or the exit fee) from the assignee (to the extent of such outstanding principal and accrued interest) or the Borrower (in the case of all other
amounts) and (y) the repayment or prepayment premium required by Section 2.03(d) and the exit fee required under Section 2.07(b) in each case, from the
Borrower, as if such assignment was a prepayment of one hundred percent (100%) of the outstanding principal amount of such assignor’s Loans on the
effective date of such assignment;
(b) such assignment does not conflict with applicable Laws;
pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter; and
(c) in the case of any such assignment resulting from a claim for compensation under Section 10.01 or payments required to be made
(d) in the case of any such assignment resulting from a Non-Consenting Lender’s failure to consent to a proposed change, waiver,
discharge or termination with respect to any Loan Document, the applicable replacement bank, financial institution or Fund consents to the proposed
change, waiver, discharge or termination; provided, that, the failure by any Defaulting Lender or any Non-Consenting Lender to execute and deliver an
Assignment and Assumption shall not impair the validity of the removal of such Defaulting Lender or Non-Consenting Lender and the mandatory
assignment of such Defaulting Lender or Non-Consenting Lender’s outstanding Loans pursuant to this Section 12.13 shall nevertheless be effective
without the execution by such Defaulting Lender or Non-Consenting Lender of an Assignment and Assumption.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise,
the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
12.14 Governing Law; Jurisdiction; Etc.
(a) GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN
DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER
IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
(b) SUBMISSION TO JURISDICTION. EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT IT
WILL NOT (AND IT WILL NOT PERMIT ANY LOAN PARTY TO) COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY
KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE
ADMINISTRATIVE AGENT, ANY LENDER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY OTHER FORUM
OTHER THAN THE COURTS OF THE STATE OF NEW YORK AND ANY UNITED STATES DISTRICT COURT IN THE STATE OF NEW YORK,
AND ANY APPELLATE COURT FROM ANY THEREOF LOCATED IN NEW YORK COUNTY, NEW YORK, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK
STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES
HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN
THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY
LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY
JURISDICTION.
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(c) WAIVER OF VENUE. THE BORROWER AND EACH LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM
TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE
MANNER PROVIDED FOR NOTICES IN SECTION 12.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY
HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
12.15 Waiver of Right to Trial by Jury. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
12.16 Judgment Currency.
(a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into
another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business
Day immediately preceding the day on which final judgment is given.
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(b) The obligations of the Loan Parties in respect of any sum due to any party hereto or any holder of the Obligations owing hereunder
(the “Applicable Creditor”) shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than the currency in which such sum is
stated to be due hereunder (the “Agreement Currency”), be discharged only to the extent that, on the Business Day following receipt by the Applicable
Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the
relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than
the sum originally due to the Applicable Creditor in the Agreement Currency, the Loan Parties agree, as a separate obligation and notwithstanding any
such judgment, to jointly and severally indemnify the Applicable Creditor against such loss. The obligations of the Borrower contained in this Section
12.16 shall survive the termination of this Agreement, the termination of the Commitments and the payment of all other amounts owing hereunder.
12.17 Electronic Execution of Assignments and Certain Other Documents.
This Agreement and any document, amendment, approval, consent, information, notice, certificate, request, statement, disclosure or authorization
related to this Agreement (each a “Communication”), including Communications required to be in writing, may be in the form of an Electronic Record and
may be executed using Electronic Signatures. Each of the Loan Parties agrees that any Electronic Signature on or associated with any Communication shall
be valid and binding on each of the Loan Parties to the same extent as a manual, original signature, and that any Communication entered into by Electronic
Signature, will constitute the legal, valid and binding obligation of each of the Loan Parties enforceable against such in accordance with the terms thereof to
the same extent as if a manually executed original signature was delivered. Any Communication may be executed in as many counterparts as necessary or
convenient, including both paper and electronic counterparts, but all such counterparts are one and the same Communication. For the avoidance of doubt,
the authorization under this paragraph may include, without limitation, use or acceptance by the Administrative Agent and each of the Lenders of a
manually signed paper Communication which has been converted into electronic form (such as scanned into PDF format), or an electronically signed
Communication converted into another format, for transmission, delivery and/or retention. The Administrative Agent and each of the Lenders may, at its
option, create one or more copies of any Communication in the form of an imaged Electronic Record (“Electronic Copy”), which shall be deemed created
in the ordinary course of the such Person’s business, and destroy the original paper document. All Communications in the form of an Electronic Record,
including an Electronic Copy, shall be considered an original for all purposes, and shall have the same legal effect, validity and enforceability as a paper
record. Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any
form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided, further, without limiting the
foregoing, (a) to the extent the Administrative Agent has agreed to accept such Electronic Signature, the Administrative Agent and each of the Lenders
shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of any Loan Party without further verification and (b) upon the
request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by such manually executed counterpart. For
purposes hereof, “Electronic Record” and “Electronic Signature” shall have the meanings assigned to them, respectively, by 15 USC §7006, as it may be
amended from time to time.
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12.18 USA PATRIOT Act.
Each Lender that is subject to the PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the
Borrower that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies each Loan Party,
which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the PATRIOT Act. Each of the Loan Parties agrees to, promptly following a request by the
Administrative Agent or any Lender, provide all such other documentation and information that the Administrative Agent or such Lender requests in order
to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT
Act.
12.19 No Advisory or Fiduciary Relationship.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other
modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (a)(i)
the arranging and other services regarding this Agreement provided by the Administrative Agent, Athyrium and its Affiliates, and the Lenders are arm’s-
length commercial transactions between the Borrower and its Affiliates, on the one hand, and the Administrative Agent, Athyrium and its Affiliates and the
Lenders on the other hand, (ii) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate,
and (iii) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by
the other Loan Documents; (b)(i) the Administrative Agent, Athyrium and its Affiliates and each Lender is and has been acting solely as a principal and,
except as expressly agreed in writing by the relevant parties, has not been, is not and will not be acting as an advisor, agent or fiduciary, for the Borrower or
any of its Affiliates or any other Person and (ii) neither the Administrative Agent nor any Lender has any obligation to the Borrower or any of its Affiliates
with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the
Administrative Agent, Athyrium and its Affiliates and the Lenders and their respective Affiliates may be engaged in a broad range of transactions that
involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent, Athyrium or its Affiliates nor any Lender
has any obligation to disclose any of such interests to the Borrower or its Affiliates. To the fullest extent permitted by law, the Borrower hereby waives and
releases any claims that they may have against the Administrative Agent, Athyrium or its Affiliates or any Lenders with respect to any breach or alleged
breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.
12.20 Acknowledgement and Consent to Bail-In of EEAAffected Financial Institutions.
Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such
parties, each party hereto acknowledges that any liability of any Lender that is an EEAAffected Financial Institution arising under any Loan Document, to
the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEAthe applicable Resolution Authority and agrees
and consents to, and acknowledges and agrees to be bound by (a) the application of any Write-Down and Conversion Powers by an EEAthe applicable
Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEAAffected Financial Institution; and
(b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a
conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEAAffected Financial Institution, its parent
undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be
accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of
such liability in connection with the exercise of the write-down and conversion powers of any EEAWrite-Down and Conversion Powers of the
applicable Resolution Authority.
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12.21 Publicity. The Loan Parties will not directly or indirectly publish, disclose or otherwise use in any public disclosure, advertising material,
promotional material, press release or interview, any reference to the name, logo or any trademark of the Administrative Agent or any Lender or any of
their Affiliates or any reference to this Agreement or the financing evidenced hereby, in any case except as required by applicable Law, subpoena or
judicial or similar order, in which case the Loan Parties shall endeavor to give the Administrative Agent prior written notice of such publication or other
disclosure. Each Lender and each Loan Party hereby authorizes each Lender to publish the name of such Lender and each Loan Party, the existence of the
financing arrangements referenced under this Agreement, the primary purpose and/or structure of those arrangements, the amount of credit extended under
each facility, the title and role of each party to this Agreement, and the total amount of the financing evidenced hereby in any “tombstone”, comparable
advertisement or press release which such Lender elects to submit for publication. In addition, each Lender and each Loan Party agrees that each Lender
may provide lending industry trade organizations with information necessary and customary for inclusion in league table measurements after the Closing
Date. With respect to any of the foregoing, such authorization shall be subject to such Lender providing the Loan Parties and the other Lenders with an
opportunity to review and confer with such Lender regarding, and approve, the contents of any such tombstone, advertisement or information, as
applicable, prior to its initial submission for publication, but subsequent publications of the same tombstone, advertisement or information shall not require
any Loan Party’s approval.
12.22 Conflicts. Notwithstanding anything to the contrary contained herein or in any other Loan Document, in the event of any conflict or
inconsistency between this Agreement and any other Loan Document, the terms of this Agreement shall govern and control.
12.23 Acknowledgement by the Loan Parties. The Loan Parties acknowledge that, if the Loans are prepaid or accelerated (including
automatic acceleration triggered by any insolvency proceeding pursuant to Section 9.01(f)) as a result of an Event of Default), the legal, equitable
and contractual rights to which the Administrative Agent and the Lenders are entitled under this Agreement include the right to receive the
prepayment or repayment premium required by Section 2.03(d), the Make-Whole Amount, or the exit fee required by Section 2.07(b), and the
amounts payable pursuant to Section 2.04(b), including the Make-Whole Amount. The Loan Parties also acknowledge that payment of each of the
amounts set forth in the immediately preceding sentence will be necessary to cure all defaults if any Loan Party becomes a debtor in a proceeding
under the Bankruptcy Code and seeks to reinstate the Obligations pursuant to Section 1124(2) of the Bankruptcy Code. Accordingly, if any Loan
Party become a debtor in a proceeding under the Bankruptcy Code, the Administrative Agent and the Lenders shall be impaired for purposes of
any plan of reorganization or liquidation unless each of the amounts set forth in the first sentence of this Section 9.02(d) are paid in full pursuant
to any plan of reorganization or liquidation under Chapter 11 of the Bankruptcy Code.
[SIGNATURE PAGES FOLLOWON FILE WITH THE ADMINISTRATIVE AGENT]
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ANNEX B
COMPLEMENT INHIBITOR
[***]
Certain information has been omitted from this exhibit in places marked “[***]” because it is both not material and would likely cause
competitive harm to the registrant if publicly disclosed. In addition, certain personally identifiable information contained in this document,
marked “[***]” has been omitted from this exhibit pursuant to Item 601(a)(6) under Regulation S-K.
Exhibit 10.102
2021 PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
BIOCRYST PHARMACEUTICALS, INC.
AND
RPI 2019 INTERMEDIATE FINANCE TRUST
DATED AS OF NOVEMBER 19, 2021
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
Section 1.1
Section 1.2
Definitions
Certain Interpretations
ARTICLE 2 PURCHASE, SALE AND ASSIGNMENT OF THE 2021 REVENUE PARTICIPATION RIGHT
Section 2.1
Section 2.2
Section 2.3
Purchase, Sale and Assignment
Purchase Price
No Assumed Obligations, Etc.
ARTICLE 3 CLOSING
Section 3.1
Section 3.2
Section 3.3
Closing
Payment of Purchase Price
Bill of Sale
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
Section 4.1
Section 4.2
Section 4.3
Seller’s Representations and Warranties
Buyer’s Representations and Warranties
No Implied Representations and Warranties
ARTICLE 5 CONDITIONS TO CLOSING
Section 5.1
Section 5.2
Conditions to the Buyer’s Obligations
Conditions to the Seller’s Obligations
ARTICLE 6 COVENANTS
Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Section 6.6
Section 6.7
Section 6.8
Section 6.9
Section 6.10
Section 6.11
Section 6.12
Section 6.13
Reporting
Royalty Payments; Revenue Participation and Royalty Payment Details
Disclosures
Inspections and Audits of the Seller
Intellectual Property Matters.
In-Licenses
Out-Licenses and Permitted Sales.
Restricted Indebtedness
Diligence.
Efforts to Consummate Transactions
Further Assurances
No Impairment of Revenue Participation Right or Back-Up Security Interest
Certain Tax Matters.
ARTICLE 7 INDEMNIFICATION
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
General Indemnity
Notice of Claims
Limitations on Liability
Exclusive Remedy; No Duplication of Recovery under 2020 Agreement
Tax Treatment of Indemnification Payments
ARTICLE 8 CONFIDENTIALITY
Section 8.1
Section 8.2
Confidentiality
Authorized Disclosure
ARTICLE 9 TERMINATION; SURVIVAL; SURVIVAL OF 2020 AGREEMENT
Section 9.1
Section 9.2
Section 9.3
Mutual Termination
Automatic Termination
Survival
(i)
Page
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Section 9.4
Survival of 2020 Agreement
ARTICLE 10 MISCELLANEOUS
Section 10.1
Section 10.2
Section 10.3
Section 10.4
Section 10.5
Section 10.6
Section 10.7
Section 10.8
Section 10.9
Section 10.10
Section 10.11
Section 10.12
Section 10.13
Section 10.14
Section 10.15
Headings
Notices
Expenses
Assignment
Amendment and Waiver.
Entire Agreement
No Third Party Beneficiaries
Governing Law
Jurisdiction; Venue.
Severability
Specific Performance
Counterparts
Relationship of the Parties
Intercreditor Agreement
Trustee Capacity of Wilmington Trust, National Association
(ii)
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Index of Exhibits, Schedules and Annexes
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Exhibit E:
Exhibit F:
Exhibit G:
BCX9930
Complement Inhibitor
Amended and Restated Intercreditor Agreement
Stock Purchase Agreement
Bill of Sale
Form of Seller Opinion
Combined Royalty and Revenue Sharing Rates
(iii)
This 2021 PURCHASE AND SALE AGREEMENT, dated as of November 19, 2021 (this “Agreement”), is made and entered into by and between
RPI 2019 Intermediate Finance Trust, a Delaware statutory trust (the “Buyer”), and BioCryst Pharmaceuticals, Inc., a Delaware corporation (the “Seller”).
2021 PURCHASE AND SALE AGREEMENT
WHEREAS, the Seller is in the business of, among other things, developing and commercializing the Products;
W I T N E S S E T H:
WHEREAS, the Buyer and the Seller previously entered into that certain Purchase and Sale Agreement, dated December 7, 2020 (the “2020
Agreement”) pursuant to which the Buyer purchased the 2020 Revenue Participation Right from the Seller as further set forth in the 2020 Agreement (the
“2020 Transaction”);
WHEREAS, the Seller desires additional funding to, among other things, develop and commercialize the Products and the Buyer desires, on the
terms and conditions set forth herein, to provide the Seller with such additional funding; and
WHEREAS, the Buyer desires to purchase the 2021 Revenue Participation Right from the Seller in exchange for payment of the Purchase Price,
and the Seller desires to sell the 2021 Revenue Participation Right to the Buyer in exchange for the Buyer’s payment of the Purchase Price, in each case on
the terms and conditions set forth in this Agreement;
NOW THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the Seller and the Buyer hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, shall have the following meanings:
“2020 Agreement” is as defined in the recitals to this Agreement.
“2020 BCX9930 Royalty Payments” means, for each calendar quarter, an amount payable to the Buyer equal to (i) the amount of worldwide
aggregate BCX9930 Net Sales (other than Product Partnering Revenue attributable to BCX9930) during such calendar quarter, multiplied by one percent
(1%), plus (ii) the amount of Product Partnering Revenue attributable to BCX9930 during such calendar quarter, multiplied by one percent (1%).
“2020 Closing Date” means December 7, 2020, the date of closing of the 2020 Transaction under the 2020 Agreement.
“2020 Orladeyo Direct Sales Royalty Rate” means the percentage based on the applicable level of Orladeyo Direct Sales in a calendar year as set
forth in the chart below:
Payment Tiers based on Annual Orladeyo Direct Sales
2020 Orladeyo Direct Sales Royalty Rate
A. Annual Orladeyo Direct Sales of up to $350,000,000
B. Annual Orladeyo Direct Sales exceeding $350,000,000 and less than or
equal to $550,000,000
C. Annual Orladeyo Direct Sales in excess of $550,000,000
8.75%
2.75%
0%
“2020 Orladeyo Indirect Revenue Sharing Rate” means the percentage based on the applicable level of Orladeyo Indirect Revenue in a calendar
year as set forth in the chart below:
Applicable Orladeyo Indirect Revenue
2020 Orladeyo Indirect Revenue Sharing Rate
Orladeyo Indirect Revenue Threshold
A. Orladeyo Indirect Revenue that does not constitute
(a) Orladeyo Indirect Royalties or (b) a milestone
payment attributable to a threshold of commercial
sales achieved or similar sales-based measurement
(such Orladeyo Indirect Revenue set forth in this Row
A, the “Orladeyo Flat Rate Indirect Revenue”)
B. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
C. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
D. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
20%
20%
10%
0%
2
N/A
Annual Orladeyo Indirect Sales up to
$150,000,000 in such calendar year
Annual Orladeyo Indirect Sales exceeding
$150,000,000 and less than or equal to
$230,000,000 in such calendar year
Annual Orladeyo Indirect Sales exceeding
$230,000,000 in such calendar year
“2020 Orladeyo Royalty Payments” means, for each calendar quarter, an amount payable to the Buyer equal to (i) the amount of all aggregate
Orladeyo Direct Sales during such calendar quarter multiplied by the 2020 Orladeyo Direct Sales Royalty Rate, plus (ii) the amount of all Orladeyo Indirect
Revenue during such calendar quarter multiplied by the applicable 2020 Orladeyo Indirect Revenue Sharing Rate, plus (iii) the amount of all Product
Partnering Revenue attributable to Orladeyo during such calendar quarter multiplied by 8.75%.
“2020 Revenue Participation Right” means the right to receive the 2020 Royalty Payments, as modified by the Additional Components.
“2020 Royalty Payments” means the 2020 Orladeyo Royalty Payments and the 2020 BCX9930 Royalty Payments.
“2020 Transaction” is defined in the recitals to this Agreement.
“2021 Combined BCX9930 and Complement Inhibitor Product Partnering Revenue Sharing Rate” means the percentage based on the applicable
level of Product Partnering Revenue in a calendar year attributable to BCX9930 and Complement Inhibitor as set forth in the chart below:
Payment Tiers based on Product Partnering Revenue attributable to
BCX9930 and Complement Inhibitor
2021 Combined BCX9930 and Complement Inhibitor Product
Partnering Revenue Sharing Rate
A. Annual Product Partnering Revenue attributable to BCX9930 and
Complement Inhibitor less than or equal to $1.5 billion
B. Annual Product Partnering Revenue attributable to BCX9930 and
Complement Inhibitor exceeding $1.5 billion and less than or equal to $3
billion
C. Annual Product Partnering Revenue attributable to BCX9930 and
Complement Inhibitor in excess of $3 billion
3.0%
2.0%
0%
“2021 Combined BCX9930 and Complement Inhibitor Royalty Payments” means for each calendar quarter from and after October 1, 2021, an
amount payable to the Buyer equal to (i) the amount of all aggregate Combined BCX9930 and Complement Inhibitor Net Sales (other than Product
Partnering Revenue attributable to BCX9930 or Complement Inhibitor) during such calendar quarter multiplied by the 2021 Combined BCX9930 and
Complement Inhibitor Royalty Rate, plus (ii) the amount of all Product Partnering Revenue attributable to BCX9930 and Complement Inhibitor during
such calendar quarter multiplied by the 2021 Combined BCX9930 and Complement Inhibitor Product Partnering Revenue Sharing Rate.
3
“2021 Combined BCX9930 and Complement Inhibitor Royalty Rate” means the percentage based on the applicable level of Combined BCX9930
and Complement Inhibitor Net Sales in a calendar year as set forth in the chart below:
Payment Tiers based on Combined BCX9930 and Complement
Inhibitor Net Sales
A. Annual Combined BCX9930 and Complement Inhibitor Net Sales less
than or equal to $1.5 billion
B. Annual Combined BCX9930 and Complement Inhibitor Net Sales
exceeding $1.5 billion and less than or equal to $3 billion
C. Annual Combined BCX9930 and Complement Inhibitor Net Sales in
excess of $3 billion
2021 Combined BCX9930 and Complement Inhibitor Royalty Rate
3.0%
2.0%
0%
“2021 Orladeyo Direct Sales Royalty Rate” means the percentage based on the applicable level of Orladeyo Direct Sales in a calendar year as set
forth in the chart below, which percentage shall be in addition to, and not in lieu of, the 2020 Orladeyo Direct Sales Royalty Rate as further set forth above:
Payment Tiers based on Annual Orladeyo Direct Sales
2021 Orladeyo Direct Sales Royalty Rate
A. Annual Orladeyo Direct Sales of up to $350,000,000
B. Annual Orladeyo Direct Sales exceeding $350,000,000 and less than or
equal to $550,000,000
C. Annual Orladeyo Direct Sales in excess of $550,000,000
4
0.75%
1.75%
0%
“2021 Orladeyo Indirect Revenue Sharing Rate” means the percentage based on the applicable level of Orladeyo Indirect Revenue in a calendar
year as set forth in the chart below, which percentage shall be in addition to, and not in lieu of, the 2020 Orladeyo Indirect Revenue Sharing Rate as further
set forth above:
Applicable Orladeyo Indirect Revenue
2021 Orladeyo Indirect Revenue Sharing Rate
Orladeyo Indirect Revenue Threshold
A. Orladeyo Flat Rate Indirect Revenue
B. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
C. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
D. All Orladeyo Indirect Revenue including (without
duplication) Orladeyo Indirect Royalties but
excluding Orladeyo Flat Rate Indirect Revenue
3.0%
3.0%
2.0%
0%
N/A
Annual Orladeyo Indirect Sales up to
$150,000,000 in such calendar year
Annual Orladeyo Indirect Sales exceeding
$150,000,000 and less than or equal to
$230,000,000 in such calendar year
Annual Orladeyo Indirect Sales exceeding
$230,000,000 in such calendar year
“2021 Orladeyo Royalty Payments” means, for each calendar quarter from and after October 1, 2021, an amount payable to the Buyer equal to (i)
the amount of all aggregate Orladeyo Direct Sales during such calendar quarter multiplied by the 2021 Orladeyo Direct Sales Royalty Rate, plus (ii) the
amount of all Orladeyo Indirect Revenue during such calendar quarter multiplied by the applicable 2021 Orladeyo Indirect Revenue Sharing Rate, plus (iii)
the amount of all Product Partnering Revenue attributable to Orladeyo during such calendar quarter multiplied by 0.75%.
“2021 Revenue Participation Right” means the right to receive the 2021 Royalty Payments.
“2021 Royalty Payments” means the 2021 Orladeyo Royalty Payments and the 2021 Combined BCX9930 and Complement Inhibitor Royalty
Payments, which are in addition to, and not in lieu of, the 2020 Royalty Payments.
“Additional Components” means (a) the components included in the definitions of “BCX9930”, “Orladeyo”, “Orladeyo Direct Sales”, “Orladeyo
Indirect Revenue” and “Product Partnering Revenue” provided for herein (except, with respect to Product Partnering Revenue, for references to
Complement Inhibitor which shall not be deemed an Additional Component), which were not described in the definitions of “BCX9930”, “Orladeyo”,
“Orladeyo Direct Sales”, “Orladeyo Indirect Revenue” and “Product Partnering Revenue” as defined in the 2020 Agreement and (b) new defined term
“BCX9930 Net Sales” set forth herein, which was not a defined term in the 2020 Agreement.
5
“Affiliate” means, with respect to any particular Person, any other Person directly or indirectly controlling, controlled by or under common control
with such particular Person. For purposes of the foregoing sentence, the term “control” means direct or indirect ownership of (x) fifty percent (50%) or
more, including ownership by trusts with substantially the same beneficial interests, of the voting and equity rights of such Person, firm, trust, corporation,
partnership or other entity or combination thereof, or (y) the power to direct the management of such person, firm, trust, corporation, partnership or other
entity or combination thereof, by contract or otherwise.
“Agreement” is defined in the preamble.
“Athyrium” means Athyrium Opportunities III Co-Invest 1 LP, together with its successors in such capacity.
“Athyrium Credit Agreement” means that certain Credit Agreement, dated December 7, 2020, among the Seller, each Person identified as a
“Guarantor” on the signature pages thereto and each other Person that joins as a Guarantor (together with their successors and permitted assigns) (each, a
“Guarantor”), each of the Persons identified as a “Lender” on the signature pages thereto and their successors and assigns, and Athyrium, as administrative
agent, and its successors and assigns, as amended by that certain Amendment No. 1 to Credit Agreement dated as of the date hereof and as further
amended, restated, amended and restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or
otherwise), increased, restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any indentures, credit facilities, term
loan facility or other agreement extending the maturity thereof, refinancing, replacing or otherwise restructuring all or a portion of the Indebtedness under
such indentures, credit facilities, term loan facility or other agreement or any successor or replacement indentures, credit facilities, term loan facility or
other agreement and whether with the original obligors, agent, lenders, institutional investors or otherwise, and whether provided under the original
Athyrium Credit Agreement or one or more other credit or other agreements or indentures, and any agreement (and related document) governing
Indebtedness incurred to refinance, in whole or in part, the borrowings, other extensions of credit and commitments then outstanding or permitted to be
outstanding under such debt facilities or successor debt facilities, whether by the same or any other obligor, issuer, agent, lender or group of lenders (or
institutional investors).
“Athyrium Indebtedness” means all of the Seller’s and its Subsidiaries’ Indebtedness and other Obligations and commitments to provide credit
extensions to the Seller or any of its Subsidiaries, in each case, under the Athyrium Loan Documents.
“Athyrium Loan Documents” means (a) the Athyrium Credit Agreement, and (b) each other “Loan Document” or such similar term as defined in
the Athyrium Credit Agreement, in each case as amended, restated, amended and restated, modified or otherwise supplemented from time to time.
6
“Attributable Indebtedness” means “Attributable Indebtedness” or such similar term as defined in the Athyrium Credit Agreement.
“Back-Up Security Interest” is defined in Section 2.1(c).
“Bankruptcy Laws” means, collectively, bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other
similar laws affecting the enforcement of creditors’ rights generally.
“BCX9930” means (a) the oral Factor D inhibitor known as BCX9930 described on Exhibit A hereto, [***].
“BCX9930 Net Sales” means Net Sales of BCX9930, including recovery of monetary damages from a Third Party in an action brought for such
Third Party’s infringement of any Patent Rights relating to BCX9930, where such damages, whether in the form of judgment or settlement, are awarded for
such infringement of such Patent Rights but solely to the extent that such monetary damages are treated as BCX9930 Net Sales in accordance with Section
6.5(d) and after application of clauses (i) and (ii) therein.
“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York are permitted
or required by applicable law or regulation to remain closed.
“Buyer” is defined in the preamble.
“Buyer Indemnified Parties” is defined in Section 7.1(a).
“Capital Lease” means, as applied to any Person, any lease of any property by that Person as lessee which, in accordance with GAAP, is required
to be accounted for as a capital lease on the balance sheet of that Person.
“Clinical and Commercial Quarterly Report” is defined in Section 6.1(a).
“Clinical and Commercial Semi-Annual Report” is defined in Section 6.1(a).
“Clinical Trial” means a clinical trial intended to support the Marketing Approval or Commercialization of a Product.
“Clinical Updates” means (a) a summary of any material updates with respect to the Clinical Trials, including the number of patients currently
enrolled in each such Clinical Trial, the number of sites conducting each such Clinical Trial, the material progress of each such Clinical Trial, any material
modifications to each such Clinical Trial, any adverse events in the Clinical Trials, (b) written plans to start new Clinical Trials, and (c) investigator
brochures for a Product.
“Closing” means the closing of the sale, transfer, assignment and conveyance of the 2021 Revenue Participation Right hereunder.
7
“Closing Date” means the date on which the Closing occurs pursuant to Section 3.1.
“CMC” means chemistry, manufacturing and controls with respect to a Product.
“Combination Product” means:
(a) a single pharmaceutical formulation (whether co-formulated or administered together via the same administration route) containing
as its active ingredients both a Product and one or more other therapeutically or prophylactically active pharmaceutical or biologic ingredients
(each an “Other Component”), or
(b) a combination therapy comprised of a Product and one or more Other Component(s), whether priced and sold in a single package
containing such multiple products, packaged separately but sold together for a single price, or sold under separate price points but labeled for use
together,
in each case, including all dosage forms, formulations, presentations, and package configurations. Drug delivery vehicles, adjuvants and
excipients will not be deemed to be “active ingredients”, except in the case where such delivery vehicle, adjuvant or excipient is recognized by the
FDA as an active ingredient in accordance with 21 C.F.R. 210.3(b)(7). All references to Products in this Agreement shall be deemed to include
Combination Products.
“Combined BCX9930 and Complement Inhibitor Net Sales” means the annual worldwide aggregate BCX9930 Net Sales and Complement
Inhibitor Net Sales.
“Commercial Updates” means a summary of material updates with respect to the Seller’s and its Affiliates’ and any Licensee’s sales and
marketing activities and, if material, commercial manufacturing matters with respect to a Product.
“Commercialization” means any and all activities directed to the distribution, marketing, detailing, promotion, selling and securing of
reimbursement of a Product (including the using, importing, selling and offering for sale of such Product), and shall include post-Marketing Approval
studies to the extent required by a Regulatory Authority, post-launch marketing, promoting, detailing, distributing, selling such Product, importing,
exporting or transporting such Product for sale, and regulatory compliance with respect to the foregoing. When used as a verb, “Commercialize” shall mean
to engage in Commercialization. Except with respect to post-Marketing Approval studies required by a Regulatory Authority, Commercialization shall not
include any activities directed to the research or development (including pre-clinical and clinical development) or manufacture of a Product.
“Commercially Reasonable Efforts” means the level of efforts and resources (measured as of the time that such efforts and resources are required
to be used under this Agreement) that are commonly used by a commercial-stage public biotechnology company of similar size and resources to Seller
(provided that such size and resources shall not decrease below the size and resources of the Seller as of the Closing Date), to develop, manufacture or
commercialize, as the case may be, a comparable product for a comparable clinical indication (with respect to market size and commercial opportunity) at a
similar stage in its development or product life and of a similar market and potential to the Product, taking into account all relevant factors, including
without limitation, safety, efficacy, product labeling or anticipated labeling, pre-clinical and regulatory developments, past performance of such Product,
pricing considerations, the profit and commercial potential of the Product, medical and clinical considerations, the extent of intellectual property and
regulatory exclusivity relating to such Product, the present and future regulatory environment, the likelihood of regulatory approval, competitive market
conditions, and other relevant factors, but without regard to the Seller’s financial obligations under this Agreement, in each case, measured by the facts and
circumstances as of the time that such efforts and resources are required to be used under this Agreement.
8
“Complement Inhibitor” means (a) the inhibitor described on Exhibit B, [***].
“Complement Inhibitor Net Sales” means Net Sales of Complement Inhibitor, including recovery of monetary damages from a Third Party in an
action brought for such Third Party’s infringement of any Patent Rights relating to Complement Inhibitor, where such damages, whether in the form of
judgment or settlement, are awarded for such infringement of such Patent Rights but solely to the extent that such monetary damages are treated as
Complement Inhibitor Net Sales in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein.
“Confidential Information” is defined in Section 8.1.
“Controlling Agreement” is defined in Section 10.14.
“Convertible Bond Indebtedness” means any Indebtedness having a feature which entitles the holder thereof to convert or exchange all or a
portion of such Indebtedness into shares of common capital stock of the Seller; provided, that, (a) the principal amount (or accreted value, if applicable) of
such Convertible Bond Indebtedness does not exceed $[***], (b) such Convertible Bond Indebtedness shall be unsecured, (c) no Subsidiary shall Guarantee
such Convertible Bond Indebtedness, (d) such Convertible Bond Indebtedness shall not mature, and no scheduled or mandatory principal payments,
repayments, prepayments, cash settlements, repurchases, redemptions or sinking fund or like payments (but excluding, for the avoidance of doubt, regularly
scheduled cash interest payments and conversion of such Convertible Bond Indebtedness into shares of common capital stock of the Seller in accordance
with the terms thereof) of such Convertible Bond Indebtedness shall be required at any time on or prior to the date that is one (1) year after the “Maturity
Date” or such similar term under the Athyrium Loan Documents (which in the case of the maturity of such Convertible Bond Indebtedness shall be tested
at the time of incurrence thereof), other than upon a “Change of Control”, “fundamental change”, “make-whole fundamental change” or similar event, (e)
such Convertible Bond Indebtedness shall (i) not include (A) any financial maintenance covenants or (B) other covenants and defaults that are, taken as a
whole, more restrictive on the Seller and its Subsidiaries than the covenants and defaults set forth in the Athyrium Loan Documents and (ii) have a cash
interest rate of less than the greater of (x) [***] percent ([***]%) per annum and (y) such cash interest rate as the administrative agent under the Athyrium
Credit Agreement, in its sole discretion, shall approve in writing after the Closing Date, upon the request of the Seller in light of changes to market interest
rates for similar convertible notes, (f) such Convertible Bond Indebtedness shall include conversion, redemption and fundamental change provisions that
are customary for public market convertible indebtedness (pursuant to a public offering or an offering under Rule 144A or Regulation S of the Securities
Act), (g) such Convertible Bond Indebtedness shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the
future to the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the
indenture under which such Convertible Bond Indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the Seller,
and the applicable Third Party in writing, (h) no Default or Event of Default or such similar terms (in each case as defined in the Athyrium Credit
Agreement) shall have occurred and be continuing at the time of incurrence of such Convertible Bond Indebtedness or could result therefrom, and (i) the
Seller shall have delivered to the administrative agent under the Athyrium Credit Agreement a certificate of an officer of the Seller certifying as to the
foregoing.
9
“Direct Sales Territories” means the United States, the United Kingdom, Germany, France, [***] and [***].
“Disclosing Party” is defined in Section 8.1.
“Disclosure Schedule” means the Disclosure Schedule, dated as of the date hereof, delivered to the Buyer by the Seller concurrently with the
execution of this Agreement.
“Distributor” means a Third Party that (a) purchases or has the option to purchase any Product in finished form from or at the direction of the
Seller or any of its Affiliates, (b) has the right, option or obligation to distribute, market and sell such Product (with or without packaging rights) in one or
more regions, and (c) does not otherwise make any royalty, milestone, profit share or other similar payment to the Seller or its Affiliate based on such Third
Party’s sale of the Product. The term “packaging rights” in this definition will mean the right for the Distributor to package or have packaged Product
supplied in unpackaged bulk form into individual ready-for-sale packs.
“EMA” means the European Medicines Agency, or any successor agency thereto.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Existing Out‑License” is defined in Section 4.1(h)(ii).
“Existing Patent Rights” is defined in Section 4.1(k)(i).
“FCPA” is defined in Section 4.1(m).
“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act.
“FDA” means the U.S. Food and Drug Administration, or any successor agency thereto.
“FDA Application Integrity Policy” is defined in Section 4.1(g)(ii).
“First Commercial Sale” means, with respect to a Product, the first sale for use or consumption by an end-user of such Product in any country of
the world after Marketing Approval of such Product has been granted in such country, or such marketing and sale is otherwise permitted, by the Regulatory
Authority of such country.
10
“GAAP” means generally accepted accounting principles in the United States in effect from time to time.
“Governmental Entity” means any: (a) nation, principality, republic, state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or other entity and any court, arbitrator or other tribunal); (d) multi-national organization or body; or
(e) individual, body or other entity exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or
taxing authority or power of any nature.
“Gross Sales” is defined in the definition of “Net Sales”.
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of)
such indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such
indebtedness or other obligation of the payment or performance of such indebtedness or other obligation, (iii) to maintain working capital, equity capital or
any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such
indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such indebtedness or other
obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), (b) any lien on any assets of
such Person securing any indebtedness or other obligation of any other Person, whether or not such indebtedness or other obligation is assumed by such
Person (or any right, contingent or otherwise, of any holder of such indebtedness to obtain any such lien) or (c) any direct or indirect liability, contingent or
not, of that Person for (i) any obligations for undrawn letters of credit for the account of that Person or (ii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices. The amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
“Guarantor” is defined in the definition of “Athyrium Credit Agreement”.
“HSBC Bank” means HSBC Bank USA, National Association.
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“HSBC Cash Collateral Accounts” means, collectively, Deposit Account #[***] and Deposit Account #[***] of the Seller established and
maintained at HSBC Bank for the sole purpose of securing the Seller’s obligations under the HSBC Letter of Credit; provided that (a) no such Deposit
Account shall hold an aggregate of cash and cash equivalents in excess of [***] percent ([***]%) of the aggregate face amount of the letters of credit it is
securing and (b) with respect to all such Deposit Accounts, the aggregate amount deposited there in at any time does not exceed [***] Dollars ($[***]).
“HSBC Letter of Credit” means the letter of credit issued by HSBC Bank in favor of the landlord with respect to the Seller’s leased real property
located at 2100 Riverchase Center, Ste. 200 / Building 200, Birmingham, AL 35244, in an aggregate face amount equal to One Million Four Hundred
Thousand Dollars ($1,400,000).
“HSBC Liens” means Liens in favor of HSBC Bank on the HSBC Cash Collateral Accounts to the extent securing obligations of the Seller
permitted pursuant to clause (g) of the definition of Permitted Contingent Obligations.
“Improvements” means any improvement, invention or discovery relating to a Product (other than with respect to a new composition of matter),
including the formulation, or the method of manufacture of a Product.
“In-License” means any license, settlement agreement or other agreement or arrangement between the Seller or any of its Affiliates and any Third
Party pursuant to which the Seller or any of its Affiliates obtains a license or a covenant not to sue or similar grant of rights to any Patents or other
intellectual property rights of such Third Party that is necessary for the research, development, manufacture, use or Commercialization of a Product.
“Indebtedness” of any Person means any indebtedness for borrowed money, any obligation evidenced by a note, bond, debenture or similar
instrument, or any guarantee of any of the foregoing.
“Indemnified Party” is defined in Section 7.2.
“Indemnifying Party” is defined in Section 7.2.
“Indirect Sales Territories” means all countries except for the Direct Sales Territories.
“Intellectual Property Product Rights” means any and all of the following as they exist throughout the world at any time: (a) the Patent Rights; (b)
rights in registered and unregistered trademarks, service marks, trade names, trade dress, logos, packaging design, slogans and Internet domain names, and
registrations and applications for registration of any of the foregoing, in each case, with respect to any Product; (c) rights in all Know-How necessary for
the development, manufacture or Commercialization of any Product; and (d) any and all other intellectual property rights and/or proprietary rights, whether
or not patentable, specifically relating to any of the foregoing, as necessary for the development, manufacture or Commercialization of a Product.
“Intellectual Property Rights” means any and all of the following as they exist throughout the world at any time: (a) the Patent Rights and (b) the
Know-How Rights.
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“Intellectual Property Updates” means an updated list of the Patent Rights, including any new Patents issued or filed, amended or supplemented,
relating to a Product in any country or any abandonments or other termination of prosecution with respect to any of the Patent Rights, and any other
material information or developments with respect to the Intellectual Property Rights.
“Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement dated as of the date hereof by and among Athyrium,
OCM IP Healthcare Holdings Limited, and the Buyer, and acknowledged and agreed to by the Seller, BioCryst Ireland Limited, BioCryst US Sales Co.,
LLC, BioCryst UK Limited, and any future Guarantor, in substantially the form attached hereto as Exhibit C, as amended, amended and restated,
supplemented and otherwise modified from time to time in accordance with the terms thereof.
“Judgment” means any judgment, order, writ, injunction, citation, award or decree of any nature.
“JPR Royalty Sub” means JPR Royalty Sub LLC, a Delaware limited liability company.
“JPR Indenture” means that certain Indenture, dated as of March 9, 2011, by and between JPR Royalty Sub and U.S. Bank, National Association,
as in effect on the date hereof.
“Know-How” means any and all proprietary or confidential information, know-how and trade secrets, including processes, formulae, models and
techniques (but excluding rights in research in progress, algorithms, data, databases, data collections, chemical and biological materials and the results of
experimentation and testing).
“Know-How Rights” means any and all Know-How owned or in-licensed by the Seller or any of its Affiliates or under which the Seller or any of
its Affiliates is or may become empowered to grant licenses necessary for the development, manufacture, or Commercialization of a Product.
“Knowledge of the Seller” means the actual knowledge of the individuals listed on Schedule 1.1 of the Disclosure Schedule, after reasonable due
inquiry.
“License Revenue” means any payments or other consideration in any form received by Seller or any of its Affiliates from a Licensee or any of its
Affiliates or sublicensees under or pursuant to an Out-License of any rights relating to Orladeyo or any sublicense under or other agreement ancillary to
such Out-License, or payments received by Seller or any of its Affiliates from a Third Party in lieu of any of the foregoing payments, in each case, except
for:
(a) payments or grants received from a commercial or non-commercial Third Party, specifically to cover future reasonable, documented fully-
burdened costs incurred by or on behalf of Seller or any Affiliate after the execution of such Out-License directly attributable to the performance of
research and development of Orladeyo, which costs are expressly covered by the Licensee under such Out-License;
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(b) equity investments in Seller or any Affiliate to the extent priced at or below fair market value, provided that in the case of common stock or its
equivalent, fair market value shall be the greater of: (i) the last reported closing price of Seller’s common stock on Nasdaq, or (ii) the thirty (30)-day
volume-weighted average price of Seller’s common stock;
(c) loans received as part of a debt financing for so long as an obligation of repayment exists, provided that if at the time any such debt becomes
due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with GAAP), is booked as income to Seller or its
Affiliates, then such amount shall be deemed License Revenue hereunder;
(d) loans received where Orladeyo forms part of the security package provided for the loan for so long as an obligation of repayment exists;
provided that at the time any such debt becomes due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with
GAAP), is booked as income to Seller or its Affiliates, shall be deemed License Revenue hereunder;
(e) Tax credits or Tax receipts; and
(f) sales or supply of Orladeyo inventory at or below Seller’s actual cost of goods sold, provided, however, that any mark-up from, or other
amounts in excess of, the Seller’s cost of goods sold for such inventory shall be License Revenue.
Notwithstanding anything to the contrary in this Agreement, “License Revenue” shall include, without limitation, any and all royalties, upfront
payment, license signing fee, license maintenance fee, minimum royalty payment in excess of earned royalties, option fee, lump sum payment, distribution
fee, joint marketing fee, profit share, milestone payment, and other payments, in each case received. In the event Seller or its Affiliate(s) receives non-
monetary consideration, License Revenue shall be calculated based on the fair market value of such consideration at the time of the transaction (where fair
market value shall be determined by agreement of the Parties or by an independent appraiser mutually agreeable to the Parties), assuming an arm’s length
transaction made in the ordinary course of business. To the extent that Seller makes any offsetting payments to a Licensee (such as a true-up payment) that
are specifically permitted pursuant to the Out-License (not entered into in violation of this Agreement) with such Licensee, then the License Revenue under
such Out-License shall be calculated net of such payments. Without limiting clauses (a) through (f) above, to the extent that Seller permits any Licensee to
set off any payments payable pursuant to the Out-License with such Licensee against any amounts payable by Seller to such Licensee, then the License
Revenue under such Out-License shall include all such payments payable to Seller under such Out-License without giving effect to any such setoff.
“Licensee” means, with respect to any Product, a Third Party to whom the Seller or any Affiliate of the Seller has granted a license or sublicense
to Commercialize such Product. For clarity, a Distributor shall not be deemed to be a “Licensee.”
“Lien” means any mortgage, lien, pledge, participation interest, charge, adverse claim, security interest, encumbrance or restriction of any kind,
including any restriction on use, transfer or exercise of any other attribute of ownership of any kind.
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“Loss” means any and all Judgments, damages, losses, claims, costs, liabilities and expenses, including reasonable fees and out-of-pocket
expenses of counsel.
“Loss of Market Exclusivity” shall mean, on a Product-by-Product and country-by-country basis, the later to occur of: (a) the expiration of the
last-to-expire Valid Claim of a Patent Right covering such Product in such country; and (b) the expiry of all Regulatory Exclusivity Periods for such
Product in such country.
“Marketing Approval” means, an NDA approved by the FDA, a Marketing Authorization Application approved by the EMA under the centralized
European procedure, or any corresponding non-U.S. or non-EMA application, registration or certification in a Direct Sales Territory, necessary or
reasonably useful to market a Product approved by the corresponding Regulatory Authority, including pricing and reimbursement approvals where
required. For clarity, notwithstanding the foregoing, solely with respect to Section 6.2, “Marketing Approval” shall not include pricing and reimbursement
approvals.
“Material Adverse Effect” means (a) an adverse effect in any material respect on the timing, duration or amount of the Royalty Payments, (b) a
material adverse effect on (i) a Product, (ii) any of the Intellectual Property Rights, including the Seller’s rights in or to any Intellectual Property Rights,
(iii) any Marketing Approval of a Product or the timing thereof, (iv) the legality, validity or enforceability of any provision of this Agreement, (v) the
ability of the Seller to perform any of its obligations under this Agreement, (vi) the rights or remedies of the Buyer under this Agreement, or (vii) the
business of the Seller or its Affiliates or (c) an adverse effect in any material respect on the Revenue Participation Rights, the Product Collateral, or the
Back-Up Security Interest.
“Minimum Return Date” means the earliest of the following dates: (a) the date on which the trailing [***] months of net revenue of the Company,
in accordance with GAAP, equals at least $[***] million and all Royalty Payments for any Net Sales of Products that make up such revenue have been paid
to Buyer; (b) the date on which Seller’s market capitalization is at least $[***] billion for [***] consecutive trading days; (c) the date that is on or after
[***] and on which Seller’s market capitalization is at least $[***] billion for [***] consecutive trading days; and (d) the date of expiration of the last-to-
expire Valid Claim of the Patent Rights covering Orladeyo in the United States.
“NDA” means a New Drug Application submitted to the FDA in the United States in accordance with the FD&C Act with respect to a
pharmaceutical product or any analogous application or submission with any Regulatory Authority outside of the United States.
“Net Sales” means, with respect to each Product, the gross amount invoiced, billed or otherwise recorded for sales of such Product anywhere in
the world by or on behalf of the Seller, its Affiliates, any Distributor, or any Licensee of the Seller or any of the Seller’s Affiliates (each of the foregoing
Persons, for purposes of this definition, shall be considered a “Related Party”) to a Third Party (“Gross Sales”) less the following amounts, to the extent
actually incurred or accrued in accordance with generally accepted accounting principles consistently applied, and not reimbursed by such Third Party,
provided, that any given amount may be taken as a permitted deduction only once:
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(a) reasonable and customary rebates, chargebacks, quantity, trade and similar discounts, credits and allowances and other price
reductions reasonably granted, allowed, incurred or paid in so far as they are applied to sales of a Product;
(b) discounts (including cash, quantity, trade, governmental, and similar discounts), coupons, retroactive price reductions, charge
back payments and rebates granted to managed care organizations or to federal, state and local governments, or to their agencies (including
payments made under the new “Medicare Part D Coverage Gap Discount Program” and the “Annual Fee for Branded Pharmaceutical
Manufacturers” specific to the Product), in each case, as applied to sales of the Product and actually given to customers;
(c) reasonable and customary credits, adjustments, and allowances, including those granted on account of price adjustments, billing
errors, and damage, Product otherwise not in saleable condition, and rejection, return or recall of a Product, in each case in so far as they are
applied to sales of the Product;
(d) reasonable and customary freight and insurance costs incurred with respect to the shipment of a Product to customers, in each
case if charged separately and invoiced to the customer;
(e) customs duties, surcharges and other similar governmental charges incurred in connection with the exportation or importation
of a Product to the extent included in the gross amount invoiced;
(f) sales, use, value-added, excise, turnover, inventory and other similar Taxes (excluding income Taxes), and that portion of annual
fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and any other fee
imposed by any equivalent applicable law, in each of the foregoing cases, that Seller allocates to sales of a Product in accordance with Seller’s
standard policies and procedures consistently applied across its products, as adjusted for rebates and refunds, imposed in connection with the
sales of the Product to any Third Party, to the extent such Taxes are not paid by the Third Party;
(g) actual copayment waiver amounts uncollected or uncollectible debt amounts with respect to sales of a Product, provided that if
the debt is thereafter paid, the corresponding amount shall be added to the Net Sales of the period during which it is paid;
(h) reasonable, customary and documented out of pocket amounts directly relating to co-pay programs, bridging programs or other
similar patient assistance programs which may be implemented from time to time by the Seller in so far as they are applied to sales of the
Product; and
(i) other similar or customary deductions taken in the ordinary course of business as permitted in calculating net sales or net
revenue (as applicable) under generally accepted accounting principles consistently applied in so far as they are applied to sales of the
Product.
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For clarity, “Net Sales” will not include (i) sales or dispositions for charitable, promotional, pre-clinical, clinical, regulatory, compassionate use,
named patient use or indigent or other similar programs, reasonable quantities of Products used as samples, and Products used in the development of
Products, (ii) sales or dispositions between any of the Related Parties (unless a Related Party is the final end-user of such Product), but will include
subsequent sales or dispositions of Products to a non-Related Party, (iii) License Revenue, (iv) solely with respect to BCX9930 or Complement Inhibitor,
any amounts or other consideration received by a Related Party from a Licensee, Distributor, or a non-Related Party in consideration of the grant of a
(sub)license or co-promotion or distribution right to such non-Related Party, or (v) sales or dispositions by or on behalf of a Permitted Purchaser.
With respect to sales of a Product invoiced in U.S. dollars, Net Sales shall be determined in U.S. dollars. With respect to sales of a Product
invoiced in a currency other than U.S. dollars, Net Sales shall be determined by converting the currencies at which the sales are made into U.S. dollars, at
rates of exchange determined in a manner consistent with the Seller’s or a Licensee’s, as applicable, method for calculating rates of exchange in the
preparation of the Seller’s or such Licensee’s annual financial statements in accordance with generally accepted accounting principles consistently applied.
Net Sales for any Combination Product shall be calculated on a country-by-country basis by multiplying actual Net Sales of such Combination
Product by the fraction A/(A+B) where “A” is the weighted average invoice price of the Product contained in such Combination Product when sold
separately in such country during the applicable accounting period in which the sales of the Combination Product were made, and “B” is the combined
weighted average invoice prices of all of the Other Components contained in such Combination Product sold separately in such country during such same
accounting period. If a Product contained in such Combination Product is not sold separately in finished form in such country, the Seller and the Buyer
shall determine Net Sales for such Product by mutual agreement based on the relative contribution of such Product and each such other active ingredient in
such Combination Product in accordance with the above formula, and shall take into account in good faith any applicable allocations and calculations that
may have been made for the same period in other countries.
“Obligations” means “Obligations” or such similar term as defined in the Athyrium Credit Agreement.
“OMERS Transaction Agreement” means the Purchase and Sale Agreement, dated as of the date hereof, between the Seller and OCM IP
Healthcare Holdings Limited, an Ontario corporation, as may be amended, supplemented or otherwise modified from time to time.
“Orladeyo” means (a) the product known as ORLADEYO® (berotralstat) that is the subject of NDA No. 214094, [***].
“Orladeyo Direct Sales” means (a) Net Sales of Orladeyo by or on behalf of the Seller, any of the Seller’s Affiliates or its or their respective
Distributors anywhere in the world, in each case other than (i) Net Sales of Orladeyo by or on behalf of any Licensee, and (ii) Product Partnering Revenue
attributable to Orladeyo; (b) Net Sales of Orladeyo by or on behalf of any Licensee in or for the Direct Sales Territories; and (c) recovery of monetary
damages from a Third Party in an action brought for such Third Party’s infringement of any Patent Rights relating to Orladeyo, where such damages,
whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights but solely to the extent that such monetary
damages are treated as Orladeyo Direct Sales in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein.
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“Orladeyo Flat Rate Indirect Revenue” is defined in Row A of the chart included in the definition of “2020 Orladeyo Indirect Revenue Sharing
Rate”.
“Orladeyo Indirect Revenue” means all License Revenue received by the Seller or any of the Seller’s Affiliates from any Licensee of Orladeyo,
other than (a) the regulatory approval milestone payable under Section 8.2.1 of the Torii License, (b) in respect of Orladeyo Direct Sales, and (c) Product
Partnering Revenue attributable to Orladeyo. Orladeyo Indirect Revenue shall also include the recovery of monetary damages from a Third Party in an
action brought for such Third Party’s infringement of any Patent Rights relating to Orladeyo, where such damages, whether in the form of judgment or
settlement, are awarded for such infringement of such Patent Rights but solely to the extent that such monetary damages are treated as Orladeyo Indirect
Revenue in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein.
“Orladeyo Indirect Sales” means Net Sales of Orladeyo by or on behalf of any Licensee in or for the Indirect Sales Territories.
“Orladeyo Indirect Royalties” means Orladeyo Indirect Revenue that constitutes (a) royalties payable on Orladeyo Indirect Sales, (b) any
payments made in lieu of the foregoing, (c) recovery of monetary damages from a Third Party in an action brought for such Third Party’s infringement of
any Patent Rights, where such damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights, and (d)
any interest on all of the foregoing.
“Other Component” is defined in the definition of “Combination Products”.
“Other Intercreditor Agreement” means an intercreditor agreement, among, the Buyer, the Seller, the “Buyer” under and as defined in the OMERS
Royalty Financing Agreement, and the administrative agent, trustee or representative under the Athyrium Credit Agreement and/or the holders of any
Indebtedness incurred pursuant to clause (b)(ii) of the definition of Restricted Indebtedness or any agent, representative or trustee acting on behalf of such
holders, on substantially the same terms as the Intercreditor Agreement, as amended, amended and restated, supplemented and otherwise modified from
time to time in accordance with the terms thereof.
“Out-License” means each license or other agreement between the Seller or any of its Affiliates and any Third Party (other than Distributors)
pursuant to which the Seller or any of its Affiliates grants a license or sublicense of any Intellectual Property Right to market, detail, promote, sell or secure
reimbursement of a Product.
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“Patents” means any and all patents and patent applications existing as of the 2020 Closing Date and all patent applications filed thereafter,
including any continuation, continuation-in-part, division, provisional or any substitute applications, any patent issued with respect to any of the foregoing
patent applications, any certificate, reissue, reexamination, renewal or patent term extension or adjustment (including any supplementary protection
certificate) of any such patent or other governmental actions which extend any of the subject matter of a patent, and any substitution patent, confirmation
patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.
“Patent Rights” means any and all Patents owned or in-licensed by the Seller or any of its Affiliates or under which the Seller or any of its
Affiliates is or may become empowered to grant licenses necessary or reasonably useful in the development, manufacture, use, marketing, promotion, sale
or distribution of a Product, as well as existing or future Patents covering any Improvements.
“Permit” is defined in Section 4.1(g)(vi).
“Permitted Assignment Provisions” is defined in Section 10.4.
“Permitted Contingent Obligations” means (a) Guarantees resulting from endorsements for collection or deposit in the ordinary course of business;
(b) Guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds and other similar obligations not to
exceed [***] Dollars ($[***]) in the aggregate at any time outstanding; (c) Guarantees arising under indemnity agreements with title insurers; (d)
Guarantees arising with respect to customary indemnification obligations in favor of purchasers in connection with sales, transfers, licenses, leases or other
dispositions of personal property assets permitted under the Athyrium Loan Documents; (e) Guarantees arising under the Athyrium Loan Documents; (f)
Guarantees existing or arising in connection with any security deposit or letter of credit obtained for the sole purpose of securing a lease of real property, or
in connection with ancillary bank services such as a corporate credit card facility, provided that the aggregate face amount of all such security deposits,
letters of credit and ancillary bank services does not at any time exceed [***] Dollars ($[***]) in the aggregate at any time outstanding; and (g) the HSBC
Letter of Credit secured solely by HSBC Liens.
“Permitted Indebtedness” is defined in the definition of “Restricted Indebtedness”.
“Permitted License” is defined in Section 6.7(a).
“Permitted Liens” means the following:
(a) Liens for Taxes, assessments or governmental charges or levies not yet due or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance
with GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided, that, such Liens secure only amounts
not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established;
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acquisition and not incurred in contemplation thereof;
(c) Liens on property existing at the time of acquisition of such property provided that such liens were in existence prior to such
(d) Permitted Licenses, including any interest or title of a licensee under a Permitted License;
(e) Liens under the Athyrium Loan Documents;
other social security legislation, other than any Lien imposed by ERISA;
(f) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and
appeal bonds, indemnity and performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(g) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and
substantial in amount, and which do not materially interfere with the ordinary conduct of the business of the applicable Person;
(h) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not
material respect with the Revenue Participation Rights, the Product Rights, the Product Collateral, or the Back-Up Security Interest;
(i) licenses, sublicenses, leases or subleases granted to others in the ordinary course of business or otherwise and not interfering in any
agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;
(j) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or
(k) normal and customary banker’s liens and rights of setoff upon deposits of cash in favor of banks or other depository institutions;
(l) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;
(m) Liens of sellers of goods to the Seller and any of its Subsidiaries arising under Article 2 of the UCC or similar provisions of
applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related
expenses;
(n) HSBC Liens;
(o) Liens under the OMERS Transaction Agreement; and
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(p) cash collateral securing letters of credit permitted under clause (f) of the definition of Permitted Contingent Obligations.
“Permitted Purchaser” means any Third Party who acquires rights to Orladeyo, BCX9930 and/or Complement Inhibitor as applicable, in a
Permitted Sale.
“Permitted Sale” means any sale, transfer, assignment or other disposition, not constituting an Out-License, of any rights relating to Orladeyo,
BCX9930 and/or Complement Inhibitor, as applicable, solely to the extent such rights pertain to [***] (collectively, the “Permitted Sale Territory”).
“Permitted Sale Territory” is defined in the definition of “Permitted Sale”.
“Person” means any individual, firm, corporation, company, partnership, limited liability company, trust, joint venture, association, estate, trust,
Governmental Entity or other entity, enterprise, association or organization.
“Prime Rate” means the prime rate published by The Wall Street Journal, from time to time, as the prime rate.
“Product” and “Products” means, individually and collectively, Orladeyo, BCX9930 and Complement Inhibitor.
“Product Collateral” means the Seller’s rights, title and interests in (a) the Products (including all inventory of the Products), (b) the Product
Rights owned, licensed or otherwise held by the Seller, and (c) any proceeds from either (a) or (b) above, including all accounts receivable and general
intangibles resulting from the sale, license or other disposition of Products by the Seller or its Licensees.
“Product Partnering Revenue” means the pre-tax profit realized by Seller or its Affiliates arising from any Permitted Sale, with the profit being
calculated as: (i) (x) aggregate payments or other consideration in any form received by Seller or any of its Affiliates from a Permitted Sale, or payments
received by Seller or any of its Affiliates from a Third Party in lieu of any of the foregoing payments arising from a Permitted Sale, and (y) recovery of
monetary damages from a Third Party in an action brought for such Third Party’s infringement of any Patent Rights relating to a Product, where such
damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights but solely to the extent that such
monetary damages are treated as Product Partner Revenue in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein, in each
case, except for the Excluded Payments (defined below), minus (ii) aggregate out-of-pocket expenses incurred by Seller or its Affiliates after the Closing
Date solely for the development or commercialization of Orladeyo, BCX9930 and/or Complement Inhibitor as applicable, in the Permitted Sale Territory.
For purposes of Product Partnering Revenue, “Excluded Payments” means:
(a) payments or grants received from a commercial or non-commercial Third Party, specifically to cover future reasonable, documented fully-
burdened costs incurred by or on behalf of Seller or any Affiliate after the execution of such Permitted Sale directly attributable to the performance of
research and development of Orladeyo, BCX9930 and/or Complement Inhibitor, as applicable, within the Permitted Sale Territory, which costs are
expressly covered by the purchaser under such Permitted Sale;
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(b) equity investments in Seller or any Affiliate to the extent priced at or below fair market value, provided that in the case of common stock or its
equivalent, fair market value shall be the greater of: (i) the last reported closing price of Seller’s common stock on Nasdaq, or (ii) the 30-day volume-
weighted average price of Seller’s common stock;
(c) loans received as part of a debt financing for so long as an obligation of repayment exists, provided that if at the time any such debt becomes
due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with GAAP), is booked as income to Seller or its
Affiliates, then such amount shall be deemed Product Partnering Revenue hereunder;
(d) loans received where Orladeyo, BCX9930 and/or Complement Inhibitor, as applicable, forms part of the security package provided for the loan
for so long as an obligation of repayment exists, provided that if at the time any such debt becomes due, the amount of such debt that is forgiven, and, for
accounting or Tax purposes (in accordance with GAAP), is booked as income to Seller or its Affiliates, then such amount shall be deemed Product
Partnering Revenue hereunder;
(e) Tax credits or Tax receipts; and
(f) sales or supply of Orladeyo, BCX9930 and/or Complement Inhibitor, as applicable, inventory at or below Seller’s actual cost of goods sold,
provided, however that any mark-up from, or other amounts in excess of, the Seller’s cost of goods sold for such inventory shall be Product Partnering
Revenue.
Notwithstanding anything to the contrary in this Agreement, “Product Partnering Revenue” shall include, without limitation, any and all
contingent payments, upfront payments, option fees, lump-sum payments, distribution fees, joint-marketing fees, profit share, milestone payments, and
other payments, in each case received. In the event Seller or its Affiliate(s) receives non-monetary consideration pursuant to a Permitted Sale, Product
Partnering Revenue shall be calculated based on the fair market value of such consideration at the time of the transaction (where fair market value shall be
determined by agreement of the Parties or by an independent appraiser mutually agreeable to the Parties), assuming an arm’s length transaction made in the
ordinary course of business. To the extent that Seller makes any offsetting payments to a Permitted Purchaser (such as a true-up payment) that are
specifically permitted pursuant to the Permitted Sale (not entered into in violation of this Agreement) with such Permitted Purchaser, then the Product
Partnering Revenue under such Permitted Sale shall be calculated net of such payments. To the extent that Seller permits any Permitted Purchaser to set off
any payments payable pursuant to the Permitted Sale with such Permitted Purchaser against any amounts payable by Seller to such Permitted Purchaser,
then the Product Partnering Revenue under such Permitted Sale shall include all such payments payable to Seller under such Permitted Sale without giving
effect to any such setoff.
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“Product Rights” means any and all of the following, as they exist throughout the world: (a) Intellectual Property Product Rights, (b) regulatory
filings, submissions and approvals, including Marketing Approvals, with or from any Regulatory Authorities with respect to any of the Products, (c) In-
Licenses and (d) Out-Licenses.
“Purchase Price” is defined in Section 2.2.
“Receiving Party” is defined in Section 8.1.
“Regulatory and IP Semi-Annual Report” is defined in Section 6.1(b).
“Regulatory Authority” means any national or supranational governmental authority, including the FDA, the EMA or such equivalent regulatory
authority, or any successor agency thereto, that has responsibility in granting a Marketing Approval.
“Regulatory Exclusivity Period” shall mean, with respect to each Product in any country, any period of data, market or other regulatory exclusivity
(other than Patent exclusivity) granted or afforded by law or by a Regulatory Authority in such country that confers exclusive marketing rights with respect
to such Product in such country or prevents another party from using or otherwise relying on any data supporting the Marketing Approval for such Product.
“Regulatory Updates” means a summary of any and all material information and developments that materially impact a Product with respect to
any regulatory filings or submissions made to any Regulatory Authority.
“Related Party” is defined in the definition of “Net Sales”.
“Report” is defined in Section 6.1(b).
“Representative” means, with respect to any Person, (a) any direct or indirect member or partner of such Person and (b) any manager, director,
trustee, officer, employee, agent, advisor or other representative (including attorneys, accountants, consultants, contractors, actual and potential lenders,
investors, co-investors and assignees, bankers and financial advisers) of such Person.
“Restricted Indebtedness” means any financing, sale, or loan of royalties on the Products, or any Indebtedness, in each case other than the
following (individually and collectively, “Permitted Indebtedness”):
(a) true sales of royalties that contain no financial covenants or other provisions typically found in loan agreements, and in
connection with such true sale Seller or its Affiliates do not grant any Lien on any assets of Seller or its Affiliates, other than a back-up
security interest to perfect the true sale;
(b) (i) additional Indebtedness incurred pursuant to the Athyrium Loan Documents, (ii) other secured Indebtedness, so long as in
the case of any Indebtedness incurred pursuant to this clause (ii), the holders of such Indebtedness or any agent, representative or trustee
acting on behalf of such holders have become party to the Intercreditor Agreement or entered into an Other Intercreditor Agreement, and (iii)
unsecured Indebtedness, so long as (x) the principal amount of any Indebtedness incurred pursuant to this clause (b) (together with the
aggregate outstanding principal amount of all Indebtedness previously incurred pursuant to this clause (b)) does not at the time of incurring
such additional Indebtedness exceed [***]% of the aggregate principal amount of Indebtedness and commitments to extend credit under the
Athyrium Loan Documents outstanding at such time and (y) except as otherwise agreed by the parties, such unsecured Indebtedness
contemplated by clause (iii) shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the future to
the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the
indenture under which such unsecured indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the
Seller, and the applicable Third Party lender of such unsecured indebtedness in writing;
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(c) certain customary de minimis exceptions incurred in the ordinary course of business;
(d) Indebtedness under the Athyrium Loan Documents, and renewals, refinancings and extensions thereof;
(e) intercompany Indebtedness permitted under the Athyrium Loan Documents (and at any time when the Athyrium Loan
Documents are not outstanding, any bona fide intercompany Indebtedness entered into in the good faith business judgment of the Seller);
(f) obligations (contingent or otherwise) of the Seller or any Subsidiary existing or arising under any Swap Contract, provided, that,
such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person, and not for purposes of speculation or taking a “market view”;
(g) purchase money Indebtedness (including obligations in respect of capital leases or synthetic leases) incurred by the Seller from
and after the 2020 Closing Date or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings, and extensions
thereof, provided, that, (i) no default or “Event of Default” has occurred under the Athyrium Loan Documents and is continuing both
immediately prior to and after giving effect thereto, (ii) the total of all such Indebtedness for all such Persons taken together shall not exceed
an aggregate principal amount of $[***] at any one time outstanding, (iii) such Indebtedness when incurred shall not exceed the purchase
price of the asset(s) financed, and (iv) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing except by an amount equal to unpaid accrued interest and premium thereon plus other
amounts owing or paid related to such Indebtedness, and fees, commissions and expenses (including upfront fees and original issue discount)
reasonably incurred, in connection with such refinancing
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(h) other unsecured Indebtedness incurred by the Seller or any of its Subsidiaries on or after the 2020 Closing Date in an aggregate
amount not to exceed $[***] at any one time outstanding;
(i) Permitted Contingent Obligations;
(j) Indebtedness incurred in the ordinary course of business not to exceed $[***] in the aggregate at any time outstanding owed to
any Person providing property, casualty, liability, or other insurance to the loan parties, including to finance insurance premiums, so long as
the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such
insurance for the policy year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such policy year;
(k) Convertible Bond Indebtedness;
(l) Attributable Indebtedness in respect of Capital Leases incurred pursuant to automobile leases entered into in the ordinary course
of business as part of employee compensation for employees based in Europe; provided that the aggregate amount of such Attributable
Indebtedness incurred pursuant to this clause (l) shall not exceed $[***] at any one time outstanding;
(m) Indebtedness under the OMERS Transaction Agreement; and
(n) other Indebtedness permitted by the Athyrium Credit Agreement after the Closing Date requested by the Seller in its good faith
business judgment, not with the purpose or effect of adversely impacting the Buyer, the Revenue Participation Rights, the Product Rights, the
Product Collateral, or the Back-up Security Interest and permitted by the holders of the Indebtedness under the Athyrium Credit Agreement
and the Intercreditor Agreement.
“Revenue Participation Rights” means, collectively, the 2020 Revenue Participation Right and the 2021 Revenue Participation Right.
“Royalty Payments” means, collectively, the 2020 Royalty Payments and the 2021 Royalty Payments.
“Safety Notices” means any recalls, field notifications, market withdrawals, warnings, “dear doctor” letters, investigator notices, safety alerts or
other notices of action issued or instigated by the Seller, any of its Affiliates or any Regulatory Authority relating to an alleged lack of safety or regulatory
compliance of any Product.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933.
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“Seller” is defined in the preamble. References to the Seller herein (i) shall be deemed to include any assignee of the Seller pursuant to Section
10.4, but (ii) shall not include any Permitted Purchaser.
“Seller Certificate” is defined in Section 5.1(j).
“Seller Indemnified Parties” is defined in Section 7.1(b).
“Stock Purchase Agreement” means that certain Stock Purchase Agreement by and among the Buyer and the Seller, in substantially the form
attached hereto as Exhibit D, as amended, amended and restated, supplemented and otherwise modified from time to time in accordance with the terms
thereof.
“Subsidiary” means any and all corporations, partnerships, limited liability companies, joint ventures, associations and other entities controlled (by
contract or otherwise) by the Seller directly or indirectly through one or more intermediaries. For purposes hereof, the Seller shall be deemed to control a
partnership, limited liability company, association or other business entity if the Seller, directly or indirectly through one or more intermediaries, shall be
allocated a majority of partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, limited liability company, association or other business entity. Notwithstanding the foregoing, until
discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof, unless expressly provided herein, Subsidiaries of the Seller shall
not include JPR Royalty Sub.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms
and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master Agreement.
“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, occupation,
premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, abandoned property, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
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“Third Party” means any Person that is not the Seller or the Seller’s Affiliates.
“Torii License” means that certain Commercialization and License Agreement between Torii Pharmaceutical Co., Ltd. and Biocryst
Pharmaceuticals, Inc. dated November 5, 2019.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, that, if, with respect to any
financing statement or by reason of any provisions of applicable law, the perfection or the effect of perfection or non-perfection of the back-up security
interest or any portion thereof granted pursuant to Section 2.1(c) is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United
States other than the State of New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“Valid Claim” means: (a) any claim of an issued and unexpired Patent included within the Patent Rights, that shall not have been withdrawn,
lapsed, abandoned, revoked, canceled or disclaimed, or held invalid or unenforceable by a court, Governmental Entity, national or regional patent office or
other appropriate body that has competent jurisdiction in a decision being final and unappealable or unappealed within the time allowed for appeal; and (b)
a claim of a pending Patent application included within the Patent Rights that is filed and being prosecuted in good faith and that has not been finally
abandoned or finally rejected and which has been pending for no more than [***] years from the date of filing of the earliest Patent application to which
such pending Patent application claims priority.
apply to this Agreement:
Section 1.2 Certain Interpretations. Except where expressly stated otherwise in this Agreement, the following rules of interpretation
the words “without limitation”;
(a) “either” and “or” are not exclusive and “include,” “includes” and “including” are not limiting and shall be deemed to be followed by
simply “if”;
(b) “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean
(c) “hereof,” “hereto,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement;
(d) references to a Person are also to its permitted successors and assigns;
(e) except as expressly provided otherwise, definitions are applicable to the singular as well as the plural forms of such terms;
Exhibit to, this Agreement, and references to a “Schedule” refer to the corresponding part of the Disclosure Schedule;
(f) except as expressly provided otherwise, references to an “Article”, “Section” or “Exhibit” refer to an Article or Section of, or an
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(g) references to “$” or otherwise to dollar amounts refer to the lawful currency of the United States; and
such amendment or modification is made, or issuance of such rules and regulations occurs, before or after the date of this Agreement.
(h) references to a law include any amendment or modification to such law and any rules and regulations issued thereunder, whether
ARTICLE 2
PURCHASE, SALE AND ASSIGNMENT OF THE
2021 REVENUE PARTICIPATION RIGHT
Section 2.1 Purchase, Sale and Assignment.
(a) At the Closing and upon the terms and subject to the conditions of this Agreement, the Seller shall sell, transfer, assign and convey
to the Buyer, without recourse (except as expressly provided herein), and the Buyer shall purchase, acquire and accept from the Seller, the 2021 Revenue
Participation Right, free and clear of all Liens, except for any Lien contemplated under subparts (a), (b), (f), (g), and (k) of the definition of “Permitted
Liens”. Immediately upon the sale to the Buyer by the Seller of the 2021 Revenue Participation Right pursuant to this Section 2.1, all of the Seller’s right,
title and interest in and to the 2021 Revenue Participation Right shall terminate, and all such right, title and interest shall vest in the Buyer.
(b) It is the intention of the parties hereto that the sale, transfer, assignment and conveyance of the 2021 Revenue Participation Right
contemplated by this Agreement be, and is, a true, complete, absolute and irrevocable sale, transfer, assignment and conveyance by the Seller to the Buyer
of all of the Seller’s right, title and interest in and to the 2021 Revenue Participation Right. Neither the Seller nor the Buyer intends the transactions
contemplated by this Agreement to be, or for any purpose characterized as, a loan from the Buyer to the Seller or a pledge, a security interest, financing
transaction or a borrowing. It is the intention of the parties hereto that the beneficial interest in and title to the 2021 Revenue Participation Right and any
“proceeds” (as such term is defined in the UCC) thereof shall not be part of the Seller’s estate in the event of the filing of a petition by or against the Seller
under any Bankruptcy Laws. The Seller hereby waives, to the maximum extent permitted by applicable law, any right to contest or otherwise assert that this
Agreement does not constitute a true, complete, absolute and irrevocable sale, transfer, assignment and conveyance by the Seller to the Buyer of all of the
Seller’s right, title and interest in and to the 2021 Revenue Participation Right under applicable Law, which waiver shall, to the maximum extent permitted
by applicable Law, be enforceable against the Seller in any bankruptcy or insolvency proceeding relating to the Seller. Accordingly, the Seller shall treat the
sale, transfer, assignment and conveyance of the 2021 Revenue Participation Right as a sale of “accounts” or “payment intangibles” (as appropriate) in
accordance with the UCC, and the Seller hereby authorizes the Buyer to file financing statements or any amendments to financing statements previously
filed by the Buyer pursuant to the 2020 Agreement (and continuation statements with respect to such financing statements when applicable) naming the
Seller as the debtor and the Buyer as the secured party in respect to the Revenue Participation Rights.
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(c) Not in derogation of the foregoing statement of the intent of the parties hereto, and for the purposes of providing additional
assurance to the Buyer in the event that, despite the intent of the parties hereto, the sale, transfer, assignment and conveyance of the 2020 Revenue
Participation Right or the 2021 Revenue Participation Right is hereafter held not to be a sale, the Seller does hereby: (x) grant to the Buyer, as security for
the payment of amounts to the Buyer equal to (a) with respect to the 2020 Revenue Participation Right, the Purchase Price (as defined in the 2020
Agreement) (plus a market rate of return thereon) less all 2020 Royalty Payments received by the Buyer pursuant to any of the 2020 Agreement and this
Agreement plus (b) with respect to the 2021 Revenue Participation Right, the Purchase Price (as defined herein) (plus a market rate of return thereon) less
all 2021 Royalty Payments received by the Buyer pursuant to this Agreement, a security interest in and to all right, title and interest in, to and under the
Revenue Participation Rights, the Royalty Payments, and the Product Collateral (clause (x), the “Back-Up Security Interest”); (y) authorize the Buyer, from
and after the Closing, to file such financing statements, or any amendments to financing statements previously filed by the Buyer pursuant to the 2020
Agreement, and continuation statements with respect to such financing statements when applicable, in such manner and such jurisdictions as are necessary
or appropriate to perfect the Back-Up Security Interest and (z) ratify the filing by the Buyer of any financing statements and amendments thereto that have
previously been made, and reaffirms, ratifies and confirms all grants of security interests and Liens (and acknowledges that such are continuing) in favor of
the Buyer under the 2020 Agreement, as modified by this Agreement.
Section 2.2 Purchase Price. At the Closing and upon the terms and subject to the conditions of this Agreement, the purchase price to be
paid as consideration to the Seller for the sale, transfer, assignment and conveyance of the 2021 Revenue Participation Right to the Buyer is One Hundred
Fifty Million Dollars ($150,000,000) in cash (the “Purchase Price”).
Section 2.3 No Assumed Obligations, Etc. Notwithstanding any provision in this Agreement to the contrary, the Buyer is only agreeing,
on the terms and conditions set forth in this Agreement, to purchase, acquire and accept the 2021 Revenue Participation Right and is not assuming any
liability or obligation of the Seller of whatever nature, whether presently in existence or arising or asserted hereafter.
ARTICLE 3
CLOSING
Section 3.1 Closing. Subject to the satisfaction of the conditions set forth in ARTICLE 5, the Closing shall take place remotely via the
exchange of documents and signatures on the date hereof, subject to the satisfaction or waiver of the conditions set forth in ARTICLE 5 (other than those
conditions that by their nature are to be satisfied at the Closing).
to the Seller by electronic funds transfer or wire transfer of immediately available funds to one or more accounts specified by the Seller.
Section 3.2 Payment of Purchase Price. At the Closing, the Buyer shall deliver (or cause to be delivered) payment of the Purchase Price
Section 3.3 Bill of Sale. At the Closing, upon confirmation of the receipt of the Purchase Price, the Seller shall deliver to the Buyer a
duly executed bill of sale evidencing the sale, transfer, assignment and conveyance of the 2021 Revenue Participation Right in form attached hereto as
Exhibit E.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
represents and warrants to the Buyer that as of the date hereof:
Section 4.1 Seller’s Representations and Warranties. Except as set forth on the Disclosure Schedule attached hereto, the Seller
(a) Existence; Good Standing. The Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Seller is duly licensed or qualified to do business and is in corporate good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in corporate good standing has not and would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(b) Authorization. The Seller has all requisite corporate power and authority to execute, deliver and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Seller.
(c) Enforceability. This Agreement has been duly executed and delivered by an authorized officer of the Seller and constitutes the valid
and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except as may be limited by applicable Bankruptcy Laws or
by general principles of equity (whether considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of the Seller, (ii) contravene
or conflict with or constitute a material default under any law binding upon or applicable to the Seller or the 2021 Revenue Participation Right or
(iii) contravene or conflict with or constitute a material default under any material agreement or Judgment binding upon or applicable to the Seller or the
2021 Revenue Participation Right.
(e) Consents. Except for the consents that have been obtained on or prior to the Closing, the UCC financing statements contemplated by
Section 2.1, or any filings required by the federal securities laws or stock exchange rules, no consent, approval, license, order, authorization, registration,
declaration or filing with or of any Governmental Entity or other Person is required to be done or obtained by the Seller in connection with (i) the execution
and delivery by the Seller of this Agreement, (ii) the performance by the Seller of its obligations under this Agreement or (iii) the consummation by the
Seller of any of the transactions contemplated by this Agreement.
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(f) No Litigation. Neither the Seller nor any of its Subsidiaries is a party to, and has not received any written notice of, any action, suit,
investigation or proceeding pending before any Governmental Entity and, to the Knowledge of the Seller, no such action, suit, investigation or proceeding
has been threatened against the Seller, that, individually or in the aggregate, has had or would, if determined adversely, reasonably be expected to have a
Material Adverse Effect.
(g) Compliance.
(i) All applications, submissions, information and data related to a Product submitted or utilized as the basis for any
request to any Regulatory Authority by or on behalf of the Seller were true and correct in all material respects as of the date of such
submission or request, and, to the Knowledge of the Seller any material updates, changes, corrections or modification to such
applications, submissions, information or data required under applicable laws or regulations have been submitted to the necessary
Regulatory Authorities.
(ii) Neither the Seller nor any of its Subsidiaries has committed any act, made any statement or failed to make any
statement that would reasonably be expected to provide a basis for the FDA or EMA to invoke its policy with respect to “Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities”, 56 Fed. Reg. 46191 (September 10, 1991) (the “FDA Application Integrity
Policy”) and any amendments thereto, or any similar policies by FDA or any other Regulatory Authority, set forth in any applicable laws
or regulations. Neither the Seller, nor to the Knowledge of the Seller, any of its officers, employees, contractors or agents is the subject of
any pending or, to the Knowledge of the Seller, threatened investigation by FDA or any other Regulatory Authority that could reasonably
result in the invocation of the FDA Application Integrity Policy or any similar policy by any Regulatory Authority.
(iii) The Seller has provided to the Buyer prior to the date hereof in a data room available to the Buyer true and
correct copies or summaries of all material written communications sent or received by the Seller and any of its Affiliates to or from any
Regulatory Authorities that relate to each Product since [***].
(iv) None of the Seller, any of its Subsidiaries and, to the Seller’s Knowledge, any Third Party manufacturer of any
Product, has received from the FDA a “Warning Letter”, Form FDA-483, “Untitled Letter,” or similar material written correspondence or
notice alleging violations of applicable laws and regulations enforced by the FDA, or any comparable material written correspondence
from any other Regulatory Authority with regard to either Product or the manufacture, processing, packaging or holding thereof, the
subject of which communication is unresolved and if determined adversely to the Seller or such Subsidiary would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
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(v) Since [***], (A) there have been no Safety Notices, (B) to the Seller’s Knowledge, there are no unresolved
material product complaints with respect to any Product, which would result in a Material Adverse Effect, and (C) to the Seller’s
knowledge, there are no facts currently in existence that would, individually or in the aggregate, reasonably be expected to result in (1) a
material Safety Notice with respect to any Product, or (2) a material change in the labeling of any Product. Since [***], neither the Seller
nor any of its Subsidiaries has experienced any significant failures in the manufacturing of any Product for clinical use or commercial
sale that have not been resolved, or that would, individually or in the aggregate, have had or would reasonably be expected to result in, if
such failure occurred again, a Material Adverse Effect.
(vi) The Seller possesses all Marketing Approvals and material permits, licenses, registrations, certificates,
authorizations, orders and approvals from the appropriate federal, state or foreign regulatory authorities necessary to conduct its business,
including all such material permits, licenses, registrations, certificates, authorizations, orders and approvals required by the FDA or any
other Regulatory Authority (collectively, “Permits”). The Seller has not received any written notice of proceedings relating to the
suspension, modification, revocation or cancellation of any Permit. Neither the Seller nor, to the Knowledge of the Seller, any officer,
employee or agent of the Seller has been convicted of any crime or engaged in any conduct that has previously caused or would
reasonably be expected to result in (A) disqualification or debarment by the FDA under 21 U.S.C. Sections 335(a) or (b), or any similar
law, rule or regulation of any other governmental entities, (B) debarment, suspension, or exclusion under any federal healthcare programs
or by the General Services Administration, or (C) exclusion under 42 U.S.C. Section 1320a-7 or any similar law, rule or regulation
administered by any Regulatory Authority. To the Knowledge of the Seller, neither the Seller nor any of its officers, employees,any of its
contractors or agents has made an untrue statement of material fact on, or material omissions from, any notifications, applications,
approvals, reports and other submissions to FDA or any similar Regulatory Authority.
(vii) The Seller is and has been in compliance with all applicable laws administered or issued by the FDA or any
similar Regulatory Authority, including the Federal Food, Drug, and Cosmetic Act, applicable requirements in FDA regulations, and any
orders issued by FDA or similar Regulatory Authorities, and all other laws regarding ownership, developing, testing, manufacturing,
packaging, storage, import, export, disposal, marketing, distributing, promoting, and complaint handling or adverse event reporting for
the products of the Seller, except to the extent that such failure to comply with such applicable laws would not reasonably be expected to
result in a Material Adverse Effect.
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(h) Licenses.
(i) In-Licenses. There are no In-Licenses.
(ii) Out-Licenses. Except as set forth on Schedule 4.1(h)(ii) of the Disclosure Schedule, there are no Out-Licenses
(any Out-License set forth on Schedule 4.1(h)(ii) of the Disclosure Schedule, an “Existing Out-License”). A true, correct and complete
copy of each Existing Out‑License has been provided to the Buyer by the Seller in a data room available to the Buyer. Neither the Seller
nor the respective counterparty thereto has made or entered into any amendment, supplement or modification to, or granted any waiver
under any provision of any Existing Out‑License.
(iii) Validity and Enforceability of Out-Licenses. Each Existing Out-License is a valid and binding obligation of the
Seller and the counterparty thereto. To the Knowledge of the Seller, each Existing Out-License is enforceable against each counterparty
thereto in accordance with its terms except as may be limited by applicable Bankruptcy Laws or by general principles of equity (whether
considered in a proceeding in equity or at law). The Seller has not received any written notice in connection with any Existing Out-
License challenging the validity, enforceability or interpretation of any provision of such agreement.
(iv) No Termination. The Seller has not (A) given notice to a counterparty of the termination of any Existing Out-
License (whether in whole or in part) or any notice to a counterparty expressing any intention or desire to terminate any Existing Out-
License or (B) received from a counterparty thereto any written notice of termination of any Existing Out-License (whether in whole or
in part) or any written notice from a counterparty expressing any intention or desire to terminate any Existing Out-License.
(v) No Breaches or Defaults. There is and has been no material breach or default under any provision of any Existing
Out-License either by the Seller or, to the Knowledge of the Seller, by the respective counterparty (or any predecessor thereof) thereto,
and there is no event that upon notice or the passage of time, or both, would reasonably be expected to give rise to any breach or default
either by the Seller or, to the Knowledge of the Seller, by the respective counterparty to such agreement.
required under each Existing Out‑License as of the date hereof.
(vi) Payments Made. The respective counterparty of each Existing Out-License has made all payments to the Seller
(vii) No Assignments. The Seller has not consented to any assignment by the counterparty to any Existing Out-
License of any of its rights or obligations under any such Existing Out-License and, to the Knowledge of the Seller, the counterparty has
not assigned any of its rights or obligations under any such Existing Out-License to any Person.
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Existing Out-License nor has the Seller received any claims for indemnification under any Existing Out-License.
(viii) No Indemnification Claims. The Seller has not notified any Person of any claims for indemnification under any
(ix) No Infringement. Neither the Seller nor any of its Subsidiaries has received any written notice from, or given any
written notice to, any counterparty to any Existing Out-License regarding any infringement of any of the Existing Patent Rights licensed
thereunder.
(i) No Liens; Title to 2021 Revenue Participation Right. None of the property or assets, in each case, that specifically relate to the
Products, including Intellectual Property Rights, of the Seller or any of its Subsidiaries is subject to any Lien, except for a Permitted Lien. Upon the
Closing, the Buyer will have acquired, subject to the terms and conditions set forth in this Agreement, good and marketable title to the 2021 Revenue
Participation Right, free and clear of all Liens, except for a Lien contemplated by subparts (a), (b), (e), (f), (g), (k), and (o) of the definition of “Permitted
Liens”.
(j) Manufacturing; Supply. All Products have, since [***], been manufactured, transported, stored and handled in all material respects
in accordance with applicable law and with good manufacturing practices. Since [***], neither the Seller nor any Affiliate of the Seller has experienced any
significant failures in the manufacturing or supply of any Product that, individually or in the aggregate, have had or would reasonably be expected to result
in, if such failure occurred again, a Material Adverse Effect. The Seller has on hand or has made adequate provisions to secure sufficient clinical quantities
of Products to complete all clinical trials and all activities required for Marketing Approvals, in each case, that are ongoing or planned as of the date hereof.
The Seller has on hand or has made adequate provisions to secure sufficient quantities of Orladeyo to support the commercial launch, and
commercialization, of Orladeyo in the Direct Sales Territories.
(k) Intellectual Property.
(i) Schedule 4.1(k)(i)(A) of the Disclosure Schedule lists all of the currently existing Patents included within the Patent Rights
(the “Existing Patent Rights”). The Seller is the sole and exclusive owner of all of the Existing Patent Rights. Schedule 4.1(k)(i)(A) of the
Disclosure Schedule specifies as to each listed patent or patent application the jurisdictions by or in which each such patent has issued as
a patent or such patent application has been filed, including the respective patent or application numbers.
(ii) Neither Seller nor any of its Subsidiaries is a party to any pending and, to the Knowledge of the Seller, there is no
threatened, litigation, interference, reexamination, opposition or like procedure involving any of the Existing Patent Rights.
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(iii) All of the issued patents within the Existing Patent Rights are (A) to the Knowledge of the Seller, valid and enforceable,
and (B) in full force and effect. None of the issued patents within the Existing Patent Rights have lapsed, expired or otherwise terminated.
Neither Seller nor any of its Subsidiaries has received any written notice relating to the lapse, expiration or other termination of any of the
issued patents within the Existing Patent Rights, and neither Seller nor its Subsidiaries has received any written legal opinion that alleges
that, an issued patent within any of the Existing Patent Rights is invalid or unenforceable.
(iv) Neither Seller nor any of its Subsidiaries has received any written notice that there is any, and, to the Knowledge of the
Seller, there is no, Person who is or claims to be an inventor under any of the Existing Patent Rights who is not a named inventor thereof.
(v) Neither Seller nor its Affiliates has received any written notice of any claim by any Person challenging the inventorship or
ownership of, the rights of the Seller in and to, or the patentability, validity or enforceability of, any of the Existing Patent Rights, or
asserting that the development, manufacture, importation, sale, offer for sale or use of the Product infringes, misappropriates or otherwise
violates or will infringe, misappropriate or otherwise violate such Person’s Patents or other intellectual property rights.
(vi) To the Knowledge of the Seller, the discovery, development manufacture, importation, sale, offer for sale or use of each
Product, in each case in the form such Product exists as of the date hereof and as such activity is currently contemplated by the Seller, has
not and will not, infringe, misappropriate or otherwise violate any Patents or other intellectual property rights owned by any Third Party.
(vii) To the Knowledge of the Seller, no Person has infringed, misappropriated or otherwise violated, or is infringing,
misappropriating or otherwise violating, any of the Intellectual Property Rights.
(viii) The Seller has paid all maintenance fees, annuities and like payments required as of the date hereof with respect to each
of the Existing Patent Rights.
(l) Indebtedness. Schedule 4.1(l) sets forth a complete list of the outstanding Indebtedness of the Seller and its Subsidiaries in excess of
$[***] in the aggregate. Since the 2020 Closing Date, the Seller and its Subsidiaries have not incurred any Indebtedness other than Permitted Indebtedness.
(m) Foreign Corrupt Practices Act. Neither the Seller nor, to the Knowledge of Seller, any of its directors, officers, employees or agents
have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any
“foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party or official
thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing
such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any
improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Seller or any of its Affiliates in obtaining or retaining business for or with, or
directing business to, any person. Neither the Seller nor, to the Knowledge of Seller, any of its directors, officers, employees or agents have made or
authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any
law, rule or regulation. The Seller further represents that it has maintained, and has caused each of its Subsidiaries to maintain, systems of internal controls
(including, but not limited to, accounting systems, purchasing systems and billing systems) and written policies designed to ensure compliance with the
FCPA or any other applicable anti-bribery or anti-corruption law, and designed to ensure that all books and records of the Seller accurately and fairly
reflect, in reasonable detail, all transactions and dispositions of funds and assets. To the Knowledge of the Seller, neither the Seller nor any of its officers,
directors or employees are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or
any other anti-corruption law.
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been, “BioCryst Pharmaceuticals, Inc.” The Seller is, and for the prior five (5) years has been, incorporated in the State of Delaware.
(n) Lien Related Representation and Warranties. The Seller’s exact legal name is, and for the immediately preceding five (5) years has
(o) Brokers’ Fees. Except for Cowen Inc., there is no investment banker, broker, finder, financial advisor or other intermediary who has
been retained by or is authorized to act on behalf of the Seller who might be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
Section 4.2 Buyer’s Representations and Warranties. The Buyer hereby represents and warrants to the Seller that:
State of Delaware.
(a) Existence; Good Standing. The Buyer is a statutory trust duly organized, validly existing and in good standing under the laws of the
(b) Authorization. The Buyer has the requisite trust right, power and authority to execute, deliver and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary action on the part of the Buyer.
(c) Enforceability. This Agreement has been duly executed and delivered by an authorized person of the owner trustee of the Buyer and
constitutes the valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as may be limited by
applicable Bankruptcy Laws or by general principles of equity (whether considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance by the Buyer of this Agreement do not and will not (i) contravene or conflict
with the organizational documents of the Buyer, (ii) contravene or conflict with or constitute a default under any material provision of any law binding
upon or applicable to the Buyer or (iii) contravene or conflict with or constitute a default under any material contract or other material agreement or
Judgment binding upon or applicable to the Buyer.
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(e) Consents. Except for any filings required by the federal securities laws or stock exchange rules, no consent, approval, license, order,
authorization, registration, declaration or filing with or of any Governmental Entity or other Person is required to be done or obtained by the Buyer in
connection with (i) the execution and delivery by the Buyer of this Agreement, (ii) the performance by the Buyer of its obligations under this Agreement or
(iii) the consummation by the Buyer of any of the transactions contemplated by this Agreement.
(f) No Litigation. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Buyer, threatened before any
Governmental Entity to which the Buyer is a party that would, if determined adversely, reasonably be expected to prevent or materially and adversely affect
the ability of the Buyer to perform its obligations under this Agreement.
under this Agreement are not contingent on obtaining financing.
(g) Financing. The Buyer has sufficient cash to pay the Purchase Price at the Closing. The Buyer acknowledges that its obligations
Revenue Participation Right by reason of the Buyer’s status as eligible for zero percent treaty rates with respect to such payments.
(h) Tax Status. Under current law, the Buyer is exempt from U.S. federal withholding tax on all payments with respect to the 2021
(i) Brokers’ Fees. There is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is
authorized to act on behalf of the Buyer who might be entitled to any fee or commission in connection with the transactions contemplated by this
Agreement.
Section 4.3 No Implied Representations and Warranties. The Buyer acknowledges and agrees that, other than the express
representations and warranties of the Seller specifically contained in this ARTICLE 4 and in ARTICLE 4 of the 2020 Agreement, (a) there are no
representations or warranties of the Seller either expressed or implied with respect to the Patent Rights or Royalty Payment and that the Buyer does not rely
on, and shall have no remedies in respect of, any representation or warranty not specifically set forth in this ARTICLE 4 or in ARTICLE 4 of the 2020
Agreement, and all other representations and warranties are hereby expressly disclaimed, and (b) nothing contained herein guarantees that sales of the
Products or the aggregate Royalty Payments due to the Buyer will achieve any specific amounts (it being understood and agreed that nothing in this Section
4.3 shall limit in any way the Seller’s obligations under ARTICLE 8). Notwithstanding the foregoing, claims for fraud, gross negligence, or willful
misconduct shall not be waived or limited in any way by this Section 4.3. Except for the Revenue Participation Rights, Back-Up Security Interest and the
Buyer’s rights under Section 6.5(d), the Buyer further acknowledges and agrees that no licenses or assignments under any assets (including the Patent
Rights or any other intellectual property) of the Seller and its Affiliates are granted pursuant to this Agreement, including by implication, estoppel,
exhaustion or otherwise.
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ARTICLE 5
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Buyer’s Obligations. The obligations of the Buyer to consummate the transactions contemplated
hereunder on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
(a) The Seller shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions
required to be performed and complied with by it under this Agreement at or prior to the Closing Date, and the Buyer shall have received a certificate
executed by a duly authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of the foregoing.
(b) The representations and warranties of the Seller contained in Section 4.1 shall have been true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made at and as of the date hereof and as of the
Closing Date, respectively, except to the extent any such representation or warranty expressly speaks as of a particular date, in which case it shall be true
and correct in all material respects as of such date; provided, that to the extent that any such representation or warranty is qualified by the term “material”
or “Material Adverse Effect” such representation or warranty (as so written, including the term “material” or “Material Adverse Effect”) shall have been
true and correct in all respects as of the date hereof and shall be true and correct in all respects as of the Closing Date or such other date, as applicable. The
Buyer shall have received a certificate executed by an authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of
the foregoing.
(c) No event or events shall have occurred, or be reasonably likely to occur, that, individually or in the aggregate, have had or would
reasonably be expected to result in (or, with the giving of notice, the passage of time or otherwise, would result in) a Material Adverse Effect. The Buyer
shall have received a certificate executed by a duly authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of the
foregoing.
(d) There shall not have been issued and be in effect any Judgment of any Governmental Entity enjoining, preventing or restricting the
consummation of the transactions contemplated by this Agreement.
(e) There shall not have been instituted or be pending any action or proceeding by any Governmental Entity or any other Person
(i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain material damages in connection with the transactions contemplated hereby or (iii) seeking to restrain or prohibit
the Buyer’s purchase of the 2021 Revenue Participation Right.
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defined in the OMERS Transaction Agreement and Athyrium.
(f) The Buyer shall have received the Intercreditor Agreement, duly executed and delivered by the Seller, the “Buyer” under and as
(g) The Buyer shall have received the Stock Purchase Agreement, duly executed and delivered by the Seller.
from U.S. federal “backup” withholding Tax.
(h) The Buyer shall have received a valid, properly executed Internal Revenue Service Form W-9 certifying that the Seller is exempt
substantially the forms attached hereto as Exhibit F.
(i) The Seller shall have delivered to the Buyer the legal opinions of Gibson, Dunn & Crutcher, LLP, as counsel to the Seller, in
(j) The Buyer shall have received a certificate of the Secretary or an Assistant Secretary of the Seller, dated the Closing Date, certifying
as to (i) the incumbency of each officer of the Seller executing this Agreement and (ii) the attached thereto copies of (A) the Seller’s certificate of
incorporation, (B) bylaws, and (C) resolutions adopted by the Seller’s Board of Directors authorizing the execution and delivery by the Seller of this
Agreement and the consummation by the Seller of the transactions contemplated hereby (the “Seller Certificate”).
(k) The Seller shall have confirmed it has scheduled delivery to Buyer of a CD or USB containing copies of all documents uploaded to
the data room related to the transactions contemplated by this Agreement, as of the date hereof, maintained by the Seller and made available to the Buyer,
including all documents referred to in Section 4.1(g)(iii) and Section 4.1(h)(ii).
on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
Section 5.2 Conditions to the Seller’s Obligations. The obligations of the Seller to consummate the transactions contemplated hereunder
(a) The Buyer shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions
required to be performed and complied with by it under this Agreement at or prior to the Closing Date, and the Seller shall have received a certificate
executed by a duly authorized person of RP Management, LLC, as Administrator of the Buyer, on the Closing Date certifying on behalf of the Buyer to the
effect of the foregoing.
(b) The representations and warranties of the Buyer contained in Section 4.2 shall have been true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made at and as of the date hereof and Closing Date,
respectively, except to the extent any such representation or warranty expressly speaks as of a particular date, in which case it shall be true and correct in all
material respects as of such date; provided, that to the extent that any such representation or warranty is qualified by the term “material,” or “Material
Adverse Effect” such representation or warranty (as so written, including the term “material” or “Material Adverse Effect”) shall have been true and correct
in all respects as of the date hereof and shall be true and correct in all respects as of the Closing Date or such other date, as applicable. The Seller shall have
received a certificate executed by a duly authorized person of RP Management, LLC, as Administrator of the Buyer, on the Closing Date certifying on
behalf of the Buyer to the effect of the foregoing.
39
consummation of the transactions contemplated by this Agreement.
(c) There shall not have been issued and be in effect any Judgment of any Governmental Entity enjoining, preventing or restricting the
(d) There shall not have been instituted or be pending any action or proceeding by any Governmental Entity or any other Person
(i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain material damages in connection with the transactions contemplated hereby or (iii) seeking to restrain or prohibit
the Buyer’s purchase of the 2021 Revenue Participation Right.
(e) The Seller shall have received a valid, properly executed Internal Revenue Service Form W-8BEN-E certifying that the Buyer is
exempt from U.S. federal withholding Tax in respect of all payments with respect to the 2021 Revenue Participation Rights under an applicable United
States income Tax treaty.
(f) The Buyer shall have delivered to the Seller standard existence and authority opinions in respect of the Buyer, enforceability
opinions on this Agreement, and an opinion that this Agreement does not conflict with the organizational documents of the Buyer or applicable law, each
such opinion in a form previously agreed upon by the Seller and the Buyer.
certifying as to the incumbency of the officers executing this Agreement on behalf of the Buyer.
(g) The Seller shall have received a certificate of an authorized person of the owner trustee of the Buyer, dated the Closing Date,
ARTICLE 6
COVENANTS
Section 6.1 Reporting. From and after the date hereof, the Seller shall provide the Buyer:
(a) promptly following the end of each calendar quarter, but in any event, in each case, no later than [***] calendar days after the end of
such calendar quarter, as applicable, a reasonably detailed quarterly report setting forth, with respect to such same period, (i) the Clinical Updates and (ii)
the Commercial Updates (the “Clinical and Commercial Quarterly Report”); provided that beginning with (A) the [***] calendar quarter following
Regulatory Approval (in the case of Clinical Updates) or (B) the [***] calendar quarter following the First Commercial Sale in the United States (in the
case of Commercial Updates) of a given Product (on a Product-by-Product basis), the Seller shall no longer be required to deliver Clinical and Commercial
Quarterly Reports for such Product and shall thereafter promptly following the end of each [***]-month period in a calendar year ([***]), but in any event,
in each case, no later than [***] calendar days after the end of such [***]-month period, as applicable, a reasonably detailed semi-annual report setting
forth, with respect to such same period, (1) any Clinical Updates and (2) the Commercial Updates (the “Clinical and Commercial Semi-Annual Report”);
40
(b) promptly following the end of each [***]-month period in a calendar year ([***]), but in any event, in each case, no later than [***]
calendar days after the end of such [***]-month period, as applicable, a reasonably detailed semi-annual report setting forth, with respect to such same
period, (i) the Regulatory Updates, and (ii) the Intellectual Property Updates (the “Regulatory and IP Semi-Annual Report”, and, collectively with the
Clinical and Commercial Quarterly Report and the Clinical and Commercial Semi-Annual Reports, the “Reports”); and
development, sales, regulatory or other milestone event set forth in each Out-License.
(c) The Seller shall include in each Report as applicable any (i) material CMC updates and (ii) details as to the achievement of any
(d) The Seller shall also provide the Buyer with such additional information regarding the updates included in each Report as the Buyer
may reasonably request from time to time. The Seller shall prepare and maintain and shall cause its Affiliates and Licensees to prepare and maintain
reasonably complete and accurate records of the information to be disclosed in each Report. All Reports, and the Confidential Information contained
therein, shall be the Confidential Information of Seller and subject to the obligations of confidentiality set forth in ARTICLE 8.
Section 6.2 Royalty Payments; Revenue Participation and Royalty Payment Details.
(a) From and after the First Commercial Sale of a Product in any country, the Seller shall pay to the Buyer, without any setoff or offset
(subject, in each case, to Section 6.13), the Royalty Payment for each calendar quarter promptly, but in any event no later than [***] calendar days after the
end of each of the first three (3) calendar quarters and [***] calendar days after the end of the last calendar quarter in each calendar year (or [***] Business
Days after the filing of the Seller’s annual report on Form 10-K, if earlier), provided that for any payments received by the Seller after the date that is [***]
calendar days after the end of each calendar quarter, such payment will be paid with the following calendar quarter’s Royalty Payment. A late fee of
[***]% over the Prime Rate (calculated on a per annum basis) will accrue on all unpaid amounts with respect to any Royalty Payment from the date such
obligation was due. The imposition and payment of a late fee shall not constitute a waiver of the Buyer’s rights with respect to such payment default.
(b) For the convenience of the parties, Exhibit G sets forth the aggregate royalty rates and revenue sharing rates for Orladeyo for
purposes of calculating the Royalty Payments in respect of Orladeyo that are payable to the Buyer following the Closing as a result of the 2020 Transaction
and the transactions contemplated hereby. For the avoidance of doubt, nothing in this Section 6.2 shall be deemed to provide for the duplication of any
Royalty Payment under the 2020 Agreement and this Agreement.
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(c) From and after the First Commercial Sale of a Product in any country, for each calendar quarter promptly, but in any event no later
than [***] calendar days after the end of each of the first three (3) calendar quarters and [***] calendar days after the end of the last calendar quarter in
each calendar year (or [***] Business Days after the filing of the Company’s annual report on Form 10-K, if earlier), the Seller shall provide to Buyer a
report setting forth in reasonable detail:
(i) with respect to BCX9930, Gross Sales and Net Sales for the applicable calendar quarter and calendar year to date, on a
country-by-country basis (including a detailed break-down of all permitted deductions from Gross Sales used to determine Net Sales and
any Net Sales described in Section 6.5(d));
(ii) with respect to Complement Inhibitor, Gross Sales and Net Sales for the applicable calendar quarter and calendar year to
date, on a country-by-country basis (including a detailed break-down of all permitted deductions from Gross Sales used to determine Net
Sales and any Net Sales described in Section 6.5(d));
(iii) with respect to Orladeyo, (A) the calculation of Orladeyo Direct Sales, including Gross Sales and Net Sales for the
applicable calendar quarter and calendar year to date, on a country-by-country basis (including a detailed break-down of all permitted
deductions from Gross Sales used to determine Net Sales and any Net Sales described in Section 6.5(d)), and (B) the calculation of
Orladeyo Indirect Revenues on a country-by-country and Licensee-by-Licensee basis (including a detailed breakdown of Orladeyo
Indirect Revenue consisting of royalties, upfront payments, milestones and other fixed payments);
(iv) for the applicable calendar quarter, and calendar year to date, on a Product-by-Product and country-by-country basis, the
number of units of each Product sold by the Seller, its Affiliates and each Licensee;
(v) for the applicable calendar quarter and calendar year to date, on a Product-by-Product, country-by-country and Permitted
Purchaser-by-Permitted Purchaser basis, the calculation of the Product Partnering Revenue, including a detailed break-down of the
consideration received by the Seller or its Affiliates from the applicable Permitted Sale and any expenses and Excluded Payments used to
determine Product Partnering Revenue;
(vi) for the applicable calendar quarter and calendar year to date, the calculation of the Royalty Payment payable to the Buyer;
and
(vii) for the applicable calendar quarter and on a Product-by-Product and country-by-country basis, the foreign currency
exchange rate used to calculate the Royalty Payment (which shall be the rate of exchange determined in a manner consistent with the
Seller’s method for calculating rates of exchange in the preparation of the Seller’s annual financial statements in accordance with
accounting principles generally accepted in the United States);
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provided that for any reports received by the Seller after the date that is [***] calendar days after the end of each calendar quarter, the Seller shall provide
to the Buyer the relevant information from such reports in the following calendar quarter’s report.
(d) Any payments required to be made by either party under this Agreement or the 2020 Agreement shall be made in United States
Dollars via electronic funds transfer or wire transfer of immediately available funds to such bank account as the other party shall designate in writing prior
to the date of such payment.
Section 6.3 Disclosures. Except for a press release previously approved in form and substance by the Seller and the Buyer or any other
public announcement using substantially the same text as such press release, neither the Buyer nor the Seller shall, and each party hereto shall cause its
respective Representatives, Affiliates and Affiliates’ Representatives not to issue a press release or other public announcement or otherwise make any
public disclosure with respect to this Agreement or the 2020 Agreement, or the subject matter hereof or thereof, without the prior written consent of the
other party hereto (which consent shall not be unreasonably withheld or delayed), except as may be required by applicable law or stock exchange rule (in
which case the party hereto required to make the press release or other public announcement or disclosure shall allow the other party hereto reasonable time
to comment on, and, if applicable, reasonably direct the disclosing party to seek confidential treatment in respect of portions of, such press release or other
public announcement or disclosure in advance of such issuance).
Section 6.4 Inspections and Audits of the Seller. Following the Closing, upon at least fourteen (14) Business Days written notice and
during normal business hours, no more frequently than once per calendar year, the Buyer may cause an inspection and/or audit by an independent public
accounting firm reasonably acceptable to the Seller to be made of the Seller’s books of account for the three (3) calendar years prior to the audit for the
purpose of determining the correctness of the calculation of the Royalty Payments under this Agreement or the 2020 Agreement. Upon the Buyer’s
reasonable request, no more frequently than once per calendar year while any Out-License remains in effect, the Seller shall use Commercially Reasonable
Efforts to exercise any rights it may have under any Out-License relating to a Product to cause an inspection and/or audit by an independent public
accounting firm to be made of the books of account of any counterparty thereto for the purpose of determining the correctness of the calculation of the
Royalty Payments under this Agreement or the 2020 Agreement. Seller shall notify Buyer in writing if it initiates an inspection and/or audit of the books of
accounts of any counterparty to an Out-License to the extent such inspection and/or audit is related to the Royalty Payments, and shall provide to Buyer a
redacted copy of any report relating thereto within ten (10) Business Days of receipt thereof; provided, that any redactions to such report shall not include
any information necessary to determine the correctness of the calculation of the Royalty Payments made under this Agreement or the 2020 Agreement. All
of the out-of-pocket expenses of any inspection or audit requested by the Buyer hereunder (including the fees and expenses of such independent public
accounting firm designated for such purpose) shall be borne solely by the Buyer, unless the independent public accounting firm determines that Royalty
Payments previously paid to Buyer during the period of the audit were underpaid by an amount greater than [***]% of the Royalty Payments actually paid
during such period, in which case such expenses shall be borne by the Seller. Any such accounting firm or Seller shall not disclose the confidential
information of the Seller or any such Licensee relating to a Product to the Buyer, except to the extent such disclosure is necessary to determine the
correctness of Royalty Payments or otherwise would be included in a Report. All information obtained by the Buyer as a result of any such inspection or
audit shall be Confidential Information subject to ARTICLE 8. If any audit discloses any underpayments by the Seller to the Buyer, then such
underpayment shall be paid by the Seller to the Buyer within thirty (30) calendar days of it being so disclosed. If any audit discloses any overpayments by
the Seller to the Buyer, then the Seller shall have the right to credit the amount of the overpayment against each subsequent quarterly Royalty Payment due
to the Buyer until the overpayment has been fully applied. If the overpayment is not fully applied prior to the final quarterly Royalty Payment due
hereunder, the Buyer shall promptly refund an amount equal to any such remaining overpayment.
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Section 6.5 Intellectual Property Matters.
(a) The Seller shall provide to the Buyer a copy of any written notice received by the Seller from a Third Party alleging or claiming that
the making, having made, using, importing, offering for sale or selling of a Product infringes or misappropriates any Patents or other intellectual property
rights of such Third Party, together with copies of material correspondence sent or received by the Seller related thereto, as soon as practicable and in any
event not more than [***] Business Days following such delivery or receipt.
(b) The Seller shall promptly inform the Buyer of any infringement by a Third Party of any Patent Right of which any of the individuals
named in the definition of “Knowledge of the Seller” (or the successors of such Person at the Seller) becomes aware. Without limiting the foregoing, the
Seller shall provide to the Buyer a copy of any written notice of any suspected infringement of any Patent Rights delivered or received by the Seller, as well
as copies of material correspondence related thereto, as soon as practicable and in any event not more than [***] Business Days following such delivery or
receipt.
infringement by a Third Party of any Patent Right, the Seller shall provide the Buyer with written notice of such enforcement action.
(c) Within [***] Business Days of initiating, or permitting a Licensee to initiate, an enforcement action regarding any suspected
(d) If the Seller recovers monetary damages from a Third Party in an action brought for such Third Party’s infringement of any Patent
Rights relating to a Product, where such damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights,
(i) such recovery will be allocated first to the reimbursement of any expenses incurred by the Seller (or any party to an In-License or Permitted Licensees of
such Patent Rights entitled to such reimbursement under any such In-License or Out-License ) in bringing such action (including all reasonable attorney’s
fees), (ii) any remaining amounts will be reduced, if applicable, to comply with allocation of recovered damages with licensors of such Patent Rights
required under any In-Licenses or Permitted Licensees of such Patent Rights under any Out-Licenses, if any, and (iii) any residual amount of such damages
after application of (i) and (ii) will be treated as Orladeyo Direct Sales with respect to the Direct Sales Territories, Orladeyo Indirect Revenue with respect
to the Indirect Sales Territories, Product Partnering Revenue with respect to the Permitted Sale Territory, BCX9930 Net Sales or Complement Inhibitor Net
Sales, as applicable.
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Section 6.6 In-Licenses.
(a) The Seller shall promptly (and in any event within [***] Business Days) provide the Buyer with (i) executed copies of any In-
License entered into by the Seller or its Affiliates, and (ii) executed copies of each amendment, supplement, modification or written waiver of any
provision of any In-License.
(b) The Seller shall use Commercially Reasonable Efforts to comply in all material respects with its obligations under any In-Licenses
it enters into and shall not take any action or forego any action that would reasonably be expected to result in a material breach thereof. Promptly, and in
any event within [***] Business Days, after receipt of any (written or oral) notice from a counterparty to any In-License or its Affiliates of an alleged
material breach under any In-License, the Seller shall provide the Buyer a copy thereof. The Seller shall use its Commercially Reasonable Efforts to cure
any material breaches by it under any In-License and shall give written notice to the Buyer upon curing any such breach. The Seller shall provide the Buyer
with written notice following becoming aware of a counterparty’s material breach of its obligations under any In-License. The Seller shall not terminate
any In-License without providing the Buyer prior written notice. Promptly, and in any event within [***] Business Days following the Seller’s notice to a
counterparty to any In-License of an alleged breach by such counterparty under any such In-License, the Seller shall provide the Buyer a copy thereof.
Section 6.7 Out-Licenses and Permitted Sales.
(a) Subject to compliance with this Section 6.7, the Seller may enter into either (i) an Out-License with a Third Party or enter into an
agreement to research, develop or manufacture any Product in all or any portion of the world without the Buyer’s prior written consent; provided, that such
license shall not assign or otherwise convey title to or impose any Lien, other than the grant of the license or sublicense, in favor of any Third Party (any
such license, a “Permitted License”), or (ii) a Permitted Sale.
(b) The Seller shall promptly (and in any event within [***] Business Days) provide the Buyer with (i) executed copies of each Out-
License and Permitted Sale, and (ii) executed copies of each amendment, supplement, modification or written waiver of any material provision of an Out-
License or Permitted Sale.
(c) The Seller shall include in all Out-Licenses (other than Existing Out-Licenses) and all definitive agreement(s) for Permitted Sales
provisions permitting the Seller to audit such Licensee or Permitted Purchaser (as applicable) and shall use commercially reasonable efforts to include
terms and conditions consistent in all material respects with the Buyer’s rights to audit the Seller set forth in Section 6.4.
(d) The Seller shall provide the Buyer prompt (and in any event within [***] Business Days) written notice of a Licensee’s material
breach of its obligations under any Out-License or a Permitted Purchaser’s material breach of its obligations under any Permitted Sale of which any of the
individuals named in the definition of “Knowledge of the Seller” (or the successors of such Person at the Seller) becomes aware.
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termination of any Out-License or Permitted Sale.
(e) The Seller shall provide the Buyer with written notice promptly (and in any event within [***] Business Days) following the
Section 6.8 Restricted Indebtedness. Prior to the Minimum Return Date, the Seller shall not, and shall not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Restricted Indebtedness. As a condition to the incurrence of any secured Permitted Indebtedness for borrowed
money with one or more lenders other than the holders of Indebtedness under the Athyrium Credit Agreement, either (i) the Seller shall cause such lender
or lenders or any agent, representative or trustee acting on behalf of such lender or lenders to become a party to the Intercreditor Agreement in accordance
with the terms thereof or (ii) the Buyer shall enter, and the Seller shall enter and cause such lender or lenders or any agent, representative or trustee acting
on behalf of such lender or lenders to enter into an Other Intercreditor Agreement. Notwithstanding the foregoing and except as otherwise agreed by the
parties, following the Minimum Return Date, the Seller shall not, and shall not permit any of its Subsidiaries to incur any Convertible Bond Indebtedness
unless such Convertible Bond Indebtedness shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the future
to the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the indenture
under which such Convertible Bond Indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the Seller, and the
applicable Third Party in writing.
Section 6.9 Diligence.
(a) The Seller shall use Commercially Reasonable Efforts to complete clinical development and Commercialize (either directly or
through Licensees) (a) Orladeyo in the Direct Sales Territories for hereditary angioedema, (b) BCX9930 in the Direct Sales Territories for paroxysmal
nocturnal hemoglobinuria, and (c) either BCX9930 or Complement Inhibitor in the Direct Sales Territories for at least three indications other than
paroxysmal nocturnal hemoglobinuria that the Seller reasonably determines have the greatest prospects for receiving Marketing Approvals and for
successful Commercialization in the Direct Sales Territories. In furtherance of the foregoing, the Seller shall use Commercially Reasonable Efforts to
prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or desirable to secure and maintain all Marketing
Approvals required to Commercialize Orladeyo, BCX9930 and Complement Inhibitor in the Direct Sales Territories and the Seller shall use Commercially
Reasonable Efforts to not withdraw or abandon, or fail to take any action necessary to prevent the withdrawal or abandonment of, any such Marketing
Approvals.
Product, the Seller’s obligations under Section 6.9(a) shall no longer apply in such country for such Product.
(b) On a country-by-country and Product-by-Product basis, if a Loss of Market Exclusivity has occurred in such country for such
Section 6.10 Efforts to Consummate Transactions. Subject to the terms and conditions of this Agreement, each of the Seller and the
Buyer will use its commercially reasonable efforts prior to the Closing to take, or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary under applicable law to consummate the transactions contemplated by this Agreement. Each of the Buyer and the Seller agrees to
execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in
order to consummate or implement expeditiously the transactions contemplated by this Agreement.
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Section 6.11 Further Assurances. After the Closing, the Seller and the Buyer agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to give effect to the transactions
contemplated by this Agreement and the 2020 Agreement.
Section 6.12 No Impairment of Revenue Participation Right or Back-Up Security Interest. Notwithstanding anything herein or in the
2020 Agreement to the contrary, the Seller shall not enter into any contracts or arrangements or otherwise knowingly take any action or knowingly fail to
act in a manner that would, individually or in the aggregate, reasonably be expected to materially and adversely affect the Buyer’s interest in the Revenue
Participation Rights or the Back-Up Security Interest. The parties agree that the entry into (i) the Athyrium Loan Documents, (ii) any agreement evidencing
any secured Indebtedness permitted by clause (b)(ii) of the definition of Restricted Indebtedness, (iii) the OMERS Transaction Agreement or (iv) the 2020
Agreement, which shall, in each case, be subject to and in compliance with the Intercreditor Agreement or any Other Intercreditor Agreement, shall be
deemed to not materially and adversely affect the Buyer’s interest in the Revenue Participation Rights or the Back-Up Security Interest
Section 6.13 Certain Tax Matters.
(a) The Seller and the Buyer agree that for Tax purposes, (a) the Seller and the Buyer shall treat the transactions contemplated by this
Agreement and the 2020 Agreement as sales of the Revenue Participation Rights and (b) any and all amounts remitted by the Seller to the Buyer after the
2020 Closing Date pursuant to this Agreement or the 2020 Agreement shall be treated as received by the Seller as agent for the Buyer. The parties hereto
agree not to take any position that is inconsistent with the provisions of this Section 6.13(a) on any tax return or in any audit or other tax-related
administrative or judicial proceeding unless the other party hereto has consented in writing (such consent not to be unreasonably withheld, conditioned or
delayed) to such actions. If there is an inquiry by any Governmental Entity of the Buyer or the Seller related to the treatment described in this Section
6.13(a), the parties hereto shall cooperate with each other in responding to such inquiry in a reasonable manner which is consistent with this Section
6.13(a).
(b) Notwithstanding anything to the contrary in this Agreement, each of the Buyer and the Seller shall be entitled to withhold and
deduct (or cause to be withheld and deducted) from any amount payable under this Agreement or the 2020 Agreement to the other party any Tax that the
Buyer or the Seller, as applicable, determines that it is required to withhold and deduct under applicable law, and any such amount withheld and deducted
shall be treated for all purposes of this Agreement as being paid to the other party; provided that each of the Buyer and the Seller shall give the other party
reasonable prior notice and the opportunity, in good faith, to contest and prevent such withholding and deduction. The parties hereto shall use commercially
reasonable efforts to give or cause to be given to the other party hereto such assistance and such information concerning the reasons for withholding or
deduction (including, in reasonable detail, the method of calculation for the deduction or withholding thereof) as may be reasonably necessary to enable the
Buyer or the Seller, as applicable, to claim exemption therefrom, or credit therefor, or relief (whether at source or by reclaim) therefrom, and, in each case,
shall furnish the Buyer or the Seller, as applicable, with proper evidence of the taxes withheld and deducted and remitted to the relevant taxing authority.
The Buyer agrees (i) to notify the Seller in writing if (A) Buyer becomes ineligible to use or deliver the Form W-8BEN-E delivered to the Seller under
Section 5.2(e), or (B) the Form W-8BEN-E delivered to the Seller under Section 5.2(e) ceases to be accurate or complete, and (ii) to provide (to the extent
it is legally eligible to do so) any additional Tax forms that the Seller may reasonably request.
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ARTICLE 7
INDEMNIFICATION
Section 7.1 General Indemnity. From and after the Closing:
(a) the Seller hereby agrees to indemnify, defend and hold harmless the Buyer and its Affiliates and its and their directors, managers,
trustees, officers, agents and employees (the “Buyer Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Buyer
Indemnified Parties to the extent arising out of or resulting from (i) any breach of any of the representations or warranties of the Seller in this Agreement,
and (ii) any breach of any of the covenants or agreements of the Seller in this Agreement; and
(b) the Buyer hereby agrees to indemnify, defend and hold harmless the Seller and its Affiliates and its and their directors, officers,
agents and employees (the “Seller Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Seller Indemnified Parties to
the extent arising out of or resulting from (i) any breach of any of the representations or warranties of the Buyer in this Agreement, and (ii) any breach of
any of the covenants or agreements of the Buyer in this Agreement.
Section 7.2 Notice of Claims. If either a Buyer Indemnified Party, on the one hand, or a Seller Indemnified Party, on the other hand
(such Buyer Indemnified Party on the one hand and such Seller Indemnified Party on the other hand being hereinafter referred to as an “Indemnified
Party”), has suffered or incurred any Losses for which indemnification may be sought under this ARTICLE 7, the Indemnified Party shall so notify the
other party from whom indemnification is sought under this ARTICLE 7 (the “Indemnifying Party”) promptly in writing describing such Loss, the amount
or estimated amount thereof, if known or reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity
and containing a reference to the provisions of this Agreement in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding is
asserted or instituted by or against a Third Party with respect to which an Indemnified Party intends to claim any Loss under this ARTICLE 7, such
Indemnified Party shall promptly notify the Indemnifying Party of such claim, action, suit or proceeding and tender to the Indemnifying Party the defense
of such claim, action, suit or proceeding. A failure by an Indemnified Party to give notice and to tender the defense of such claim, action, suit or proceeding
in a timely manner pursuant to this Section 7.2 shall not limit the obligation of the Indemnifying Party under this ARTICLE 7, except to the extent such
Indemnifying Party is actually prejudiced thereby.
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Section 7.3 Limitations on Liability. Except for claims arising from a breach of confidentiality obligations under ARTICLE 8 or in
cases of fraud, gross negligence, or willful misconduct, no party hereto shall be liable for any consequential, punitive, special or incidental damages under
this ARTICLE 7 (and no claim for indemnification hereunder shall be asserted) as a result of any breach or violation of any covenant or agreement of such
party (including under this ARTICLE 7) in or pursuant to this Agreement. In connection with the foregoing, the parties hereto acknowledge and agree that
(i) the Buyer’s damages, if any, for any such action or claim will typically include Losses for Royalty Payments that the Buyer was entitled to receive in
respect of its ownership of the Royalty Payments but did not receive timely or at all due to such indemnifiable event and (ii) the Buyer shall be entitled to
make claims for all such missing or delayed Royalty Payments as Losses hereunder, and such missing or delayed Royalty Payments shall not be deemed
consequential, punitive, special, indirect or incidental damages.
Section 7.4 Exclusive Remedy; No Duplication of Recovery under 2020 Agreement. Except as set forth in Section 10.11, from and
after Closing, the rights of the parties hereto pursuant to (and subject to the conditions of) this ARTICLE 7 shall be the sole and exclusive remedy of the
parties hereto and their respective Affiliates with respect to any Losses (whether based in contract, tort or otherwise) resulting from or relating to any
breach of the representations, warranties, covenants and agreements made under this Agreement or any certificate, document or instrument delivered
hereunder, and each party hereto hereby waives, to the fullest extent permitted under applicable law, and agrees not to assert after Closing, any other claim
or action in respect of any such breach. Notwithstanding the foregoing, the rights of Buyer under the Intercreditor Agreement and claims for fraud, gross
negligence, or willful misconduct shall not be waived or limited in any way by this ARTICLE 7. No party hereto shall be entitled to recover duplicative
Losses for Losses resulting from or relating to any breach of any representations, warranties, covenants or agreements made under this Agreement that also
constitute Losses resulting from or relating to any breach of any representations, warranties, covenants or agreements made under the 2020 Agreement.
this ARTICLE 7 will be treated as an adjustment to the Purchase Price for U.S. federal income tax to the fullest extent permitted by applicable law.
Section 7.5 Tax Treatment of Indemnification Payments. For all purposes hereunder, any indemnification payments made pursuant to
ARTICLE 8
CONFIDENTIALITY
Section 8.1 Confidentiality. Except as provided in this ARTICLE 8, Section 10.4 or otherwise agreed in writing by the parties, the
parties hereto agree that, during the term of this Agreement and for [***] years thereafter, each party (the “Receiving Party”) shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other than as provided for in this Agreement (which includes the exercise of any
rights or the performance of any obligations hereunder) any information furnished to it by or on behalf of the other party (the “Disclosing Party”) pursuant
to this Agreement (such information, “Confidential Information” of the Disclosing Party), except for that portion of such information that:
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Disclosing Party;
(a) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the
(b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;
omission of the Receiving Party in breach of this Agreement or any other agreement;
(c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or
reference of the Confidential Information; or
(d) is independently developed by the Receiving Party or any of its Affiliates, as evidenced by written records, without the use of or
(e) is subsequently disclosed to the Receiving Party on a non-confidential basis by a Third Party without obligations of confidentiality
with respect thereto.
Section 8.2 Authorized Disclosure.
(a) Either party may disclose Confidential Information to the extent such disclosure is reasonably necessary in the following situations:
(i) prosecuting or defending litigation;
(ii) complying with applicable laws and regulations, including regulations promulgated by securities exchanges;
(iii) complying with a valid order of a court of competent jurisdiction or other Governmental Entity;
(iv) for regulatory, Tax or customs purposes;
(v) for audit purposes, provided that each recipient of Confidential Information must be bound by customary and reasonable
obligations of confidentiality and non-use prior to any such disclosure;
(vi) disclosure to its Affiliates and Representatives on a need-to-know basis, provided that each such recipient of Confidential
Information must be bound by contractual or professional obligations of confidentiality and non-use at least as stringent as those imposed
upon the parties hereunder prior to any such disclosure;
(vii) upon the prior written consent of the Disclosing Party;
(viii) disclosure to its potential investors, and other sources of funding, including debt financing, or potential partners,
collaborators or acquirers, and their respective accountants, financial advisors and other professional representatives, provided, that such
disclosure shall be made only to the extent customarily required to consummate such investment, financing transaction partnership,
collaboration or acquisition and that each recipient of Confidential Information must be bound by customary obligations of
confidentiality and non-use prior to any such disclosure;
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(ix) as is necessary in connection with a permitted assignment pursuant to Section 10.4.
(b) Notwithstanding the foregoing, in the event the Receiving Party is required to make a disclosure of the Disclosing Party’s
Confidential Information pursuant to Section 8.2(a)(i), (ii), (iii) or (iv), it will, except where impracticable, give reasonable advance notice to the Disclosing
Party of such disclosure and use reasonable efforts to secure confidential treatment of such information. In any event, the Buyer shall not file any patent
application based upon or using the Confidential Information of Seller provided hereunder.
(c) Notwithstanding anything set forth in this Agreement, materials and documentation relating to the Seller’s Intellectual Property
Rights may be only disclosed to or accessed by the Buyer and its attorneys and auditors, without further disclosure to any other Representative of the
Buyer.
ARTICLE 9
TERMINATION; SURVIVAL; SURVIVAL OF 2020 AGREEMENT
Section 9.1 Mutual Termination. This Agreement may be terminated by mutual written agreement of the Buyer and the Seller.
Section 9.2 Automatic Termination. Unless earlier terminated as provided in Section 9.1, following the Closing, this Agreement shall
continue in full force and effect until sixty (60) days after such time as the Seller is no longer obligated to make any Royalty Payments under this
Agreement, at which point this Agreement shall automatically terminate, except with respect to any rights that shall have accrued prior to such termination.
Section 9.3 Survival. Notwithstanding anything to the contrary in this ARTICLE 9, the following provisions shall survive termination
of this Agreement: Section 6.3 (Disclosures), Section 6.4 (Inspections and Audits of the Seller) ARTICLE 7 (Indemnification), ARTICLE 8
(Confidentiality), this Section 9.3 (Survival), Section 9.4 (Survival of 2020 Agreement) and ARTICLE 10 (Miscellaneous). Termination of the Agreement
shall not relieve any party of liability in respect of breaches under this Agreement by any party on or prior to termination.
Section 9.4 Survival of 2020 Agreement. This Agreement shall not be deemed to amend, modify, restate or supersede the 2020
Agreement, which shall continue in full force and effect, except that, notwithstanding the foregoing, (a) ARTICLE 6 (Covenants) of the 2020 Agreement
and the defined terms used therein, including without, limitation, the Seller’s obligation to pay the Royalty Payments (as defined in the 2020 Agreement) to
the Buyer under Section 6.2 of the 2020 Agreement, shall be amended, replaced and superseded by ARTICLE 6 (Covenants) hereof and the defined terms
used herein, including the Additional Components, (b) the Back-Up Security Interest provided for in the 2020 Agreement shall be as modified by Section
2.1(c) of this Agreement and (c) Sections 10.2 and 10.4 of the 2020 Agreement shall be amended, replaced and superseded by Sections 10.2 and 10.4 of
this Agreement. Entry into this Agreement shall not (i) relieve either party of liability in respect of breaches or in respect of any payment or other
obligations, in each case whether known or unknown, incurred or accrued, under the 2020 Agreement by either party thereto (including under ARTICLE 6
(Covenants) thereof on or prior to the date hereof) or (ii) limit, terminate, restrict or otherwise modify any rights or remedies accruing to either party under
the 2020 Agreement (including under ARTICLE 6 (Covenants) thereof on or prior to the date hereof).
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ARTICLE 10
MISCELLANEOUS
Section 10.1 Headings. The table of contents and the descriptive headings of the several Articles and Sections of this Agreement and
the Exhibits and Schedules are for convenience only, do not constitute a part of this Agreement and shall not control or affect, in any way, the meaning or
interpretation of this Agreement.
Section 10.2 Notices. All notices and other communications under this Agreement shall be in writing and shall be by email with PDF
attachment, facsimile, courier service or personal delivery to the following addresses, or to such other addresses as shall be designated from time to time by
a party hereto in accordance with this Section 10.2:
If to the Seller, to it at:
BioCryst Pharmaceuticals, Inc.
4505 Emperor Blvd., Suite 200
Durham, North Carolina 27703
Attention: Alane Barnes
E-mail: [***]
with a copy to:
Gibson, Dunn & Crutcher LLP
555 Mission Street, Suite 3000
San Francisco, CA 94105
Attention: Ryan Murr; Todd Trattner
E-mail: rmurr@gibsondunn.com; ttrattner@gibsondunn.com
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If to the Buyer, to it at:
RPI 2019 Intermediate Finance Trust
110 E. 59th Street, Suite 3300
New York, New York 10022
Attention: George Lloyd
Email: [***]
with a copy to:
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Attention: Arthur R. McGivern, Jacqueline Mercier &
Robert M. Crawford, Jr.
Email: amcgivern@goodwinlaw.com, jmercier@goodwinlaw.com & rcrawford@goodwinlaw.com
All notices and communications under this Agreement shall be deemed to have been duly given (i) when delivered by hand, if personally delivered,
(ii) when sent, if sent by facsimile, with an acknowledgement of sending being produced by the sending facsimile machine, (iii) when sent, if by email with
PDF attachment, with an acknowledgment of receipt being produced by the recipient’s email account, or (iv) one (1) Business Day following sending
within the United States by overnight delivery via commercial one-day overnight courier service.
Section 10.3 Expenses. Except as otherwise provided herein, all fees, costs and expenses (including any legal, accounting and banking
fees) incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and to consummate the transactions contemplated
hereby shall be paid by the party hereto incurring such fees, costs and expenses.
Section 10.4 Assignment. The Seller may not assign in whole or in part this Agreement or any of its rights or obligations hereunder
except (a) for a Permitted Sale or (b) to a Third Party in connection with the sale or transfer of all or substantially all of the Seller’s business or assets
related to a Product, whether by merger, sale of assets, reorganization, or other conveyance of title and only if upon closing any such transaction, the Seller
causes such Affiliate or Third Party, as applicable, to deliver a writing to the Buyer in which it assumes all of the obligations of the Seller to the Buyer
under this Agreement, and such Affiliate or Third Party shall be deemed an assignee of Seller under this Agreement (clauses (a) and (b) the “Permitted
Assignment Provisions”). The Seller may not assign in whole or in part any of its rights in a Product, including any Product Rights, without the Buyer’s
prior written consent, except (i) pursuant to the Permitted Assignment Provisions, (ii) pursuant to the OMERS Transaction Agreement, (iii) pursuant to the
2020 Agreement, (iv) pursuant to the Athyrium Loan Documents, or (v) pursuant to any agreement evidencing any secured Indebtedness permitted by
clause (b)(ii) of the definition of Restricted Indebtedness. For the avoidance of doubt, nothing in this Section 10.4 shall restrict the Seller from engaging in
a Permitted Sale, from licensing any Product Rights pursuant to a Permitted License, from transferring the Marketing Approvals for any jurisdiction to a
Licensee or a Permitted Purchaser in connection with a Permitted License or Permitted Sale covering such jurisdiction, or incurring any Permitted
Indebtedness. Following the Closing, the Buyer may assign this Agreement in whole or in part to any Person, including to any Third Party, to one or more
of its Affiliates, to the “Buyer” under the OMERS Transaction Agreement or the “Buyer” under the 2020 Agreement; provided that the Buyer shall cause
such Person to become a party to the Intercreditor Agreement in accordance with the terms thereof or enter into an intercreditor agreement with the
administrative agent, trustee or representative under the Athyrium Credit Agreement, the “Buyer” under the OMERS Transaction Agreement and the
“Buyer” under the 2020 Agreement in form and substance substantially the same as the Intercreditor Agreement. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by, the parties hereto and their respective permitted successors and assigns. Any purported assignment in
violation of this Section 10.4 shall be null and void. Notwithstanding the foregoing, nothing in this Agreement shall prohibit Athyrium or the administrative
agent, trustee or representative under the Athyrium Credit Agreement at such time from taking any action permitted by the Intercreditor Agreement or an
Other Intercreditor Agreement, including but not limited to commencing or maintaining any Enforcement Action (as defined in the Intercreditor
Agreement) or such similar term (as defined in an Other Intercreditor Agreement) or exercising any rights with respect to its collateral under the
Bankruptcy Laws.
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Section 10.5 Amendment and Waiver.
this Agreement may be waived only in a writing signed by the party hereto granting such waiver.
(a) This Agreement may be amended, modified or supplemented only in a writing signed by each of the parties hereto. Any provision of
(b) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No course of dealing between the parties hereto shall be effective to amend, modify, supplement or waive any provision of this
Agreement.
Section 10.6 Entire Agreement. This Agreement, the Exhibits annexed hereto and the Disclosure Schedule constitute the entire
understanding between the parties hereto with respect to the subject matter hereof and, except for the 2020 Agreement (subject to Section 9.4 of this
Agreement), supersede all other understandings and negotiations with respect thereto. For the sake of clarity, as of the date of the 2020 Agreement, the
Non-Disclosure Agreement between RP Management, LLC and the Seller, dated as of [***] was terminated and shall continue to be superseded by
ARTICLE 8 of this Agreement and all obligations between the parties relating to confidentiality shall be governed by ARTICLE 8 of this Agreement.
Section 10.7 No Third Party Beneficiaries. This Agreement is for the sole benefit of the Seller and the Buyer and their permitted
successors and assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such
successors and assigns, any legal or equitable rights hereunder, except that the Indemnified Parties shall be third party beneficiaries of the benefits provided
for in Section 7.1.
Section 10.8 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
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Section 10.9 Jurisdiction; Venue.
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS RESPECTIVE PROPERTY AND ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, NEW YORK, AND ANY APPELLATE COURT THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, AND THE BUYER AND THE SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE BUYER AND
THE SELLER HEREBY AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.
EACH OF THE BUYER AND THE SELLER HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF SUCH
NEW YORK STATE AND FEDERAL COURTS. THE BUYER AND THE SELLER AGREE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THAT PROCESS MAY BE SERVED ON THE BUYER OR THE SELLER IN THE SAME MANNER THAT NOTICES MAY BE
GIVEN PURSUANT TO SECTION 10.2 HEREOF.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH OF THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT.
(c) EACH PARTY HEREBY JOINTLY AND SEVERALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT DELIVERED HEREUNDER OR IN
CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE FOREGOING. EACH OF THE
PARTIES REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY, AND VOLUNTARILY GIVEN.
Section 10.10 Severability. If any term or provision of this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any situation in any jurisdiction, then, to the extent that the economic and legal substance of the transactions contemplated hereby is not
affected in a manner that is materially adverse to either party hereto, all other terms and provisions of this Agreement shall nevertheless remain in full force
and effect and the enforceability and validity of the offending term or provision shall not be affected in any other situation or jurisdiction.
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Section 10.11 Specific Performance. Each of the parties acknowledges and agrees that the other party would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated.
Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other party will be entitled to seek an injunction or injunctions
to prevent breaches or violations of the provisions of this Agreement and to seek to enforce specifically this Agreement and the terms and provisions hereof
in any action, suit or other proceeding instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in
addition to any other remedy to which it may be entitled, at law or in equity. Each of the parties further agrees that, in the event of any action for specific
performance in respect of such breach of violation, it will not assert the defense that a remedy at law would be adequate.
Section 10.12 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same
agreement. Copies of executed counterparts transmitted by telecopy, facsimile or other similar means of electronic transmission, including “PDF”, shall be
considered original executed counterparts, provided receipt of such counterparts is confirmed.
Section 10.13 Relationship of the Parties. The relationship between the Buyer and the Seller is solely that of purchaser and seller, and
neither the Buyer nor the Seller has any fiduciary or other special relationship with the other party or any of its Affiliates. This Agreement is not a
partnership or similar agreement, and nothing contained herein shall be deemed to constitute the Buyer and the Seller as a partnership, an association, a
joint venture or any other kind of entity or legal form for any purposes, including any Tax purposes. The Buyer and the Seller agree that they shall not take
any inconsistent position with respect to such treatment in a filing with any Governmental Entity.
Section 10.14 Intercreditor Agreement. Notwithstanding anything to the contrary herein, the Liens and Back-Up Security Interest
granted to the Buyer and its successors and assigns pursuant to this Agreement and the exercise of any right or remedy by the Buyer and its successors and
assigns hereunder are subject to the provisions of the Intercreditor Agreement and the provisions of any Other Intercreditor Agreement. If there is conflict
between the terms of the Intercreditor Agreement or an Other Intercreditor Agreement (each a “Controlling Agreement”), on the one hand, and the terms of
this Agreement, on the other hand, with respect to the Liens, security interests or the exercise of any right or remedy of the Buyer, the “Buyer” under and as
defined in the OMERS Transaction Agreement for so long as such Person is a party to a Controlling Agreement, the “Buyer” under and as defined in the
2020 Agreement or any holder of any Indebtedness that is a party to a Controlling Agreement, then the terms of such Controlling Agreement will control.
Section 10.15 Trustee Capacity of Wilmington Trust, National Association. Notwithstanding anything contained herein to the contrary,
it is expressly understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust, National Association, not
individually or personally but solely in its trustee capacity, in the exercise of the powers and authority conferred and vested in it under the trust agreement
of the Buyer, (ii) each of the representations, undertakings and agreements herein made on the part of
56
the Buyer is made and intended not as a personal representation, undertaking and agreement by Wilmington Trust, National Association, but is made and
intended for the purpose of binding only the Buyer and, (iii) nothing herein contained shall be construed as creating any liability on Wilmington Trust,
National Association, individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto and by any Person claiming by, through or under the parties hereto, (iv) Wilmington Trust, National Association has
made no investigation as to the accuracy or completeness of any representations and warranties made by the Buyer in this Agreement, and (v) under no
circumstances shall Wilmington Trust, National Association be personally liable for the payment of any indebtedness or expenses of the Buyer or be liable
for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Buyer under this Agreement or any related
documents.
[Signature Page Follows]
57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective representatives
thereunto duly authorized as of the date first above written.
SELLER
BIOCRYST PHARMACEUTICALS, INC.
By:
/s/ Anthony Doyle
Name: Anthony Doyle
Title: Chief Financial Officer
BUYER
RPI 2019 INTERMEDIATE FINANCE TRUST
By: Wilmington Trust, National Association, not in its individual capacity
but solely in its capacity as owner trustee
By:
/s/ Cynthia L. Major
Name: Cynthia L. Major
Title: Banking Officer
[Signature Page to Purchase and Sale Agreement]
Certain information has been omitted from this exhibit in places marked “[***]” because it is both not material and would likely cause competitive
harm to the registrant if publicly disclosed. In addition, certain personally identifiable information contained in this document, marked “[***]”
has been omitted from this exhibit pursuant to Item 601(a)(6) under Regulation S-K.
Exhibit 10.103
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
BIOCRYST PHARMACEUTICALS, INC.
AND
OCM IP HEALTHCARE HOLDINGS LIMITED
DATED AS OF NOVEMBER 19, 2021
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS
Section 1.1
Section 1.2
Definitions
Certain Interpretations
ARTICLE 2 PURCHASE, SALE AND ASSIGNMENT OF THE REVENUE PARTICIPATION RIGHT
Section 2.1
Section 2.2
Section 2.3
Purchase, Sale and Assignment
Purchase Price
No Assumed Obligations, Etc.
ARTICLE 3 CLOSING
Section 3.1
Section 3.2
Section 3.3
Closing
Payment of Purchase Price
Bill of Sale
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
Section 4.1
Section 4.2
Section 4.3
Seller’s Representations and Warranties
Buyer’s Representations and Warranties
No Implied Representations and Warranties
ARTICLE 5 CONDITIONS TO CLOSING
Section 5.1
Section 5.2
Conditions to the Buyer’s Obligations
Conditions to the Seller’s Obligations
ARTICLE 6 COVENANTS
Section 6.1
Section 6.2
Section 6.3
Section 6.4
Section 6.5
Section 6.6
Section 6.7
Section 6.8
Section 6.9
Section 6.10
Section 6.11
Section 6.12
Section 6.13
Reporting
Royalty Payments; Revenue Participation and Royalty Payment Details
Disclosures
Inspections and Audits of the Seller
Intellectual Property Matters.
In-Licenses
Out-Licenses and Permitted Sales.
Restricted Indebtedness
Diligence.
Efforts to Consummate Transactions
Further Assurances
No Impairment of Revenue Participation Right or Back-Up Security Interest
Certain Tax Matters.
ARTICLE 7 INDEMNIFICATION
Section 7.1
Section 7.2
Section 7.3
Section 7.4
Section 7.5
General Indemnity
Notice of Claims
Limitations on Liability
Exclusive Remedy
Tax Treatment of Indemnification Payments
ARTICLE 8 CONFIDENTIALITY
Section 8.1
Section 8.2
Confidentiality
Authorized Disclosure
ARTICLE 9 TERMINATION
Section 9.1
Section 9.2
Section 9.3
Mutual Termination
Automatic Termination
Survival
(i)
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ARTICLE 10 MISCELLANEOUS
Section 10.1
Section 10.2
Section 10.3
Section 10.4
Section 10.5
Section 10.6
Section 10.7
Section 10.8
Section 10.9
Section 10.10
Section 10.11
Section 10.12
Section 10.13
Section 10.14
Headings
Notices
Expenses
Assignment
Amendment and Waiver.
Entire Agreement
No Third Party Beneficiaries
Governing Law
Jurisdiction; Venue.
Severability
Specific Performance
Counterparts
Relationship of the Parties
Intercreditor Agreement
(ii)
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Index of Exhibits, Schedules and Annexes
Exhibit A:
Exhibit B:
Exhibit C:
Exhibit D:
Form of Intercreditor Agreement
Bill of Sale
Forms of Seller Opinion
Form of Royalty Report
(iii)
This PURCHASE AND SALE AGREEMENT, dated as of November 19, 2021 (this “Agreement”), is made and entered into by and between
OCM IP Healthcare Holdings Limited, an Ontario corporation (the “Buyer”), and BioCryst Pharmaceuticals, Inc., a Delaware corporation (the “Seller”).
PURCHASE AND SALE AGREEMENT
WHEREAS, the Seller is in the business of, among other things, developing and commercializing the Product; and
W I T N E S S E T H:
WHEREAS, the Buyer desires to purchase the Revenue Participation Right from the Seller in exchange for payment of the Purchase Price, and the
Seller desires to sell the Revenue Participation Right to the Buyer in exchange for the Buyer’s payment of the Purchase Price, in each case on the terms and
conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein and for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the Seller and the Buyer hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, shall have the following meanings:
“2020 RP Royalty Financing Agreement” means the Purchase and Sale Agreement, dated as of December 7, 2020, between the Seller and RPI
2019 Intermediate Finance Trust, a Delaware statutory trust, as may be amended, supplemented or otherwise modified from time to time.
“2020 RP Royalty Financing Documents” means the 2020 RP Royalty Financing Agreement and any other agreement, instrument or document
entered into from time to time in connection therewith, in each case, as amended, supplemented or otherwise modified from time to time.
“2021 RP Royalty Financing Agreement” means the 2021 Purchase and Sale Agreement, dated as of the date hereof, between the Seller and RPI
2019 Intermediate Finance Trust, a Delaware statutory trust, as may be amended, supplemented or otherwise modified from time to time.
“2021 RP Royalty Financing Documents” means the 2021 RP Royalty Financing Agreement and any other agreement, instrument or document
entered into from time to time in connection therewith, in each case, as amended, supplemented or otherwise modified from time to time.
“Affiliate” means, (a) with respect to any particular Person, any other Person directly or indirectly through one or more intermediary Controlling,
Controlled by or under common Control with such particular Person. For purposes of the foregoing sentence, the term “Control” means direct or indirect
ownership of (x) fifty percent (50%) or more, including ownership by trusts with substantially the same beneficial interests, of the voting and equity rights
of such Person, firm, trust, corporation, partnership or other entity or combination thereof, or (y) the power to direct the management of such person, firm,
trust, corporation, partnership or other entity or combination thereof, by contract or otherwise and (b) with respect to Buyer, any Person in respect of which
OMERS Administration Corporation holds, directly or indirectly, more than seventy five percent (75%) of the equity interests (economic) of such Person.
“Agreement” is defined in the preamble.
“Athyrium” means Athyrium Opportunities III Co-Invest 1 LP, together with its successors in such capacity.
“Athyrium Credit Agreement” means that certain Credit Agreement dated as of December 7, 2020 among the Seller, each Person identified as a
“Guarantor” on the signature pages thereto and each other Person that joins as a Guarantor (together with their successors and permitted assigns) (each, a
“Guarantor”), each of the Persons identified as a “Lender” on the signature pages thereto and their successors and assigns, and Athyrium, as administrative
agent, and its successors and assigns, as amended by that certain Amendment No. 1 to Credit Agreement dated as of the date hereof and as further
amended, restated, amended and restated, supplemented, waived, replaced (whether or not upon termination, and whether with the original lenders or
otherwise), increased, restructured, repaid, refunded, refinanced or otherwise modified from time to time, including any indentures, credit facilities, term
loan facility or other agreement extending the maturity thereof, refinancing, replacing or otherwise restructuring all or a portion of the Indebtedness under
such indentures, credit facilities, term loan facility or other agreement or any successor or replacement indentures, credit facilities, term loan facility or
other agreement and whether with the original obligors, agent, lenders, institutional investors or otherwise, and whether provided under the original
Athyrium Credit Agreement or one or more other credit or other agreements or indentures, and any agreement (and related document) governing
Indebtedness incurred to refinance, in whole or in part, the borrowings, other extensions of credit and commitments then outstanding or permitted to be
outstanding under such debt facilities or successor debt facilities, whether by the same or any other obligor, issuer, agent, lender or group of lenders (or
institutional investors).
“Athyrium Loan Documents” means (a) the Athyrium Credit Agreement, and (b) each other “Loan Document” or such similar term as defined in
the Athyrium Credit Agreement, in each case as amended, restated, amended and restated, modified or otherwise supplemented from time to time.
“Attributable Indebtedness” means “Attributable Indebtedness” or such similar term as defined in the Athyrium Credit Agreement.
“Back-Up Security Interest” is defined in Section 2.1(b).
2
“Bankruptcy Laws” means, collectively, bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or other
similar laws affecting the enforcement of creditors’ rights generally.
“Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in New York are permitted
or required by applicable law or regulation to remain closed.
“Buyer” is defined in the preamble.
“Buyer Indemnified Parties” is defined in Section 7.1(a).
“Capital Lease” means, as applied to any Person, any lease of any property by that Person as lessee which, in accordance with GAAP, is required
to be accounted for as a capital lease on the balance sheet of that Person.
“Clinical and Commercial Semi-Annual Report” is defined in Section 6.1(a).
“Clinical Trial” means a clinical trial intended to support the Marketing Approval or Commercialization of a Product.
“Clinical Updates” means (a) a summary of any material updates with respect to the Clinical Trials, including the number of patients currently
enrolled in each such Clinical Trial, the number of sites conducting each such Clinical Trial, the material progress of each such Clinical Trial, any material
modifications to each such Clinical Trial, any adverse events in the Clinical Trials, (b) written plans to start new Clinical Trials, and (c) investigator
brochures for the Product.
“Closing” means the closing of the sale, transfer, assignment and conveyance of the Revenue Participation Right hereunder.
“Closing Date” means the date on which the Closing occurs pursuant to Section 3.1.
“CMC” means chemistry, manufacturing and controls with respect to the Product.
“Code” means the Internal Revenue Code of 1986, as amended.
“Combination Product” means:
(a) a single pharmaceutical formulation (whether co-formulated or administered together via the same administration route) containing
as its active ingredients both the Product and one or more other therapeutically or prophylactically active pharmaceutical or biologic ingredients
(each an “Other Component”), or
(b) a combination therapy comprised of the Product and one or more Other Component(s), whether priced and sold in a single package
containing such multiple products, packaged separately but sold together for a single price, or sold under separate price points but labeled for use
together,
3
in each case, including all dosage forms, formulations, presentations, and package configurations. Drug delivery vehicles, adjuvants and
excipients will not be deemed to be “active ingredients”, except in the case where such delivery vehicle, adjuvant or excipient is recognized by the
FDA as an active ingredient in accordance with 21 C.F.R. 210.3(b)(7). All references to Products in this Agreement shall be deemed to include
Combination Products.
“Commercial Updates” means a summary of material updates with respect to the Seller’s and its Affiliates’ and any Licensee’s sales and
marketing activities and, if material, commercial manufacturing matters with respect to the Product.
“Commercialization” means any and all activities directed to the distribution, marketing, detailing, promotion, selling and securing of
reimbursement of the Product (including the using, importing, selling and offering for sale of the Product), and shall include post-Marketing Approval
studies to the extent required by a Regulatory Authority, post-launch marketing, promoting, detailing, distributing, selling the Product, importing, exporting
or transporting the Product for sale, and regulatory compliance with respect to the foregoing. When used as a verb, “Commercialize” shall mean to engage
in Commercialization. Except with respect to post-Marketing Approval studies required by a Regulatory Authority, Commercialization shall not include
any activities directed to the research or development (including pre-clinical and clinical development) or manufacture of the Product.
“Commercially Reasonable Efforts” means the level of efforts and resources (measured as of the time that such efforts and resources are required
to be used under this Agreement) that are commonly used by a commercial-stage public biotechnology company of similar size and resources to Seller
(provided that such size and resources shall not decrease below the size and resources of the Seller as of the Closing Date), to develop, manufacture or
commercialize, as the case may be, a comparable product for a comparable clinical indication (with respect to market size and commercial opportunity) at a
similar stage in its development or product life and of a similar market and potential to the Product, but without regard to the Seller’s financial obligations
under this Agreement.
“Confidential Information” is defined in Section 8.1.
“Controlling Agreement” is defined in Section 10.14.
“Convertible Bond Indebtedness” means any Indebtedness having a feature which entitles the holder thereof to convert or exchange all or a
portion of such Indebtedness into shares of common capital stock of the Seller; provided, that, (a) the principal amount (or accreted value, if applicable) of
such Convertible Bond Indebtedness does not exceed $[***], (b) such Convertible Bond Indebtedness shall be unsecured, (c) no Subsidiary shall Guarantee
such Convertible Bond Indebtedness, (d) such Convertible Bond Indebtedness shall not mature, and no scheduled or mandatory principal payments,
repayments, prepayments, cash settlements, repurchases, redemptions or sinking fund or like payments (but excluding, for the avoidance of doubt, regularly
scheduled cash interest payments and conversion of such Convertible Bond Indebtedness into shares of common capital stock of the Seller in accordance
with the terms thereof) of such Convertible Bond Indebtedness shall be required at any time on or prior to the date that is one (1) year after the “Maturity
Date” or such similar term under the Athyrium Loan Documents (which in the case of the maturity of such Convertible Bond Indebtedness shall be tested
at the time of incurrence thereof), other than upon a “Change of Control”, “fundamental change”, “make-whole fundamental change” or similar event, (e)
such Convertible Bond Indebtedness shall (i) not include (A) any financial maintenance covenants or (B) other covenants and defaults that are, taken as a
whole, more restrictive on the Seller and its Subsidiaries than the covenants and defaults set forth in the Athyrium Loan Documents and (ii) have a cash
interest rate of less than the greater of (x) [***] percent ([***]%) per annum and (y) such cash interest rate as the administrative agent under the Athyrium
Credit Agreement, in its sole discretion, shall approve in writing after the Closing Date, upon the request of the Seller in light of changes to market interest
rates for similar convertible notes, (f) such Convertible Bond Indebtedness shall include conversion, redemption and fundamental change provisions that
are customary for public market convertible indebtedness (pursuant to a public offering or an offering under Rule 144A or Regulation S of the Securities
Act), (g) such Convertible Bond Indebtedness shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the
future to the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the
indenture under which such Convertible Bond Indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the Seller,
and the applicable Third Party in writing, (h) no Default or Event of Default or such similar terms (in each case as defined in the Athyrium Credit
Agreement) shall have occurred and be continuing at the time of incurrence of such Convertible Bond Indebtedness or could result therefrom, and (i) the
Seller shall have delivered to the administrative agent under the Athyrium Credit Agreement a certificate of an officer of the Seller certifying as to the
foregoing.
4
“Direct Sales” means (a) Net Sales of the Product by or on behalf of the Seller, any of the Seller’s Affiliates or its or their respective Distributors
anywhere in the world, in each case other than (i) Net Sales of the Product by or on behalf of any Licensee, and (ii) Product Partnering Revenue attributable
to the Product; (b) Net Sales of the Product by or on behalf of any Licensee in or for the Direct Sales Territories; and (c) recovery of monetary damages
from a Third Party in an action brought for such Third Party’s infringement of any Patent Rights relating to the Product, where such damages, whether in
the form of judgment or settlement, are awarded for such infringement of such Patent Rights, but solely to the extent that such monetary damages are
treated as Direct Sales in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein.
“Direct Sales Royalty Rate” means, (a) for the calendar quarter beginning on October 1, 2023, the percentage based on the applicable level of
Direct Sales in a calendar year as set forth in the chart below under the column, entitled “Regime A” (the “Regime A Royalty Rate”) and (b) for each
calendar quarter beginning on or after January 1, 2024, (i) if annual Net Sales for calendar year 2023 are greater than or equal to $[***], the Regime A
Royalty Rate or (ii) if annual Net Sales for calendar year 2023 are less than $[***], the percentage based on the applicable level of Direct Sales in a
calendar year as set forth in the chart below under the column, entitled “Regime B” (the “Regime B Royalty Rate”):
Payment Tiers based on Annual Direct Sales
Direct Sales Royalty Rate
A. Annual Direct Sales of up to $350,000,000
B. Annual Direct Sales exceeding $350,000,000 and
less than or equal to $550,000,000
C. Annual Direct Sales in excess of $550,000,000
Regime A
7.5%
6.0%
0.0%
5
Regime B
10.0%
3.0%
0.0%
“Direct Sales Territories” means the United States, the United Kingdom, Germany, France, [***] and [***].
“Disclosing Party” is defined in Section 8.1.
“Disclosure Schedule” means the Disclosure Schedule, dated as of the date hereof, delivered to the Buyer by the Seller concurrently with the
execution of this Agreement.
“Distributor” means a Third Party that (a) purchases or has the option to purchase the Product in finished form from or at the direction of the
Seller or any of its Affiliates, (b) has the right, option or obligation to distribute, market and sell the Product (with or without packaging rights) in one or
more regions, and (c) does not otherwise make any royalty, milestone, profit share or other similar payment to the Seller or its Affiliate based on such Third
Party’s sale of the Product. The term “packaging rights” in this definition will mean the right for the Distributor to package or have packaged Product
supplied in unpackaged bulk form into individual ready-for-sale packs.
“EMA” means the European Medicines Agency, or any successor agency thereto.
“ERISA” means the Employee Retirement Income Security Act of 1974.
“Existing Out‑License” is defined in Section 4.1(h)(ii).
“Existing Patent Rights” is defined in Section 4.1(k)(i).
“FD&C Act” means the United States Federal Food, Drug, and Cosmetic Act.
“FDA” means the U.S. Food and Drug Administration, or any successor agency thereto.
“FDA Application Integrity Policy” is defined in Section 4.1(g)(ii).
“Flat Rate Indirect Revenue” is defined in the definition of “Indirect Revenue Sharing Rate”.
6
“GAAP” means generally accepted accounting principles in the United States in effect from time to time.
“Governmental Entity” means any: (a) nation, principality, republic, state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency, bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or other entity and any court, arbitrator or other tribunal); (d) multi-national organization or body; or
(e) individual, body or other entity exercising, or entitled to exercise, any executive, legislative, judicial, administrative, regulatory, police, military or
taxing authority or power of any nature.
“Gross Sales” is defined in the definition of “Net Sales”.
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of)
such indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such
indebtedness or other obligation of the payment or performance of such indebtedness or other obligation, (iii) to maintain working capital, equity capital or
any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such
indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such indebtedness or other
obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), (b) any lien on any assets of
such Person securing any indebtedness or other obligation of any other Person, whether or not such indebtedness or other obligation is assumed by such
Person (or any right, contingent or otherwise, of any holder of such indebtedness to obtain any such lien) or (c) any direct or indirect liability, contingent or
not, of that Person for (i) any obligations for undrawn letters of credit for the account of that Person or (ii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices. The amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.
“Guarantor” is defined in the definition of “Athyrium Credit Agreement”.
“HSBC Bank” means HSBC Bank USA, National Association.
“HSBC Cash Collateral Accounts” means, collectively, Deposit Account #[***] and Deposit Account #[***] of the Seller established and
maintained at HSBC Bank for the sole purpose of securing the Seller’s obligations under the HSBC Letter of Credit; provided that (a) no such Deposit
Account shall hold an aggregate of cash and cash equivalents in excess of [***] percent ([***]%) of the aggregate face amount of the letters of credit it is
securing and (b) with respect to all such Deposit Accounts, the aggregate amount deposited there in at any time does not exceed [***] Dollars ($[***]).
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“HSBC Letter of Credit” means the letter of credit issued by HSBC Bank in favor of the landlord with respect to the Seller’s leased real property
located at 2100 Riverchase Center, Ste. 200 / Building 200, Birmingham, AL 35244, in an aggregate face amount equal to One Million Four Hundred
Thousand Dollars ($1,400,000).
“HSBC Liens” means Liens in favor of HSBC Bank on the HSBC Cash Collateral Accounts to the extent securing obligations of the Seller
permitted pursuant to clause (g) of the definition of Permitted Contingent Obligations.
“Improvements” means any improvement, invention or discovery relating to the Product (other than with respect to a new composition of matter),
including the formulation, or the method of manufacture of the Product.
“In-License” means any license, settlement agreement or other agreement or arrangement between the Seller or any of its Affiliates and any Third
Party pursuant to which the Seller or any of its Affiliates obtains a license or a covenant not to sue or similar grant of rights to any Patents or other
intellectual property rights of such Third Party that is necessary for the research, development, manufacture, use or Commercialization of the Product.
“Indebtedness” of any Person means any indebtedness for borrowed money, any obligation evidenced by a note, bond, debenture or similar
instrument, or any guarantee of any of the foregoing.
“Indemnified Party” is defined in Section 7.2.
“Indemnifying Party” is defined in Section 7.2.
“Indirect Revenue” means all License Revenue received by the Seller or any of the Seller’s Affiliates from any Licensee of the Product, other than
(a) the regulatory approval milestone payable under Section 8.2.1 of the Torii License, (b) in respect of Direct Sales, and (c) Product Partnering Revenue
attributable to the Product.
“Indirect Revenue Sharing Rate” means the percentage based on the applicable level of Indirect Revenue in a calendar year as set forth in the chart
below:
Applicable Indirect Revenue
Indirect Revenue Sharing Rate
Indirect Revenue Threshold
A. Indirect Revenue that does not constitute (a)
Indirect Royalties, or (b) a milestone payment
attributable to a threshold of commercial sales
achieved or similar sales-based measurement
(collectively, such Indirect Revenue set forth in this
Row A, the “Flat Rate Indirect Revenue”).
B. All Indirect Revenue including (without
duplication) Indirect Royalties but excluding Flat Rate
Indirect Revenue
C. All Indirect Revenue including (without
duplication) Indirect Royalties but excluding Flat Rate
Indirect Revenue
D. All Indirect Revenue including (without
duplication) Indirect Royalties but excluding Flat Rate
Indirect Revenue
20%
20%
10%
0%
8
N/A
Annual Indirect Sales up to $150,000,000
in such calendar year
Annual Indirect Sales exceeding
$150,000,000 and less than or equal to
$230,000,000 in such calendar year
Annual Indirect Sales exceeding
$230,000,000 in such calendar year
“Indirect Royalties” means Indirect Revenue that constitutes (a) royalties payable on Indirect Sales, (b) any payments made in lieu of the
foregoing, (c) recovery of monetary damages from a Third Party in an action brought for such Third Party’s infringement of any Patent Rights relating to
the Product, where such damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights but solely to the
extent that such monetary damages are treated as Indirect Sales in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein, and
(d) any interest on all of the foregoing.
“Indirect Sales” means Net Sales of the Product by or on behalf of any Licensee in or for the Indirect Sales Territories.
“Indirect Sales Territories” means all countries except for the Direct Sales Territories.
“Intellectual Property Product Rights” means any and all of the following as they exist throughout the world at any time: (a) the Patent Rights; (b)
rights in registered and unregistered trademarks, service marks, trade names, trade dress, logos, packaging design, slogans and Internet domain names, and
registrations and applications for registration of any of the foregoing, in each case, with respect to the Product; (c) rights in all Know-How necessary for the
development, manufacture or Commercialization of the Product; and (d) any and all other intellectual property rights and/or proprietary rights, whether or
not patentable, specifically relating to any of the foregoing, as necessary for the development, manufacture or Commercialization of the Product.
“Intellectual Property Rights” means any and all of the following as they exist throughout the world at any time: (a) the Patent Rights and (b) the
Know-How Rights.
9
“Intellectual Property Updates” means an updated list of the Patent Rights, including any new Patents issued or filed, amended or supplemented,
relating to the Product in any country or any abandonments or other termination of prosecution with respect to any of the Patent Rights, and any other
material information or developments with respect to the Intellectual Property Rights.
“Intercreditor Agreement” means that certain Amended and Restated Intercreditor Agreement dated as of the date hereof by and among Athyrium,
RPI 2019 Intermediate Finance Trust, and the Buyer, and acknowledged and agreed to by the Seller, BioCryst Ireland Limited, BioCryst US Sales Co.,
LLC, BioCryst UK Limited, and any future Guarantor, in substantially the form attached hereto as Exhibit A, as amended, amended and restated,
supplemented and otherwise modified from time to time in accordance with the terms thereof.
“Judgment” means any judgment, order, writ, injunction, citation, award or decree of any nature.
“JPR Indenture” means that certain Indenture, dated as of March 9, 2011, by and between JPR Royalty Sub and U.S. Bank, National Association,
as in effect on the date hereof.
“JPR Royalty Sub” means JPR Royalty Sub LLC, a Delaware limited liability company.
“Know-How” means any and all proprietary or confidential information, know-how and trade secrets, including processes, formulae, models and
techniques (but excluding rights in research in progress, algorithms, data, databases, data collections, chemical and biological materials and the results of
experimentation and testing).
“Know-How Rights” means any and all Know-How owned or in-licensed by the Seller or any of its Affiliates or under which the Seller or any of
its Affiliates is or may become empowered to grant licenses necessary for the development, manufacture, or Commercialization of the Product.
“Knowledge of the Seller” means the actual knowledge of the individuals listed on Schedule 1.1 of the Disclosure Schedule, after reasonable due
inquiry.
“License Revenue” means any payments or other consideration in any form received by Seller or any of its Affiliates from a Licensee or any of its
Affiliates or sublicensees under or pursuant to an Out-License of any rights relating to the Product or any sublicense under or other agreement ancillary to
such Out-License, or payments received by Seller or any of its Affiliates from a Third Party in lieu of any of the foregoing payments, in each case, except
for:
(a) payments or grants received from a commercial or non-commercial Third Party, specifically to cover future reasonable, documented fully-
burdened costs incurred by or on behalf of Seller or any Affiliate after the execution of such Out-License directly attributable to the performance of
research and development of the Product, which costs are expressly covered by the Licensee under such Out-License;
10
(b) equity investments in Seller or any Affiliate to the extent priced at or below fair market value, provided that in the case of common stock or its
equivalent, fair market value shall be the greater of: (i) the last reported closing price of Seller’s common stock on Nasdaq, or (ii) the 30-day volume-
weighted average price of Seller’s common stock;
(c) loans received as part of a debt financing for so long as an obligation of repayment exists, provided that if at the time any such debt becomes
due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with GAAP), is booked as income to Seller or its
Affiliates, then such amount shall be deemed License Revenue hereunder;
(d) loans received where the Product forms part of the security package provided for the loan for so long as an obligation of repayment exists;
provided that at the time any such debt becomes due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with
GAAP), is booked as income to Seller or its Affiliates, shall be deemed License Revenue hereunder;
(e) Tax credits or Tax receipts; and
(f) sales or supply of Product inventory at or below Seller’s actual cost of goods sold, provided, however, that any mark-up from, or other amounts
in excess of, the Seller’s cost of goods sold for such inventory shall be License Revenue.
Notwithstanding anything to the contrary in this Agreement, “License Revenue” shall include, without limitation, any and all royalties, upfront
payment, license signing fee, license maintenance fee, minimum royalty payment in excess of earned royalties, option fee, lump sum payment, distribution
fee, joint marketing fee, profit share, milestone payment, and other payments, in each case received. In the event Seller or its Affiliate(s) receives non-
monetary consideration, License Revenue shall be calculated based on the fair market value of such consideration at the time of the transaction (where fair
market value shall be determined by agreement of the parties or by an independent appraiser mutually agreeable to the parties), assuming an arm’s length
transaction made in the ordinary course of business. To the extent that Seller makes any offsetting payments to a Licensee (such as a true-up payment) that
are specifically permitted pursuant to the Out-License (not entered into in violation of this Agreement) with such Licensee, then the License Revenue under
such Out-License shall be calculated net of such payments. Without limiting clauses (a) through (f) above, to the extent that Seller permits any Licensee to
set off any payments payable pursuant to the Out-License with such Licensee against any amounts payable by Seller to such Licensee, then the License
Revenue under such Out-License shall include all such payments payable to Seller under such Out-License without giving effect to any such setoff.
“Licensee” means, with respect to the Product, a Third Party to whom the Seller or any Affiliate of the Seller has granted a license or sublicense to
Commercialize the Product. For clarity, a Distributor shall not be deemed to be a “Licensee.”
“Lien” means any mortgage, lien, pledge, participation interest, charge, adverse claim, security interest, encumbrance or restriction of any kind,
including any restriction on use, transfer or exercise of any other attribute of ownership of any kind.
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“Loss” means any and all Judgments, damages, losses, claims, costs, liabilities and expenses, including reasonable fees and out-of-pocket
expenses of counsel.
“Loss of Market Exclusivity” shall mean, on a country-by-country basis, the later to occur of: (a) the expiration of the last-to-expire Valid Claim
of a Patent Right covering the Product in such country; and (b) the expiry of all Regulatory Exclusivity Periods for the Product in such country.
“Marketing Approval” means, an NDA approved by the FDA, a Marketing Authorization Application approved by the EMA under the centralized
European procedure, or any corresponding non-U.S. or non-EMA application, registration or certification in a Direct Sales Territory, necessary or
reasonably useful to market the Product approved by the corresponding Regulatory Authority, including pricing and reimbursement approvals where
required. For clarity, notwithstanding the foregoing, solely with respect to Section 6.2, “Marketing Approval” shall not include pricing and reimbursement
approvals.
“Material Adverse Effect” means (a) an adverse effect in any material respect on the timing, duration or amount of the Royalty Payments, (b) a
material adverse effect on (i) the Product, (ii) any of the Intellectual Property Rights, including the Seller’s rights in or to any Intellectual Property Rights,
(iii) any Marketing Approval of the Product or the timing thereof, (iv) the legality, validity or enforceability of any provision of this Agreement, (v) the
ability of the Seller to perform any of its obligations under this Agreement, (vi) the rights or remedies of the Buyer under this Agreement, or (vii) the
business of the Seller or its Affiliates or (c) an adverse effect in any material respect on the Revenue Participation Right, the Product Collateral, or the
Back-Up Security Interest.
“Minimum Return Date” means the earliest of the following dates: (a) the date on which the trailing [***] months of net revenue of the Seller, in
accordance with GAAP, equals at least $[***] million and all Royalty Payments for any Net Sales of Product that make up such revenue have been paid to
Buyer; (b) the date on which Seller’s market capitalization is at least $[***] billion for [***] consecutive trading days; (c) the date that is on or after [***]
and on which Seller’s market capitalization is at least $[***] billion for [***] consecutive trading days; and (d) the date of expiration of the last-to-expire
Valid Claim of the Patent Rights covering the Product in the United States.
“NDA” means a New Drug Application submitted to the FDA in the United States in accordance with the FD&C Act with respect to a
pharmaceutical product or any analogous application or submission with any Regulatory Authority outside of the United States.
“Net Sales” means, with respect to the Product, the gross amount invoiced, billed or otherwise recorded for sales of the Product anywhere in the
world by or on behalf of the Seller, its Affiliates, any Distributor, or any Licensee of the Seller or any of the Seller’s Affiliates (each of the foregoing
Persons, for purposes of this definition, shall be considered a “Related Party”) to a Third Party (“Gross Sales”) less the following amounts, to the extent
actually incurred or accrued in accordance with generally accepted accounting principles consistently applied, and not reimbursed by such Third Party,
provided, that any given amount may be taken as a permitted deduction only once:
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(a) reasonable and customary rebates, chargebacks, quantity, trade and similar discounts, credits and allowances and other price
reductions reasonably granted, allowed, incurred or paid in so far as they are applied to sales of the Product;
(b) discounts (including cash, quantity, trade, governmental, and similar discounts), coupons, retroactive price reductions, charge
back payments and rebates granted to managed care organizations or to federal, state and local governments, or to their agencies (including
payments made under the new “Medicare Part D Coverage Gap Discount Program” and the “Annual Fee for Branded Pharmaceutical
Manufacturers” specific to the Product), in each case, as applied to sales of the Product and actually given to customers;
(c) reasonable and customary credits, adjustments, and allowances, including those granted on account of price adjustments, billing
errors, and damage, Product otherwise not in saleable condition, and rejection, return or recall of the Product, in each case in so far as they are
applied to sales of the Product;
(d) reasonable and customary freight and insurance costs incurred with respect to the shipment of the Product to customers, in each
case if charged separately and invoiced to the customer;
(e) customs duties, surcharges and other similar governmental charges incurred in connection with the exportation or importation
of the Product to the extent included in the gross amount invoiced;
(f) sales, use, value-added, excise, turnover, inventory and other similar Taxes (excluding income Taxes), and that portion of annual
fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and any other fee
imposed by any equivalent applicable law, in each of the foregoing cases, that Seller allocates to sales of the Product in accordance with
Seller’s standard policies and procedures consistently applied across its products, as adjusted for rebates and refunds, imposed in connection
with the sales of the Product to any Third Party, to the extent such Taxes are not paid by the Third Party;
(g) actual copayment waiver amounts uncollected or uncollectible debt amounts with respect to sales of the Product, provided that
if the debt is thereafter paid, the corresponding amount shall be added to the Net Sales of the period during which it is paid;
(h) reasonable, customary and documented out of pocket amounts directly relating to co-pay programs, bridging programs or other
similar patient assistance programs which may be implemented from time to time by the Seller in so far as they are applied to sales of the
Product; and
(i) other similar or customary deductions taken in the ordinary course of business as permitted in calculating net sales or net
revenue (as applicable) under generally accepted accounting principles consistently applied in so far as they are applied to sales of the
Product.
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For clarity, “Net Sales” will not include (i) sales or dispositions for charitable, promotional, pre-clinical, clinical, regulatory, compassionate use,
named patient use or indigent or other similar programs, reasonable quantities of Product used as samples, and Product used in the development of the
Product, (ii) sales or dispositions between any of the Related Parties (unless a Related Party is the final end-user of the Product), but will include
subsequent sales or dispositions of Product to a non-Related Party, (iii) License Revenue, or (iv) sales or dispositions by or on behalf of a Permitted
Purchaser.
With respect to sales of the Product invoiced in U.S. dollars, Net Sales shall be determined in U.S. dollars. With respect to sales of the Product
invoiced in a currency other than U.S. dollars, Net Sales shall be determined by converting the currencies at which the sales are made into U.S. dollars, at
rates of exchange determined in a manner consistent with the Seller’s or a Licensee’s, as applicable, method for calculating rates of exchange in the
preparation of the Seller’s or such Licensee’s annual financial statements in accordance with generally accepted accounting principles consistently applied.
Net Sales for any Combination Product shall be calculated on a country-by-country basis by multiplying actual Net Sales of such Combination
Product by the fraction A/(A+B) where “A” is the weighted average invoice price of the Product contained in such Combination Product when sold
separately in such country during the applicable accounting period in which the sales of the Combination Product were made, and “B” is the combined
weighted average invoice prices of all of the Other Components contained in such Combination Product sold separately in such country during such same
accounting period. If the Product contained in such Combination Product is not sold separately in finished form in such country, the Seller and the Buyer
shall determine Net Sales for the Product by mutual agreement based on the relative contribution of the Product and each such other active ingredient in
such Combination Product in accordance with the above formula, and shall take into account in good faith any applicable allocations and calculations that
may have been made for the same period in other countries.
“Obligations” means “Obligations” or such similar term as defined in the Athyrium Credit Agreement.
“Other Component” is defined in the definition of “Combination Products”.
“Other Intercreditor Agreement” means an intercreditor agreement, among, the Buyer, RPI 2019 Intermediate Finance Trust, the Seller and the
administrative agent, trustee or representative under the Athyrium Credit Agreement and/or the holders of any Indebtedness incurred pursuant to clause (b)
(ii) of the definition of Restricted Indebtedness or any agent, representative or trustee acting on behalf of such holders, on substantially the same terms as
the Intercreditor Agreement, as amended, amended and restated, supplemented and otherwise modified from time to time in accordance with the terms
thereof.
“Out-License” means each license or other agreement between the Seller or any of its Affiliates and any Third Party (other than Distributors)
pursuant to which the Seller or any of its Affiliates grants a license or sublicense of any Intellectual Property Right to market, detail, promote, sell or secure
reimbursement of the Product.
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“Patent Rights” means any and all Patents owned or in-licensed by the Seller or any of its Affiliates or under which the Seller or any of its
Affiliates is or may become empowered to grant licenses necessary or reasonably useful in the development, manufacture, use, marketing, promotion, sale
or distribution of the Product, as well as existing or future Patents covering any Improvements.
“Patents” means any and all patents and patent applications existing as of the date of this Agreement and all patent applications filed hereafter,
including any continuation, continuation-in-part, division, provisional or any substitute applications, any patent issued with respect to any of the foregoing
patent applications, any certificate, reissue, reexamination, renewal or patent term extension or adjustment (including any supplementary protection
certificate) of any such patent or other governmental actions which extend any of the subject matter of a patent, and any substitution patent, confirmation
patent or registration patent or patent of addition based on any such patent, and all foreign counterparts of any of the foregoing.
“Permit” is defined in Section 4.1(g)(vi).
“Permitted Assignment Provisions” is defined in Section 10.4.
“Permitted Contingent Obligations” means (a) Guarantees resulting from endorsements for collection or deposit in the ordinary course of business;
(b) Guarantees incurred in the ordinary course of business with respect to surety and appeal bonds, performance bonds and other similar obligations not to
exceed [***] Dollars ($[***]) in the aggregate at any time outstanding; (c) Guarantees arising under indemnity agreements with title insurers; (d)
Guarantees arising with respect to customary indemnification obligations in favor of purchasers in connection with sales, transfers, licenses, leases or other
dispositions of personal property assets permitted under the Athyrium Loan Documents; (e) Guarantees arising under the Athyrium Loan Documents; (f)
Guarantees existing or arising in connection with any security deposit or letter of credit obtained for the sole purpose of securing a lease of real property, or
in connection with ancillary bank services such as a corporate credit card facility, provided that the aggregate face amount of all such security deposits,
letters of credit and ancillary bank services does not at any time exceed [***] Dollars ($[***]) in the aggregate at any time outstanding; and (g) the HSBC
Letter of Credit secured solely by HSBC Liens.
“Permitted Indebtedness” is defined in the definition of “Restricted Indebtedness”.
“Permitted License” is defined in Section 6.7(a).
“Permitted Liens” means the following:
(a) Liens for Taxes, assessments or governmental charges or levies not yet due or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance
with GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising in the ordinary course of business, provided, that, such Liens secure only amounts
not yet due and payable or, if due and payable, are unfiled and no other action has been taken to enforce the same or are being contested in good faith by
appropriate proceedings for which adequate reserves determined in accordance with GAAP have been established;
15
acquisition and not incurred in contemplation thereof;
(c) Liens on property existing at the time of acquisition of such property provided that such liens were in existence prior to such
(d) Permitted Licenses, including any interest or title of a licensee under a Permitted License;
(e) Liens under the Athyrium Loan Documents;
other social security legislation, other than any Lien imposed by ERISA;
(f) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and
appeal bonds, indemnity and performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(g) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and
substantial in amount, and which do not materially interfere with the ordinary conduct of the business of the applicable Person;
(h) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not
material respect with the Revenue Participation Right, the Product Rights, the Product Collateral, or the Back-Up Security Interest;
(i) licenses, sublicenses, leases or subleases granted to others in the ordinary course of business or otherwise and not interfering in any
agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;
(j) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or
(k) normal and customary banker’s liens and rights of setoff upon deposits of cash in favor of banks or other depository institutions;
(l) Liens of a collection bank arising under Section 4-210 of the UCC on items in the course of collection;
(m) Liens of sellers of goods to the Seller and any of its Subsidiaries arising under Article 2 of the UCC or similar provisions of
applicable law in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related
expenses;
(n) HSBC Liens;
(o) Liens under the RP Royalty Financing Documents; and
16
(p) cash collateral securing letters of credit permitted under clause (f) of the definition of Permitted Contingent Obligations.
“Permitted Purchaser” means any Third Party who acquires rights to the Product in a Permitted Sale.
“Permitted Sale” means any sale, transfer, assignment or other disposition, not constituting an Out-License, of any rights relating to the Product,
solely to the extent such rights pertain to [***] (collectively, the “Permitted Sale Territory”).
“Permitted Sale Territory” is defined in the definition of “Permitted Sale”.
“Person” means any individual, firm, corporation, company, partnership, limited liability company, trust, joint venture, association, estate, trust,
Governmental Entity or other entity, enterprise, association or organization.
“Prime Rate” means the prime rate published by The Wall Street Journal, from time to time, as the prime rate.
“Product” means (a) the product known as ORLADEYO®™ (berotralstat) that is the subject of NDA No. 214094, [***].
“Product Collateral” means the Seller’s rights, title and interests in (a) the Product (including all inventory of the Product), (b) the Product Rights
owned, licensed or otherwise held by the Seller, and (c) any proceeds from either (a) or (b) above, including all accounts receivable and general intangibles
resulting from the sale, license or other disposition of Product by the Seller or its Licensees.
“Product Partnering Revenue” means the pre-tax profit realized by Seller or its Affiliates arising from any Permitted Sale, with the profit being
calculated as: (i) (x) aggregate payments or other consideration in any form received by Seller or any of its Affiliates from a Permitted Sale, or payments
received by Seller or any of its Affiliates from a Third Party in lieu of any of the foregoing payments arising from a Permitted Sale, and (y) recovery of
monetary damages from a Third Party in an action brought for such Third Party’s infringement of any Patent Rights relating to the Product, where such
damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent Rights but solely to the extent that such
monetary damages are treated as Product Partnering Revenue in accordance with Section 6.5(d) and after application of clauses (i) and (ii) therein, in each
case, except for the Excluded Payments (defined below), minus (ii) aggregate out-of-pocket expenses incurred by Seller or its Affiliates after the Closing
Date solely for the development or commercialization of the Product in the Permitted Sale Territory. For purposes of Product Partnering Revenue,
“Excluded Payments” means:
(a) payments or grants received from a commercial or non-commercial Third Party, specifically to cover future reasonable, documented fully-
burdened costs incurred by or on behalf of Seller or any Affiliate after the execution of such Permitted Sale directly attributable to the performance of
research and development of the Product within the Permitted Sale Territory, which costs are expressly covered by the purchaser under such Permitted
Sale;
17
(b) equity investments in Seller or any Affiliate to the extent priced at or below fair market value, provided that in the case of common stock or its
equivalent, fair market value shall be the greater of: (i) the last reported closing price of Seller’s common stock on Nasdaq, or (ii) the 30-day volume-
weighted average price of Seller’s common stock;
(c) loans received as part of a debt financing for so long as an obligation of repayment exists, provided that if at the time any such debt becomes
due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with GAAP), is booked as income to Seller or its
Affiliates, then such amount shall be deemed Product Partnering Revenue hereunder;
(d) loans received where the Product forms part of the security package provided for the loan for so long as an obligation of repayment exists,
provided that if at the time any such debt becomes due, the amount of such debt that is forgiven, and, for accounting or Tax purposes (in accordance with
GAAP), is booked as income to Seller or its Affiliates, then such amount shall be deemed Product Partnering Revenue hereunder;
(e) Tax credits or Tax receipts; and
(f) sales or supply of Product inventory at or below Seller’s actual cost of goods sold, provided, however that any mark-up from, or other amounts
in excess of, the Seller’s cost of goods sold for such inventory shall be Product Partnering Revenue.
Notwithstanding anything to the contrary in this Agreement, “Product Partnering Revenue” shall include, without limitation, any and all
contingent payments, upfront payments, option fees, lump-sum payments, distribution fees, joint-marketing fees, profit share, milestone payments, and
other payments, in each case received. In the event Seller or its Affiliate(s) receives non-monetary consideration pursuant to a Permitted Sale, Product
Partnering Revenue shall be calculated based on the fair market value of such consideration at the time of the transaction (where fair market value shall be
determined by agreement of the parties or by an independent appraiser mutually agreeable to the parties), assuming an arm’s length transaction made in the
ordinary course of business. To the extent that Seller makes any offsetting payments to a Permitted Purchaser (such as a true-up payment) that are
specifically permitted pursuant to the Permitted Sale (not entered into in violation of this Agreement) with such Permitted Purchaser, then the Product
Partnering Revenue under such Permitted Sale shall be calculated net of such payments. To the extent that Seller permits any Permitted Purchaser to set off
any payments payable pursuant to the Permitted Sale with such Permitted Purchaser against any amounts payable by Seller to such Permitted Purchaser,
then the Product Partnering Revenue under such Permitted Sale shall include all such payments payable to Seller under such Permitted Sale without giving
effect to any such setoff.
“Product Rights” means any and all of the following, as they exist throughout the world: (a) Intellectual Property Product Rights, (b) regulatory
filings, submissions and approvals, including Marketing Approvals, with or from any Regulatory Authorities with respect to the Product, (c) In-Licenses
and (d) Out-Licenses.
“Purchase Price” is defined in Section 2.2.
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“Receiving Party” is defined in Section 8.1.
“Regime A Royalty Rate” is defined in the definition of “Direct Sales Royalty Rate”.
“Regime B Royalty Rate” is defined in the definition of “Direct Sales Royalty Rate”.
“Regulatory and IP Semi-Annual Report” is defined in Section 6.1(b).
“Regulatory Authority” means any national or supranational governmental authority, including the FDA, the EMA or such equivalent regulatory
authority, or any successor agency thereto, that has responsibility in granting a Marketing Approval.
“Regulatory Exclusivity Period” shall mean, with respect to the Product in any country, any period of data, market or other regulatory exclusivity
(other than Patent exclusivity) granted or afforded by law or by a Regulatory Authority in such country that confers exclusive marketing rights with respect
to the Product in such country or prevents another party from using or otherwise relying on any data supporting the Marketing Approval for the Product.
“Regulatory Updates” means a summary of any and all material information and developments that materially impact the Product with respect to
any regulatory filings or submissions made to any Regulatory Authority.
“Related Party” is defined in the definition of “Net Sales”.
“Report” is defined in Section 6.1(b).
“Representative” means, with respect to any Person, (a) any direct or indirect member or partner of such Person and (b) any manager, director,
trustee, officer, employee, agent, advisor or other representative (including attorneys, accountants, consultants, contractors, actual and potential lenders,
investors, co-investors and assignees, bankers and financial advisers) of such Person.
“Restricted Indebtedness” means any financing, sale, or loan of royalties on the Product, or any Indebtedness, in each case other than the
following (individually and collectively, “Permitted Indebtedness”):
(a) true sales of royalties that contain no financial covenants or other provisions typically found in loan agreements, and in
connection with such true sale Seller or its Affiliates do not grant any Lien on any assets of Seller or its Affiliates, other than a back-up
security interest to perfect the true sale;
(b) (i) additional Indebtedness incurred pursuant to the Athyrium Loan Documents, (ii) other secured Indebtedness, so long as in
the case of any Indebtedness incurred pursuant to this clause (ii), the holders of such Indebtedness or any agent, representative or trustee
acting on behalf of such holders have become party to the Intercreditor Agreement or entered into an Other Intercreditor Agreement, and (iii)
unsecured Indebtedness, so long as (x) the principal amount of any Indebtedness incurred pursuant to this clause (b) (together with the
aggregate outstanding principal amount of all Indebtedness previously incurred pursuant to this clause (b)) does not at the time of incurring
such additional Indebtedness exceed [***]% of the aggregate principal amount of Indebtedness and commitments to extend credit under the
Athyrium Loan Documents outstanding at such time and (y) except as otherwise agreed by the parties, such unsecured Indebtedness
contemplated by clause (iii) shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the future to
the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the
indenture under which such unsecured indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the
Seller, and the applicable Third Party lender of such unsecured indebtedness in writing;
19
(c) certain customary de minimis exceptions incurred in the ordinary course of business;
(d) Indebtedness under the Athyrium Loan Documents, and renewals, refinancings and extensions thereof;
(e) intercompany Indebtedness permitted under the Athyrium Loan Documents (and at any time when the Athyrium Loan
Documents are not outstanding, any bona fide intercompany Indebtedness entered into in the good faith business judgment of the Seller);
(f) obligations (contingent or otherwise) of the Seller or any Subsidiary existing or arising under any Swap Contract, provided, that,
such obligations are (or were) entered into by such Person in the ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held or reasonably anticipated by such Person, or changes in the
value of securities issued by such Person, and not for purposes of speculation or taking a “market view”;
(g) purchase money Indebtedness (including obligations in respect of capital leases or synthetic leases) hereafter incurred by the
Seller or any of its Subsidiaries to finance the purchase of fixed assets, and renewals, refinancings, and extensions thereof, provided, that, (i)
no default or “Event of Default” has occurred under the Athyrium Loan Documents and is continuing both immediately prior to and after
giving effect thereto, (ii) the total of all such Indebtedness for all such Persons taken together shall not exceed an aggregate principal amount
of $[***] at any one time outstanding, (iii) such Indebtedness when incurred shall not exceed the purchase price of the asset(s) financed, and
(iv) no such Indebtedness shall be refinanced for a principal amount in excess of the principal balance outstanding thereon at the time of such
refinancing except by an amount equal to unpaid accrued interest and premium thereon plus other amounts owing or paid related to such
Indebtedness, and fees, commissions and expenses (including upfront fees and original issue discount) reasonably incurred, in connection
with such refinancing;
(h) other unsecured Indebtedness hereafter incurred by the Seller or any of its Subsidiaries in an aggregate amount not to exceed
$[***] at any one time outstanding;
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(i) Permitted Contingent Obligations;
(j) Indebtedness incurred in the ordinary course of business not to exceed $[***] in the aggregate at any time outstanding owed to
any Person providing property, casualty, liability, or other insurance to the loan parties, including to finance insurance premiums, so long as
the amount of such Indebtedness is not in excess of the amount of the unpaid cost of, and shall be incurred only to defer the cost of, such
insurance for the policy year in which such Indebtedness is incurred and such Indebtedness is outstanding only during such policy year;
(k) Convertible Bond Indebtedness;
(l) Attributable Indebtedness in respect of Capital Leases incurred pursuant to automobile leases entered into in the ordinary course
of business as part of employee compensation for employees based in Europe; provided that the aggregate amount of such Attributable
Indebtedness incurred pursuant to this clause (l) shall not exceed $[***] at any one time outstanding;
(m) Indebtedness / liability under the RP Royalty Financing Documents; and
(n) other Indebtedness permitted by the Athyrium Credit Agreement after the Closing Date requested by the Seller in its good faith
business judgment, not with the purpose or effect of adversely impacting the Buyer, the Revenue Participation Right, the Product Rights, the
Product Collateral, or the Back-up Security Interest and permitted by the holders of the Indebtedness under the Athyrium Credit Agreement
and the Intercreditor Agreement.
“Revenue Participation Right” means the right to receive the Royalty Payments.
“Royalty Cap” means either (a) $213,750,000 if the Direct Sales Royalty Rate is calculated under the Regime A Royalty Rate for each calendar
quarter beginning on or after January 1, 2024 or (b) $232,500,000 if the Direct Sales Royalty Rate is calculated under the Regime B Royalty Rate for each
calendar quarter beginning on or after January 1, 2024.
“Royalty Payments” means, for each calendar quarter beginning on October 1, 2023 until the Royalty Termination Date, an amount payable to the
Buyer equal to (i) the amount of all aggregate Direct Sales during such calendar quarter multiplied by the Direct Sales Royalty Rate, (ii) the amount of all
Indirect Revenue during such calendar quarter multiplied by the applicable Indirect Revenue Sharing Rate, and (iii) the amount of all Product Partnering
Revenue attributable to the Product during such calendar quarter multiplied by (A) 7.5%, if the Direct Sales Royalty Rate is calculated under the Regime A
Royalty Rate for such calendar quarter or (B) 10.0% if the Direct Sales Royalty Rate is calculated under the Regime B Royalty Rate for such calendar
quarter.
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“Royalty Termination Date” means the date on which aggregate payments of the Royalty Payments actually received by the Buyer equal the
Royalty Cap.
“RP Royalty Financing Documents” means the 2020 RP Royalty Financing Documents and the 2021 RP Royalty Financing Documents.
“Safety Notices” means any recalls, field notifications, market withdrawals, warnings, “dear doctor” letters, investigator notices, safety alerts or
other notices of action issued or instigated by the Seller, any of its Affiliates or any Regulatory Authority relating to an alleged lack of safety or regulatory
compliance of the Product.
“Securities Act” means the Securities Act of 1933.
“Seller” is defined in the preamble. References to the Seller herein (i) shall be deemed to include any assignee of the Seller pursuant to Section
10.4, but (ii) shall not include any Permitted Purchaser.
“Seller Certificate” is defined in Section 5.1(i).
“Seller Indemnified Parties” is defined in Section 7.1(b).
“Subsidiary” means any and all corporations, partnerships, limited liability companies, joint ventures, associations and other entities controlled (by
contract or otherwise) by the Seller directly or indirectly through one or more intermediaries. For purposes hereof, the Seller shall be deemed to control a
partnership, limited liability company, association or other business entity if the Seller, directly or indirectly through one or more intermediaries, shall be
allocated a majority of partnership, limited liability company, association or other business entity gains or losses or shall be or control the managing
director or general partner of such partnership, limited liability company, association or other business entity. Notwithstanding the foregoing, until
discharge of the JPR Indenture pursuant to and in accordance with Section 11.1 thereof, unless expressly provided herein, Subsidiaries of the Seller shall
not include JPR Royalty Sub.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity
swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or
forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor
transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms
and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any Master Agreement.
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“Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, occupation,
premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, abandoned property, value added, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
“Third Party” means any Person that is not the Seller or the Seller’s Affiliates.
“Torii License” means that certain Commercialization and License Agreement between Torii Pharmaceutical Co., Ltd. and BioCryst
Pharmaceuticals, Inc. dated November 5, 2019.
“Transaction Documents” means this Agreement and any other agreement, instrument or document entered into from time to time in connection
therewith, in each case, as amended, supplemented or otherwise modified from time to time.
“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided, that, if, with respect to any
financing statement or by reason of any provisions of applicable law, the perfection or the effect of perfection or non-perfection of the back-up security
interest or any portion thereof granted pursuant to Section 2.1(b) is governed by the Uniform Commercial Code as in effect in a jurisdiction of the United
States other than the State of New York, then “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for
purposes of the provisions of this Agreement and any financing statement relating to such perfection or effect of perfection or non-perfection.
“Valid Claim” means: (a) any claim of an issued and unexpired Patent included within the Patent Rights, that shall not have been withdrawn,
lapsed, abandoned, revoked, canceled or disclaimed, or held invalid or unenforceable by a court, Governmental Entity, national or regional patent office or
other appropriate body that has competent jurisdiction in a decision being final and unappealable or unappealed within the time allowed for appeal; and (b)
a claim of a pending Patent application included within the Patent Rights that is filed and being prosecuted in good faith and that has not been finally
abandoned or finally rejected and which has been pending for no more than [***] years from the date of filing of the earliest Patent application to which
such pending Patent application claims priority.
apply to this Agreement:
Section 1.2 Certain Interpretations. Except where expressly stated otherwise in this Agreement, the following rules of interpretation
the words “without limitation”;
(a) “either” and “or” are not exclusive and “include,” “includes” and “including” are not limiting and shall be deemed to be followed by
(b) “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends, and such phrase does not mean
simply “if”;
whole and not to any particular provision of this Agreement;
(c) “hereof,” “hereto,” “herein” and “hereunder” and words of similar import when used in this Agreement refer to this Agreement as a
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(d) references to a Person are also to its permitted successors and assigns;
(e) except as expressly provided otherwise, definitions are applicable to the singular as well as the plural forms of such terms;
Exhibit to, this Agreement, and references to a “Schedule” refer to the corresponding part of the Disclosure Schedule;
(f) except as expressly provided otherwise, references to an “Article”, “Section” or “Exhibit” refer to an Article or Section of, or an
(g) references to “$” or otherwise to dollar amounts refer to the lawful currency of the United States; and
such amendment or modification is made, or issuance of such rules and regulations occurs, before or after the date of this Agreement.
(h) references to a law include any amendment or modification to such law and any rules and regulations issued thereunder, whether
PURCHASE, SALE AND ASSIGNMENT OF THE REVENUE PARTICIPATION RIGHT
ARTICLE 2
Section 2.1 Purchase, Sale and Assignment.
(a) At the Closing and upon the terms and subject to the conditions of this Agreement, the Seller shall sell, transfer, assign and convey
to the Buyer, without recourse (except as expressly provided herein), and the Buyer shall purchase, acquire and accept from the Seller, the Revenue
Participation Right, free and clear of all Liens, except for any Lien contemplated under subparts (a), (b), (f), (g), and (k) of the definition of “Permitted
Liens”. Immediately upon the sale to the Buyer by the Seller of the Revenue Participation Right pursuant to this Section 2.1, all of the Seller’s right, title
and interest in and to the Revenue Participation Right shall terminate, and all such right, title and interest shall vest in the Buyer.
(b) It is the intention of the parties hereto that the sale, transfer, assignment and conveyance contemplated by this Agreement be, and is,
a true, complete, absolute and irrevocable sale, transfer, assignment and conveyance by the Seller to the Buyer of all of the Seller’s right, title and interest
in and to the Revenue Participation Right. Neither the Seller nor the Buyer intends the transactions contemplated by this Agreement to be, or for any
purpose characterized as, a loan from the Buyer to the Seller or a pledge, a security interest, a financing transaction or a borrowing. It is the intention of the
parties hereto that the beneficial interest in and title to the Revenue Participation Right and any “proceeds” (as such term is defined in the UCC) thereof
shall not be part of the Seller’s estate in the event of the filing of a petition by or against the Seller under any Bankruptcy Laws. The Seller hereby waives,
to the maximum extent permitted by applicable law, any right to contest or otherwise assert that this Agreement does not constitute a true, complete,
absolute and irrevocable sale, transfer, assignment and conveyance by the Seller to the Buyer of all of the Seller’s right, title and interest in and to the
Revenue Participation Right under applicable law, which waiver shall, to the maximum extent permitted by applicable law, be enforceable against the
Seller in any bankruptcy or insolvency proceeding relating to the Seller. Accordingly, the Seller shall treat the sale, transfer, assignment and conveyance of
the Revenue Participation Right as a sale of “accounts” or “payment intangibles” (as appropriate) in accordance with the UCC, and the Seller hereby
authorizes the Buyer to file financing statements (and continuation statements with respect to such financing statements when applicable) naming the Seller
as the debtor and the Buyer as the secured party in respect to the Revenue Participation Right. Not in derogation of the foregoing statement of the intent of
the parties hereto in this regard, and for the purposes of providing additional assurance to the Buyer in the event that, despite the intent of the parties hereto,
the sale, transfer, assignment and conveyance contemplated hereby is hereafter held not to be a sale, the Seller does hereby grant to the Buyer, as security
for the payment of amounts to the Buyer equal to the Royalty Cap less all Royalty Payments received by the Buyer pursuant to this Agreement, a security
interest in and to all right, title and interest in, to and under the Revenue Participation Right, the Royalty Payments, and the Product Collateral (collectively,
the “Back-Up Security Interest”), and the Seller does hereby authorize the Buyer, from and after the Closing, to file such financing statements (and
continuation statements with respect to such financing statements when applicable) in such manner and such jurisdictions as are necessary or appropriate to
perfect such security interest.
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Section 2.2 Purchase Price. At the Closing and upon the terms and subject to the conditions of this Agreement, the purchase price to be
paid as consideration to the Seller for the sale, transfer, assignment and conveyance of the Revenue Participation Right to the Buyer is One Hundred Fifty
Million Dollars ($150,000,000) in cash (the “Purchase Price”).
Section 2.3 No Assumed Obligations, Etc. Notwithstanding any provision in this Agreement to the contrary, the Buyer is only agreeing,
on the terms and conditions set forth in this Agreement, to purchase, acquire and accept the Revenue Participation Right and is not assuming any liability or
obligation of the Seller of whatever nature, whether presently in existence or arising or asserted hereafter.
ARTICLE 3
CLOSING
Section 3.1 Closing. Subject to the satisfaction of the conditions set forth in ARTICLE 5, the Closing shall take place remotely via the
exchange of documents and signatures on the date hereof, subject to the satisfaction or waiver of the conditions set forth in ARTICLE 5 (other than those
conditions that by their nature are to be satisfied at the Closing).
to the Seller by electronic funds transfer or wire transfer of immediately available funds to one or more accounts specified by the Seller.
Section 3.2 Payment of Purchase Price. At the Closing, the Buyer shall deliver (or cause to be delivered) payment of the Purchase Price
duly executed bill of sale evidencing the sale, transfer, assignment and conveyance of the Revenue Participation Right in form attached hereto as Exhibit B.
Section 3.3 Bill of Sale. At the Closing, upon confirmation of the receipt of the Purchase Price, the Seller shall deliver to the Buyer a
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
represents and warrants to the Buyer that as of the date hereof:
Section 4.1 Seller’s Representations and Warranties. Except as set forth on the Disclosure Schedule attached hereto, the Seller
(a) Existence; Good Standing. The Seller is a corporation duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Seller is duly licensed or qualified to do business and is in corporate good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and assets owned, leased or operated by it makes such licensing or qualification
necessary, except where the failure to be so licensed or qualified and in corporate good standing has not and would not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(b) Authorization. The Seller has all requisite corporate power and authority to execute, deliver and perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action on the part of the Seller.
(c) Enforceability. This Agreement has been duly executed and delivered by an authorized officer of the Seller and constitutes the valid
and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, except as may be limited by applicable Bankruptcy Laws or
by general principles of equity (whether considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance by the Seller of this Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) contravene or conflict with the certificate of incorporation or bylaws of the Seller, (ii) contravene
or conflict with or constitute a material default under any law binding upon or applicable to the Seller or the Revenue Participation Right or (iii) contravene
or conflict with or constitute a material default under any material agreement or Judgment binding upon or applicable to the Seller or the Revenue
Participation Right.
(e) Consents. Except for the consents that have been obtained on or prior to the Closing, the UCC financing statements contemplated by
Section 2.1(b), or any filings required by the federal securities laws or stock exchange rules, no consent, approval, license, order, authorization, registration,
declaration or filing with or of any Governmental Entity or other Person is required to be done or obtained by the Seller in connection with (i) the execution
and delivery by the Seller of this Agreement, (ii) the performance by the Seller of its obligations under this Agreement or (iii) the consummation by the
Seller of any of the transactions contemplated by this Agreement.
(f) No Litigation. Neither the Seller nor any of its Subsidiaries is a party to, and has not received any written notice of, any action, suit,
investigation or proceeding pending before any Governmental Entity and, to the Knowledge of the Seller, no such action, suit, investigation or proceeding
has been threatened against the Seller, that, individually or in the aggregate, has had or would, if determined adversely, reasonably be expected to have a
Material Adverse Effect.
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(g) Compliance.
(i) All applications, submissions, information and data related to the Product submitted or utilized as the basis for any
request to any Regulatory Authority by or on behalf of the Seller were true and correct in all material respects as of the date of such
submission or request, and, to the Knowledge of the Seller any material updates, changes, corrections or modification to such
applications, submissions, information or data required under applicable laws or regulations have been submitted to the necessary
Regulatory Authorities.
(ii) Neither the Seller nor any of its Subsidiaries has committed any act, made any statement or failed to make any
statement that would reasonably be expected to provide a basis for the FDA or EMA to invoke its policy with respect to “Fraud, Untrue
Statements of Material Facts, Bribery, and Illegal Gratuities”, 56 Fed. Reg. 46191 (September 10, 1991) (the “FDA Application Integrity
Policy”) and any amendments thereto, or any similar policies by FDA or any other Regulatory Authority, set forth in any applicable laws
or regulations. Neither the Seller nor, to the Knowledge of the Seller, any of its officers, employees, contractors or agents is the subject of
any pending or, to the Knowledge of the Seller, threatened investigation by FDA or any other Regulatory Authority that could reasonably
result in the invocation of the FDA Application Integrity Policy or any similar policy by any Regulatory Authority.
(iii) The Seller has provided to the Buyer prior to the date hereof in a data room available to the Buyer true and
correct copies or summaries of all material written communications sent or received by the Seller and any of its Affiliates to or from any
Regulatory Authorities that relate to the Product since [***].
(iv) None of the Seller, any of its Subsidiaries and, to the Knowledge of the Seller, any Third Party manufacturer of
the Product, has received from the FDA a “Warning Letter”, Form FDA-483, “Untitled Letter,” or similar material written
correspondence or notice alleging violations of applicable laws and regulations enforced by the FDA, or any comparable material written
correspondence from any other Regulatory Authority with regard to the Product or the manufacture, processing, packaging or holding
thereof, the subject of which communication is unresolved and if determined adversely to the Seller or such Subsidiary would,
individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
(v) Since [***], (A) there have been no Safety Notices, (B) to the Knowledge of the Seller, there are no unresolved
material product complaints with respect to the Product, which would result in a Material Adverse Effect, and (C) to the Knowledge of
the Seller, there are no facts currently in existence that would, individually or in the aggregate, reasonably be expected to result in (1) a
material Safety Notice with respect to the Product, or (2) a material change in the labeling of the Product. Since [***], neither the Seller
nor any of its Subsidiaries has experienced any significant failures in the manufacturing of the Product for clinical use or commercial sale
that have not been resolved, or that would, individually or in the aggregate, have had or would reasonably be expected to result in, if such
failure occurred again, a Material Adverse Effect.
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(vi) The Seller possesses all Marketing Approvals and material permits, licenses, registrations, certificates,
authorizations, orders and approvals from the appropriate federal, state or foreign regulatory authorities necessary to conduct its business,
including all such material permits, licenses, registrations, certificates, authorizations, orders and approvals required by the FDA or any
other Regulatory Authority (collectively, “Permits”). The Seller has not received any written notice of proceedings relating to the
suspension, modification, revocation or cancellation of any Permit. Neither the Seller nor, to the Knowledge of the Seller, any officer,
employee or agent of the Seller has been convicted of any crime or engaged in any conduct that has previously caused or would
reasonably be expected to result in (A) disqualification or debarment by the FDA under 21 U.S.C. Sections 335(a) or (b), or any similar
law, rule or regulation of any other governmental entities, (B) debarment, suspension, or exclusion under any federal healthcare programs
or by the General Services Administration, or (C) exclusion under 42 U.S.C. Section 1320a-7 or any similar law, rule or regulation
administered by any Regulatory Authority. To the Knowledge of the Seller, neither the Seller nor any of its officers, employees,, any of
its contractors or agents has made an untrue statement of material fact on, or material omissions from, any notifications, applications,
approvals, reports and other submissions to FDA or any similar Regulatory Authority.
(vii) The Seller is and has been in compliance with all applicable laws administered or issued by the FDA or any
similar Regulatory Authority, including the Federal Food, Drug, and Cosmetic Act, applicable requirements in FDA regulations, and any
orders issued by FDA or similar Regulatory Authorities, and all other laws regarding ownership, developing, testing, manufacturing,
packaging, storage, import, export, disposal, marketing, distributing, promoting, and complaint handling or adverse event reporting for
the products of the Seller, except to the extent that such failure to comply with such applicable laws would not reasonably be expected to
result in a Material Adverse Effect.
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(h) Licenses.
(i) In-Licenses. There are no In-Licenses.
(ii) Out-Licenses. Except as set forth on Schedule 4.1(h)(ii) of the Disclosure Schedule, there are no Out-Licenses
(any Out-License set forth on Schedule 4.1(h)(ii) of the Disclosure Schedule, an “Existing Out-License”). A true, correct and complete
copy of each Existing Out‑License has been provided to the Buyer by the Seller in a data room available to the Buyer. Neither the Seller
nor the respective counterparty thereto has made or entered into any amendment, supplement or modification to, or granted any waiver
under any provision of any Existing Out‑License.
(iii) Validity and Enforceability of Out-Licenses. Each Existing Out-License is a valid and binding obligation of the
Seller and the counterparty thereto. To the Knowledge of the Seller, each Existing Out-License is enforceable against each counterparty
thereto in accordance with its terms except as may be limited by applicable Bankruptcy Laws or by general principles of equity (whether
considered in a proceeding in equity or at law). The Seller has not received any written notice in connection with any Existing Out-
License challenging the validity, enforceability or interpretation of any provision of such agreement.
(iv) No Termination. The Seller has not (A) given notice to a counterparty of the termination of any Existing Out-
License (whether in whole or in part) or any notice to a counterparty expressing any intention or desire to terminate any Existing Out-
License or (B) received from a counterparty thereto any written notice of termination of any Existing Out-License (whether in whole or
in part) or any written notice from a counterparty expressing any intention or desire to terminate any Existing Out-License.
(v) No Breaches or Defaults. There is and has been no material breach or default under any provision of any Existing
Out-License either by the Seller or, to the Knowledge of the Seller, by the respective counterparty (or any predecessor thereof) thereto,
and there is no event that upon notice or the passage of time, or both, would reasonably be expected to give rise to any breach or default
either by the Seller or, to the Knowledge of the Seller, by the respective counterparty to such agreement.
required under each Existing Out‑License as of the date hereof.
(vi) Payments Made. The respective counterparty of each Existing Out-License has made all payments to the Seller
(vii) No Assignments. The Seller has not consented to any assignment by the counterparty to any Existing Out-
License of any of its rights or obligations under any such Existing Out-License and, to the Knowledge of the Seller, the counterparty has
not assigned any of its rights or obligations under any such Existing Out-License to any Person.
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(viii) No Indemnification Claims. The Seller has not notified any Person of any claims for indemnification under any
Existing Out-License nor has the Seller received any claims for indemnification under any Existing Out-License.
(ix) No Infringement. Neither the Seller nor any of its Subsidiaries has received any written notice from, or given any
written notice to, any counterparty to any Existing Out-License regarding any infringement of any of the Existing Patent Rights licensed
thereunder.
(i) No Liens; Title to Revenue Participation Right. None of the property or assets, in each case, that specifically relate to the Product,
including Intellectual Property Rights, of the Seller or any of its Subsidiaries is subject to any Lien, except for a Permitted Lien. Upon the Closing, the
Buyer will have acquired, subject to the terms and conditions set forth in this Agreement, good and marketable title to the Revenue Participation Right, free
and clear of all Liens, except for a Lien contemplated by subparts (a), (b), (f), (g), and (k) of the definition of “Permitted Liens”.
(j) Manufacturing; Supply. All Product has, since [***], been manufactured, transported, stored and handled in all material respects in
accordance with applicable law and with good manufacturing practices. Since [***], neither the Seller nor any Affiliate of the Seller has experienced any
significant failures in the manufacturing or supply of the Product that, individually or in the aggregate, have had or would reasonably be expected to result
in, if such failure occurred again, a Material Adverse Effect. The Seller has on hand or has made adequate provisions to secure sufficient clinical quantities
of Product to complete all clinical trials and all activities required for Marketing Approvals, in each case, that are ongoing or planned as of the date hereof.
The Seller has on hand or has made adequate provisions to secure sufficient quantities of the Product to support the commercial launch of the Product in the
Direct Sales Territories.
(k) Intellectual Property.
(i) Schedule 4.1(k)(i)(A) of the Disclosure Schedule lists all of the currently existing Patents included within the Patent Rights
(the “Existing Patent Rights”). The Seller is the sole and exclusive owner of all of the Existing Patent Rights. Schedule 4.1(k)(i)(A) of the
Disclosure Schedule specifies as to each listed patent or patent application the jurisdictions by or in which each such patent has issued as
a patent or such patent application has been filed, including the respective patent or application numbers.
(ii) Neither Seller nor any of its Subsidiaries is a party to any pending and, to the Knowledge of the Seller, there is no
threatened, litigation, interference, reexamination, opposition or like procedure involving any of the Existing Patent Rights.
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(iii) All of the issued patents within the Existing Patent Rights are (A) to the Knowledge of the Seller, valid and enforceable,
and (B) in full force and effect. None of the issued patents within the Existing Patent Rights have lapsed, expired or otherwise terminated.
Neither Seller nor any of its Subsidiaries has received any written notice relating to the lapse, expiration or other termination of any of the
issued patents within the Existing Patent Rights, and neither Seller nor its Subsidiaries has received any written legal opinion that alleges
that, an issued patent within any of the Existing Patent Rights is invalid or unenforceable.
(iv) Neither Seller nor any of its Subsidiaries has received any written notice that there is any, and, to the Knowledge of the
Seller, there is no, Person who is or claims to be an inventor under any of the Existing Patent Rights who is not a named inventor thereof.
(v) Neither Seller not its Affiliates has received any written notice of any claim by any Person challenging the inventorship or
ownership of, the rights of the Seller in and to, or the patentability, validity or enforceability of, any of the Existing Patent Rights, or
asserting that the development, manufacture, importation, sale, offer for sale or use of the Product infringes, misappropriates or otherwise
violates or will infringe, misappropriate or otherwise violate such Person’s Patents or other intellectual property rights.
(vi) To the Knowledge of the Seller, the discovery, development manufacture, importation, sale, offer for sale or use of the
Product, in each case in the form the Product exists as of the date hereof and as such activity is currently contemplated by the Seller, has
not and will not, infringe, misappropriate or otherwise violate any Patents or other intellectual property rights owned by any Third Party.
(vii) To the Knowledge of the Seller, no Person has infringed, misappropriated or otherwise violated, or is infringing,
misappropriating or otherwise violating, any of the Intellectual Property Rights.
(viii) The Seller has paid all maintenance fees, annuities and like payments required as of the date hereof with respect to each
of the Existing Patent Rights.
$[***] in the aggregate.
(l) Indebtedness. Schedule 4.1(l) sets forth a complete list of the outstanding Indebtedness of the Seller and its Subsidiaries in excess of
(m) Foreign Corrupt Practices Act. Neither the Seller nor, to the Knowledge of Seller, any of its directors, officers, employees or agents
have, directly or indirectly, made, offered, promised or authorized any payment or gift of any money or anything of value to or for the benefit of any
“foreign official” (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”)), foreign political party or official
thereof or candidate for foreign political office for the purpose of (i) influencing any official act or decision of such official, party or candidate, (ii) inducing
such official, party or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, or (iii) securing any
improper advantage, in the case of (i), (ii) and (iii) above in order to assist the Seller or any of its Affiliates in obtaining or retaining business for or with, or
directing business to, any person. Neither the Seller nor, to the Knowledge of Seller, any of its directors, officers, employees or agents have made or
authorized any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any
law, rule or regulation. The Seller further represents that it has maintained, and has caused each of its Subsidiaries to maintain, systems of internal controls
(including, but not limited to, accounting systems, purchasing systems and billing systems) and written policies designed to ensure compliance with the
FCPA or any other applicable anti-bribery or anti-corruption law, and designed to ensure that all books and records of the Seller accurately and fairly
reflect, in reasonable detail, all transactions and dispositions of funds and assets. To the Knowledge of the Seller, neither the Seller nor any of its officers,
directors or employees are the subject of any allegation, voluntary disclosure, investigation, prosecution or other enforcement action related to the FCPA or
any other anti-corruption law.
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been, “BioCryst Pharmaceuticals, Inc.” The Seller is, and for the prior five (5) years has been, incorporated in the State of Delaware.
(n) Lien Related Representation and Warranties. The Seller’s exact legal name is, and for the immediately preceding five (5) years has
(o) Brokers’ Fees. Except for Cowen Inc., there is no investment banker, broker, finder, financial advisor or other intermediary who has
been retained by or is authorized to act on behalf of the Seller who might be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
Section 4.2 Buyer’s Representations and Warranties. The Buyer hereby represents and warrants to the Seller that:
Ontario, Canada.
(a) Existence; Good Standing. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of
(b) Authorization. The Buyer has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.
The execution, delivery and performance of this Agreement, and the consummation of the transactions contemplated hereby, have been duly authorized by
all necessary action on the part of the Buyer.
(c) Enforceability. This Agreement has been duly executed and delivered by an authorized person of the Buyer and constitutes the valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, except as may be limited by applicable Bankruptcy Laws
or by general principles of equity (whether considered in a proceeding in equity or at law).
(d) No Conflicts. The execution, delivery and performance by the Buyer of this Agreement do not and will not (i) contravene or conflict
with the organizational documents of the Buyer, (ii) contravene or conflict with or constitute a default under any material provision of any law binding
upon or applicable to the Buyer or (iii) contravene or conflict with or constitute a default under any material contract or other material agreement or
Judgment binding upon or applicable to the Buyer.
32
(e) Consents. Except for any filings required by the federal securities laws or stock exchange rules, no consent, approval, license, order,
authorization, registration, declaration or filing with or of any Governmental Entity or other Person is required to be done or obtained by the Buyer in
connection with (i) the execution and delivery by the Buyer of this Agreement, (ii) the performance by the Buyer of its obligations under this Agreement or
(iii) the consummation by the Buyer of any of the transactions contemplated by this Agreement.
(f) No Litigation. There is no action, suit, investigation or proceeding pending or, to the knowledge of the Buyer, threatened before any
Governmental Entity to which the Buyer is a party that would, if determined adversely, reasonably be expected to prevent or materially and adversely affect
the ability of the Buyer to perform its obligations under this Agreement.
under this Agreement are not contingent on obtaining financing.
(g) Financing. The Buyer has sufficient cash to pay the Purchase Price at the Closing. The Buyer acknowledges that its obligations
Participation Right by reason of the Buyer’s status as eligible for zero percent treaty rates with respect to such payments.
(h) Tax Status. Under current law, the Buyer is exempt from U.S. federal withholding tax on all payments with respect to the Revenue
(i) Brokers’ Fees. There is no investment banker, broker, finder, financial advisor or other intermediary who has been retained by or is
authorized to act on behalf of the Buyer who might be entitled to any fee or commission in connection with the transactions contemplated by this
Agreement.
Section 4.3 No Implied Representations and Warranties. The Buyer acknowledges and agrees that, other than the express
representations and warranties of the Seller specifically contained in this ARTICLE 4, (a) there are no representations or warranties of the Seller either
expressed or implied with respect to the Patent Rights or Royalty Payment and that the Buyer does not rely on, and shall have no remedies in respect of,
any representation or warranty not specifically set forth in this ARTICLE 4, and all other representations and warranties are hereby expressly disclaimed,
and (b) nothing contained herein guarantees that sales of the Product or the aggregate Royalty Payments due to the Buyer will achieve any specific amounts
(it being understood and agreed that nothing in this Section 4.3 shall limit in any way the Seller’s obligations under ARTICLE 8). Notwithstanding the
foregoing, claims for fraud, gross negligence, or willful misconduct shall not be waived or limited in any way by this Section 4.3. Except for the Revenue
Participation Right, Back-up Security Interest and the Buyer’s rights under Section 6.5(d), the Buyer further acknowledges and agrees that no licenses or
assignments under any assets (including the Patent Rights or any other intellectual property) of the Seller and its Affiliates are granted pursuant to this
Agreement, including by implication, estoppel, exhaustion or otherwise.
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ARTICLE 5
CONDITIONS TO CLOSING
hereunder on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
Section 5.1 Conditions to the Buyer’s Obligations. The obligations of the Buyer to consummate the transactions contemplated
(a) The Seller shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions
required to be performed and complied with by it under this Agreement at or prior to the Closing Date, and the Buyer shall have received a certificate
executed by a duly authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of the foregoing.
(b) The representations and warranties of the Seller contained in Section 4.1 shall have been true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made at and as of the date hereof and as of the
Closing Date, respectively, except to the extent any such representation or warranty expressly speaks as of a particular date, in which case it shall be true
and correct in all material respects as of such date; provided, that to the extent that any such representation or warranty is qualified by the term “material”
or “Material Adverse Effect” such representation or warranty (as so written, including the term “material” or “Material Adverse Effect”) shall have been
true and correct in all respects as of the date hereof and shall be true and correct in all respects as of the Closing Date or such other date, as applicable. The
Buyer shall have received a certificate executed by an authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of
the foregoing.
(c) No event or events shall have occurred, or be reasonably likely to occur, that, individually or in the aggregate, have had or would
reasonably be expected to result in (or, with the giving of notice, the passage of time or otherwise, would result in) a Material Adverse Effect. The Buyer
shall have received a certificate executed by a duly authorized officer of the Seller on the Closing Date certifying on behalf of the Seller to the effect of the
foregoing.
consummation of the transactions contemplated by this Agreement.
(d) There shall not have been issued and be in effect any Judgment of any Governmental Entity enjoining, preventing or restricting the
(e) There shall not have been instituted or be pending any action or proceeding by any Governmental Entity or any other Person
(i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain material damages in connection with the transactions contemplated hereby or (iii) seeking to restrain or prohibit
the Buyer’s purchase of the Revenue Participation Right.
Finance Trust, and Athyrium.
(f) The Buyer shall have received the Intercreditor Agreement, duly executed and delivered by the Seller, RPI 2019 Intermediate
34
from U.S. federal “backup” withholding Tax.
(g) The Buyer shall have received a valid, properly executed Internal Revenue Service Form W-9 certifying that the Seller is exempt
substantially the forms attached hereto as Exhibit C.
(h) The Seller shall have delivered to the Buyer the legal opinions of Gibson, Dunn & Crutcher, LLP, as counsel to the Seller, in
(i) The Buyer shall have received a certificate of the Secretary or an Assistant Secretary of the Seller, dated the Closing Date, certifying
as to (i) the incumbency of each officer of the Seller executing this Agreement and (ii) the attached thereto copies of (A) the Seller’s certificate of
incorporation, (B) bylaws, and (C) resolutions adopted by the Seller’s Board of Directors authorizing the execution and delivery by the Seller of this
Agreement and the consummation by the Seller of the transactions contemplated hereby (the “Seller Certificate”).
(j) The Seller shall have confirmed it has scheduled delivery to Buyer of a CD or USB containing copies of all documents uploaded to
the data room related to the transactions contemplated by this Agreement, as of the date hereof, maintained by the Seller and made available to the Buyer,
including all documents referred to in Section 4.1(g)(iii) and Section 4.1(h)(ii).
on the Closing Date are subject to the satisfaction or waiver, at or prior to the Closing Date, of each of the following conditions precedent:
Section 5.2 Conditions to the Seller’s Obligations. The obligations of the Seller to consummate the transactions contemplated hereunder
(a) The Buyer shall have performed and complied in all material respects with all agreements, covenants, obligations and conditions
required to be performed and complied with by it under this Agreement at or prior to the Closing Date, and the Seller shall have received a certificate
executed by a duly authorized person of the Buyer, on the Closing Date certifying on behalf of the Buyer to the effect of the foregoing.
(b) The representations and warranties of the Buyer contained in Section 4.2 shall have been true and correct in all material respects as
of the date hereof and shall be true and correct in all material respects as of the Closing Date as though made at and as of the date hereof and Closing Date,
respectively, except to the extent any such representation or warranty expressly speaks as of a particular date, in which case it shall be true and correct in all
material respects as of such date; provided, that to the extent that any such representation or warranty is qualified by the term “material,” or “Material
Adverse Effect” such representation or warranty (as so written, including the term “material” or “Material Adverse Effect”) shall have been true and correct
in all respects as of the date hereof and shall be true and correct in all respects as of the Closing Date or such other date, as applicable. The Seller shall have
received a certificate executed by a duly authorized person of the Buyer, on the Closing Date certifying on behalf of the Buyer to the effect of the
foregoing.
35
consummation of the transactions contemplated by this Agreement.
(c) There shall not have been issued and be in effect any Judgment of any Governmental Entity enjoining, preventing or restricting the
(d) There shall not have been instituted or be pending any action or proceeding by any Governmental Entity or any other Person
(i) challenging or seeking to make illegal, to delay materially or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions
contemplated hereby, (ii) seeking to obtain material damages in connection with the transactions contemplated hereby or (iii) seeking to restrain or prohibit
the Buyer’s purchase of the Revenue Participation Right.
(e) The Seller shall have received a valid, properly executed Internal Revenue Service Form W-8EXP certifying that the Buyer is a
“controlled entity” of a foreign government within the meaning of Section 892 of the Code and the payments with respect to the Revenue Participation
Rights are within the scope of the exemption granted by Section 892 of the Code.
incumbency of the officers executing this Agreement on behalf of the Buyer.
(f) The Seller shall have received a certificate of an authorized person of the Buyer, dated the Closing Date, certifying as to the
ARTICLE 6
COVENANTS
Section 6.1 Reporting. From and after the date hereof, the Seller shall provide the Buyer:
(a) promptly following the end of each [***]-month period in a calendar year ([***]), but in any event, in each case, no later than [***]
calendar days after the end of such [***]-month period, as applicable, a reasonably detailed semi-annual report setting forth, with respect to such same
period, (1) any Clinical Updates and (2) the Commercial Updates (the “Clinical and Commercial Semi-Annual Report”);
(b) promptly following the end of each [***]-month period in a calendar year ([***]), but in any event, in each case, no later than [***]
calendar days after the end of such [***]-month period, as applicable, a reasonably detailed semi-annual report setting forth, with respect to such same
period, (i) the Regulatory Updates, and (ii) the Intellectual Property Updates (the “Regulatory and IP Semi-Annual Report”, and, collectively with the
Clinical and Commercial Semi-Annual Reports, the “Reports”); and
development, sales, regulatory or other milestone event set forth in each Out-License.
(c) The Seller shall include in each Report as applicable any (i) material CMC updates and (ii) details as to the achievement of any
(d) The Seller shall also provide the Buyer with such additional information regarding the updates included in each Report as the Buyer
may reasonably request from time to time. The Seller shall prepare and maintain and shall cause its Affiliates and Licensees to prepare and maintain
reasonably complete and accurate records of the information to be disclosed in each Report. All Reports, and the Confidential Information contained
therein, shall be the Confidential Information of Seller and subject to the obligations of confidentiality set forth in ARTICLE 8.
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Section 6.2 Royalty Payments; Revenue Participation and Royalty Payment Details.
(a) For each calendar quarter beginning on October 1, 2023 and until the Royalty Termination Date, the Seller shall pay to the Buyer,
without any setoff or offset (subject, in each case, to Section 6.13), the Royalty Payment promptly, but in any event no later than [***] calendar days after
the end of each of the first three calendar quarters and [***] calendar days after the end of the last calendar quarter in each calendar year (or [***] Business
Days after the filing of the Seller’s annual report on Form 10-K, if earlier), provided that for any payments received by the Seller after the date that is [***]
calendar days after the end of each calendar quarter, such payment will be paid with the following calendar quarter’s Royalty Payment. A late fee of
[***]% over the Prime Rate (calculated on a per annum basis) will accrue on all unpaid amounts with respect to any Royalty Payment from the date such
obligation was due. The imposition and payment of a late fee shall not constitute a waiver of the Buyer’s rights with respect to such payment default.
(b) For each calendar quarter beginning on October 1, 2023 and until the Royalty Termination Date, promptly, but in any event no later
than [***] calendar days after the end of each of the first three calendar quarters and [***] calendar days after the end of the last calendar quarter in each
calendar year (or [***] Business Days after the filing of the Seller’s annual report on Form 10-K, if earlier), the Seller shall provide to Buyer a report, in
substantially the form attached to this Agreement as Exhibit D, setting forth in reasonable detail (i) the calculation of Direct Sales, including Gross Sales
and Net Sales for the applicable calendar quarter and calendar year to date, on a country-by-country basis (including a detailed break-down of all permitted
deductions from Gross Sales used to determine Net Sales and any Net Sales described in Section 6.5(d)), (ii) the calculation of Indirect Revenues on a
country-by-country and Licensee-by-Licensee basis (including a detailed breakdown of Indirect Revenue consisting of royalties, upfront payments,
milestones and other fixed payments), (iii) the calculation of the Royalty Payment payable to the Buyer for the applicable calendar quarter, identifying, on a
country-by-country basis, the number of units of Product sold by the Seller, its Affiliates and each Licensee and (iv) foreign currency exchange rates used
(which shall be rates of exchange determined in a manner consistent with the Seller’s method for calculating rates of exchange in the preparation of the
Seller’s annual financial statements in accordance with accounting principles generally accepted in the United States); provided that for any reports
received by the Seller after the date that is [***] calendar days after the end of each calendar quarter, the Seller shall provide to the Buyer the relevant
information from such reports in the following calendar quarter’s report.
(c) Any payments required to be made by either party under this Agreement shall be made in United States Dollars via electronic funds
transfer or wire transfer of immediately available funds to such bank account as the other party shall designate in writing prior to the date of such payment.
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Section 6.3 Disclosures. Except for a press release previously approved in form and substance by the Seller and the Buyer or any other
public announcement using substantially the same text as such press release, neither the Buyer nor the Seller shall, and each party hereto shall cause its
respective Representatives, Affiliates and Affiliates’ Representatives not to issue a press release or other public announcement or otherwise make any
public disclosure with respect to this Agreement or the subject matter hereof without the prior written consent of the other party hereto (which consent shall
not be unreasonably withheld or delayed), except as may be required by applicable law or stock exchange rule (in which case the party hereto required to
make the press release or other public announcement or disclosure shall allow the other party hereto reasonable time to comment on, and, if applicable,
reasonably direct the disclosing party to seek confidential treatment in respect of portions of, such press release or other public announcement or disclosure
in advance of such issuance).
Section 6.4 Inspections and Audits of the Seller. Following the Closing, upon at least fourteen (14) Business Days written notice and
during normal business hours, no more frequently than once per calendar year, the Buyer may cause an inspection and/or audit by an independent public
accounting firm reasonably acceptable to the Seller to be made of the Seller’s books of account for the three (3) calendar years prior to the audit for the
purpose of determining the correctness of the calculation of the Royalty Payments made under this Agreement. Upon the Buyer’s reasonable request, no
more frequently than once per calendar year while any Out-License remains in effect, the Seller shall use Commercially Reasonable Efforts to exercise any
rights it may have under any Out-License relating to the Product to cause an inspection and/or audit by an independent public accounting firm to be made
of the books of account of any counterparty thereto for the purpose of determining the correctness of the calculation of the Royalty Payments made under
this Agreement. Seller shall notify Buyer in writing if it initiates an inspection and/or audit of the books of account of any counterparty to an Out-License
to the extent such inspection and/or audit is related to the Royalty Payments, and shall provide to Buyer a redacted copy of any report relating thereto
within ten (10) Business Days of receipt thereof; provided, that any redactions to such report shall not include any information necessary to determine the
correctness of the calculation of the Royalty Payments made under this Agreement. All of the out-of-pocket expenses of any inspection or audit requested
by the Buyer hereunder (including the fees and expenses of such independent public accounting firm designated for such purpose) shall be borne solely by
the Buyer, unless the independent public accounting firm determines that Royalty Payments previously paid to Buyer during the period of the audit were
underpaid by an amount greater than [***]% of the Royalty Payments actually paid during such period, in which case such expenses shall be borne by the
Seller. Any such accounting firm or Seller shall not disclose the confidential information of the Seller or any such Licensee relating to the Product to the
Buyer, except to the extent such disclosure is necessary to determine the correctness of Royalty Payments or otherwise would be included in a Report. All
information obtained by the Buyer as a result of any such inspection or audit shall be Confidential Information subject to ARTICLE 8. If any audit
discloses any underpayments by the Seller to the Buyer, then such underpayment shall be paid by the Seller to the Buyer within thirty (30) calendar days of
it being so disclosed. If any audit discloses any overpayments by the Seller to the Buyer, then the Seller shall have the right to credit the amount of the
overpayment against each subsequent quarterly Royalty Payment due to the Buyer until the overpayment has been fully applied. If the overpayment is not
fully applied prior to the final quarterly Royalty Payment due hereunder, the Buyer shall promptly refund an amount equal to any such remaining
overpayment.
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Section 6.5 Intellectual Property Matters.
(a) The Seller shall provide to the Buyer a copy of any written notice received by the Seller from a Third Party alleging or claiming that
the making, having made, using, importing, offering for sale or selling of the Product infringes or misappropriates any Patents or other intellectual property
rights of such Third Party, together with copies of material correspondence sent or received by the Seller related thereto, as soon as practicable and in any
event not more than [***] Business Days following such delivery or receipt.
(b) The Seller shall promptly inform the Buyer of any infringement by a Third Party of any Patent Right of which any of the individuals
named in the definition of “Knowledge of the Seller” (or the successors of such Person at the Seller) becomes aware. Without limiting the foregoing, the
Seller shall provide to the Buyer a copy of any written notice of any suspected infringement of any Patent Rights delivered or received by the Seller, as well
as copies of material correspondence related thereto, as soon as practicable and in any event not more than [***] Business Days following such delivery or
receipt.
infringement by a Third Party of any Patent Right, the Seller shall provide the Buyer with written notice of such enforcement action.
(c) Within [***] Business Days of initiating, or permitting a Licensee to initiate, an enforcement action regarding any suspected
(d) If the Seller recovers monetary damages from a Third Party in an action brought for such Third Party’s infringement of any Patent
Rights relating to the Product, where such damages, whether in the form of judgment or settlement, are awarded for such infringement of such Patent
Rights, (i) such recovery will be allocated first to the reimbursement of any expenses incurred by the Seller (or any party to an In-License or Permitted
License of such Patent Rights entitled to such reimbursement under any such In-License or Out-License ) in bringing such action (including all reasonable
attorney’s fees), (ii) any remaining amounts will be reduced, if applicable, to comply with allocation of recovered damages with licensors of such Patent
Rights required under any In-Licenses or Permitted Licenses of such Patent Rights under any Out-Licenses, if any, and (iii) any residual amount of such
damages after application of (i) and (ii) will be treated as Direct Sales with respect to the Direct Sales Territories, Indirect Sales with respect to the Indirect
Sales Territories, or Product Partnering Revenue with respect to the Permitted Sale Territory, as applicable.
Section 6.6 In-Licenses.
(a) The Seller shall promptly (and in any event within [***] Business Days) provide the Buyer with (i) executed copies of any In-
License entered into by the Seller or its Affiliates, and (ii) executed copies of each amendment, supplement, modification or written waiver of any
provision of any In-License.
(b) The Seller shall use Commercially Reasonable Efforts to comply in all material respects with its obligations under any In-Licenses
it enters into and shall not take any action or forego any action that would reasonably be expected to result in a material breach thereof. Promptly, and in
any event within [***] Business Days, after receipt of any (written or oral) notice from a counterparty to any In-License or its Affiliates of an alleged
material breach under any In-License, the Seller shall provide the Buyer a copy thereof. The Seller shall use its Commercially Reasonable Efforts to cure
any material breaches by it under any In-License and shall give written notice to the Buyer upon curing any such breach. The Seller shall provide the Buyer
with written notice following becoming aware of a counterparty’s material breach of its obligations under any In-License. The Seller shall not terminate
any In-License without providing the Buyer prior written notice. Promptly, and in any event within [***] Business Days following the Seller’s notice to a
counterparty to any In-License of an alleged breach by such counterparty under any such In-License, the Seller shall provide the Buyer a copy thereof.
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Section 6.7 Out-Licenses and Permitted Sales.
(a) Subject to compliance with this Section 6.7, the Seller may enter into either (i) an Out-License with a Third Party or enter into an
agreement to research, develop or manufacture the Product in all or any portion of the world; provided, that such license shall not assign or otherwise
convey title to or impose any Lien, other than the grant of the license or sublicense, in favor of any Third Party (any such license, a “Permitted License”),
or (ii) a Permitted Sale.
(b) The Seller shall promptly (and in any event within [***] Business Days) provide the Buyer with (i) executed copies of each Out-
License and Permitted Sale, and (ii) executed copies of each amendment, supplement, modification or written waiver of any material provision of an Out-
License or Permitted Sale.
(c) The Seller shall include in all Out-Licenses (other than Existing Out-Licenses) and all definitive agreement(s) for Permitted Sales
provisions permitting the Seller to audit such Licensee or Permitted Purchaser (as applicable) and shall use commercially reasonable efforts to include
terms and conditions consistent in all material respects with the Buyer’s rights to audit the Seller set forth in Section 6.4.
(d) The Seller shall provide the Buyer prompt (and in any event within [***] Business Days) written notice of a Licensee’s material
breach of its obligations under any Out-License or a Permitted Purchaser’s material breach of its obligations under any Permitted Sale of which any of the
individuals named in the definition of “Knowledge of the Seller” (or the successors of such Person at the Seller) becomes aware.
termination of any Out-License or Permitted Sale.
(e) The Seller shall provide the Buyer with written notice promptly (and in any event within [***] Business Days) following the
Section 6.8 Restricted Indebtedness. Prior to the Minimum Return Date, the Seller shall not, and shall not permit any of its Subsidiaries
to, create, incur, assume or suffer to exist any Restricted Indebtedness. As a condition to the incurrence of any secured Permitted Indebtedness for borrowed
money with one or more lenders other than the holders of Indebtedness under the Athyrium Credit Agreement, either (i) the Seller shall cause such lender
or lenders or any agent, representative or trustee acting on behalf of such lender or lenders to become a party to the Intercreditor Agreement in accordance
with the terms thereof or (ii) the Buyer shall enter, and the Seller shall enter and cause such lender or lenders or any agent, representative or trustee acting
on behalf of such lender or lenders to enter into an Other Intercreditor Agreement. Notwithstanding the foregoing and except as otherwise agreed by the
parties, following the Minimum Return Date, the Seller shall not, and shall not permit any of its Subsidiaries to incur any Convertible Bond Indebtedness
unless such Convertible Bond Indebtedness shall be subordinated in right of payment to the Royalty Payments that are owed or may be owed in the future
to the Buyer pursuant to the terms of a subordination, intercreditor, or other similar agreement (or terms of subordination incorporated into the indenture
under which such Convertible Bond Indebtedness is issued), in each case in form and substance, and on terms, approved by the Buyer, the Seller, and the
applicable Third Party in writing.
40
Section 6.9 Diligence.
(a) The Seller shall use Commercially Reasonable Efforts to complete clinical development and Commercialize (either directly or
through Licensees) the Product in the Direct Sales Territories for hereditary angioedema. In furtherance of the foregoing, the Seller shall use Commercially
Reasonable Efforts to prepare, execute, deliver and file any and all agreements, documents or instruments that are necessary or desirable to secure and
maintain all Marketing Approvals required to Commercialize the Product in the Direct Sales Territories and the Seller shall use Commercially Reasonable
Efforts to not withdraw or abandon, or fail to take any action necessary to prevent the withdrawal or abandonment of, any such Marketing Approvals.
6.9(a) shall no longer apply in such country.
(b) On a country-by-country basis, if a Loss of Market Exclusivity has occurred in such country, the Seller’s obligations under Section
Section 6.10 Efforts to Consummate Transactions. Subject to the terms and conditions of this Agreement, each of the Seller and the
Buyer will use its commercially reasonable efforts prior to the Closing to take, or cause to be taken, all actions and to do, or cause to be done, all things
reasonably necessary under applicable law to consummate the transactions contemplated by this Agreement. Each of the Buyer and the Seller agrees to
execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary in
order to consummate or implement expeditiously the transactions contemplated by this Agreement.
Section 6.11 Further Assurances. After the Closing, the Seller and the Buyer agree to execute and deliver such other documents,
certificates, agreements and other writings and to take such other actions as may be reasonably necessary in order to give effect to the transactions
contemplated by this Agreement.
Section 6.12 No Impairment of Revenue Participation Right or Back-Up Security Interest. Notwithstanding anything herein to the
contrary, the Seller shall not enter into any contracts or arrangement or otherwise knowingly take any action or knowingly fail to act in a manner that
would, individually or in the aggregate, reasonably be expected to materially and adversely affect the Buyer’s interest in the Revenue Participation Right or
the Back-Up Security Interest. The parties agree that the entry into (i) the Athyrium Loan Documents, (ii) any agreement evidencing any secured
Indebtedness permitted by clause (b)(ii) of the definition of Restricted Indebtedness and (iii) the RP Royalty Financing Documents, which shall, in each
case, be subject to and in compliance with the Intercreditor Agreement or any Other Intercreditor Agreement, shall be deemed to not materially and
adversely affect the Buyer’s interest in the Revenue Participation Right or the Back-Up Security Interest.
41
Section 6.13 Certain Tax Matters.
(a) The Seller and the Buyer agree that for Tax purposes, (a) the Seller and the Buyer shall treat the transactions contemplated by this
Agreement as [***] and (b) any and all amounts remitted by the Seller to the Buyer after the Closing Date pursuant to this Agreement shall be treated as
received by the Seller as agent for the Buyer. The parties hereto agree not to take any position that is inconsistent with the provisions of this Section 6.13(a)
on any tax return or in any audit or other tax-related administrative or judicial proceeding unless the other party hereto has consented in writing (such
consent not to be unreasonably withheld, conditioned or delayed) to such actions. If there is an inquiry by any Governmental Entity of the Buyer or the
Seller related to the treatment described in this Section 6.13(a), the parties hereto shall cooperate with each other in responding to such inquiry in a
reasonable manner which is consistent with this Section 6.13(a).
(b) Notwithstanding anything to the contrary in this Agreement, each of the Buyer and the Seller shall be entitled to withhold and
deduct (or cause to be withheld and deducted) from any amount payable under this Agreement to the other party any Tax that the Buyer or the Seller, as
applicable, determines that it is required to withhold and deduct under applicable law, and any such amount withheld and deducted shall be treated for all
purposes of this Agreement as being paid to the other party; provided that each of the Buyer and the Seller shall give the other party reasonable prior notice
and the opportunity, in good faith, to contest and prevent such withholding and deduction. The parties hereto shall use commercially reasonable efforts to
give or cause to be given to the other party hereto such assistance and such information concerning the reasons for withholding or deduction (including, in
reasonable detail, the method of calculation for the deduction or withholding thereof) as may be reasonably necessary to enable the Buyer or the Seller, as
applicable, to claim exemption therefrom, or credit therefor, or relief (whether at source or by reclaim) therefrom, and, in each case, shall furnish the Buyer
or the Seller, as applicable, with proper evidence of the taxes withheld and deducted and remitted to the relevant taxing authority. The Buyer agrees (i) to
notify the Seller in writing if (A) Buyer becomes ineligible to use or deliver the Form W-8EXP delivered to the Seller under Section 5.2(e), or (B) the Form
W-8EXP delivered to the Seller under Section 5.2(e) ceases to be accurate or complete, and (ii) to provide (to the extent it is legally eligible to do so) any
additional Tax forms that the Seller may reasonably request.
ARTICLE 7
INDEMNIFICATION
Section 7.1 General Indemnity. From and after the Closing:
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(a) the Seller hereby agrees to indemnify, defend and hold harmless the Buyer and its Affiliates and its and their directors, managers,
officers, trustees, agents and employees (the “Buyer Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Buyer
Indemnified Parties to the extent arising out of or resulting from (i) any breach of any of the representations or warranties of the Seller in this Agreement,
and (ii) any breach of any of the covenants or agreements of the Seller in this Agreement; and
(b) the Buyer hereby agrees to indemnify, defend and hold harmless the Seller and its Affiliates and its and their directors, officers,
agents and employees (the “Seller Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Seller Indemnified Parties to
the extent arising out of or resulting from (i) any breach of any of the representations or warranties of the Buyer in this Agreement, and (ii) any breach of
any of the covenants or agreements of the Buyer in this Agreement.
Section 7.2 Notice of Claims. If either a Buyer Indemnified Party, on the one hand, or a Seller Indemnified Party, on the other hand
(such Buyer Indemnified Party on the one hand and such Seller Indemnified Party on the other hand being hereinafter referred to as an “Indemnified
Party”), has suffered or incurred any Losses for which indemnification may be sought under this ARTICLE 7, the Indemnified Party shall so notify the
other party from whom indemnification is sought under this ARTICLE 7 (the “Indemnifying Party”) promptly in writing describing such Loss, the amount
or estimated amount thereof, if known or reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity
and containing a reference to the provisions of this Agreement in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding is
asserted or instituted by or against a Third Party with respect to which an Indemnified Party intends to claim any Loss under this ARTICLE 7, such
Indemnified Party shall promptly notify the Indemnifying Party of such claim, action, suit or proceeding and tender to the Indemnifying Party the defense
of such claim, action, suit or proceeding. A failure by an Indemnified Party to give notice and to tender the defense of such claim, action, suit or proceeding
in a timely manner pursuant to this Section 7.2 shall not limit the obligation of the Indemnifying Party under this ARTICLE 7, except to the extent such
Indemnifying Party is actually prejudiced thereby.
Section 7.3 Limitations on Liability. Except for claims arising from a breach of confidentiality obligations under ARTICLE 8 or in
cases of fraud, gross negligence, or willful misconduct, no party hereto shall be liable for any consequential, punitive, special or incidental damages under
this ARTICLE 7 (and no claim for indemnification hereunder shall be asserted) as a result of any breach or violation of any covenant or agreement of such
party (including under this ARTICLE 7) in or pursuant to this Agreement. In connection with the foregoing, the parties hereto acknowledge and agree that
(i) the Buyer’s damages, if any, for any such action or claim will typically include Losses for Royalty Payments that the Buyer was entitled to receive in
respect of its ownership of the Royalty Payments but did not receive timely or at all due to such indemnifiable event and (ii) the Buyer shall be entitled to
make claims for all such missing or delayed Royalty Payments as Losses hereunder, and such missing or Royalty Payments shall not be deemed
consequential, punitive, special, indirect or incidental damages
Section 7.4 Exclusive Remedy. Except as set forth in Section 10.11, from and after Closing, the rights of the parties hereto pursuant to
(and subject to the conditions of) this ARTICLE 7 shall be the sole and exclusive remedy of the parties hereto and their respective Affiliates with respect to
any Losses (whether based in contract, tort or otherwise) resulting from or relating to any breach of the representations, warranties covenants and
agreements made under this Agreement or any certificate, document or instrument delivered hereunder, and each party hereto hereby waives, to the fullest
extent permitted under applicable law, and agrees not to assert after Closing, any other claim or action in respect of any such breach. Notwithstanding the
foregoing, the rights of the Buyer under the Intercreditor Agreement and claims for fraud, gross negligence, or willful misconduct shall not be waived or
limited in any way by this ARTICLE 7.
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this ARTICLE 7 will be treated as an adjustment to the Purchase Price for U.S. federal income tax to the fullest extent permitted by applicable law.
Section 7.5 Tax Treatment of Indemnification Payments. For all purposes hereunder, any indemnification payments made pursuant to
ARTICLE 8
CONFIDENTIALITY
Section 8.1 Confidentiality. Except as provided in this ARTICLE 8, Section 10.4 or otherwise agreed in writing by the parties, the
parties hereto agree that, during the term of this Agreement and for [***] years thereafter, each party (the “Receiving Party”) shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other than as provided for in this Agreement (which includes the exercise of any
rights or the performance of any obligations hereunder) any information furnished to it by or on behalf of the other party (the “Disclosing Party”) pursuant
to this Agreement (such information, “Confidential Information” of the Disclosing Party), except for that portion of such information that:
Disclosing Party;
(a) was already known to the Receiving Party, other than under an obligation of confidentiality, at the time of disclosure by the
(b) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party;
(c) became generally available to the public or otherwise part of the public domain after its disclosure and other than through any act or
omission of the Receiving Party in breach of this Agreement or any other agreement;
reference of the Confidential Information; or
(d) is independently developed by the Receiving Party or any of its Affiliates, as evidenced by written records, without the use of or
with respect thereto.
(e) is subsequently disclosed to the Receiving Party on a non-confidential basis by a Third Party without obligations of confidentiality
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Section 8.2 Authorized Disclosure.
(a) Either party may disclose Confidential Information to the extent such disclosure is reasonably necessary in the following situations:
(i) prosecuting or defending litigation;
(ii) complying with applicable laws and regulations, including regulations promulgated by securities exchanges;
(iii) complying with a valid order of a court of competent jurisdiction or other Governmental Entity;
(iv) for regulatory, Tax or customs purposes;
(v) for audit purposes, provided that each recipient of Confidential Information must be bound by customary and reasonable
obligations of confidentiality and non-use prior to any such disclosure;
(vi) disclosure to its Affiliates and Representatives on a need-to-know basis, provided that each such recipient of Confidential
Information must be bound by contractual or professional obligations of confidentiality and non-use at least as stringent as those imposed
upon the parties hereunder prior to any such disclosure;
(vii) upon the prior written consent of the Disclosing Party;
(viii) disclosure to its potential investors, and other sources of funding, including debt financing, or potential partners,
collaborators or acquirers, and their respective accountants, financial advisors and other professional representatives, provided, that such
disclosure shall be made only to the extent customarily required to consummate such investment, financing transaction partnership,
collaboration or acquisition and that each recipient of Confidential Information must be bound by customary obligations of
confidentiality and non-use prior to any such disclosure;
(ix) as is necessary in connection with a permitted assignment pursuant to Section 10.4.
(b) Notwithstanding the foregoing, in the event the Receiving Party is required to make a disclosure of the Disclosing Party’s
Confidential Information pursuant to Section 8.2(a)(i), (ii), (iii) or (iv), it will, except where impracticable, give reasonable advance notice to the Disclosing
Party of such disclosure and use reasonable efforts to secure confidential treatment of such information. In any event, the Buyer shall not file, or assist any
Third Party in filing, any patent application based upon or using the Confidential Information of Seller provided hereunder.
(c) Notwithstanding anything set forth in this Agreement, materials and documentation relating to the Seller’s Intellectual Property
Rights may be only disclosed to or accessed by the Buyer and its attorneys and auditors, without further disclosure to any other Representative of the
Buyer.
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ARTICLE 9
TERMINATION
Section 9.1 Mutual Termination. This Agreement may be terminated by mutual written agreement of the Buyer and the Seller.
Section 9.2 Automatic Termination. Unless earlier terminated as provided in Section 9.1, following the Closing, this Agreement shall
continue in full force and effect until the Royalty Termination Date, at which point this Agreement shall automatically terminate, except with respect to any
rights that shall have accrued prior to such termination, and the Liens and Back-Up Security Interest granted to the Buyer and its successors and assigns
pursuant to this Agreement shall be automatically released without any further action necessary. In furtherance of the foregoing, the Buyer shall promptly
file UCC-3 terminations and deliver to Seller a lien release letter, in in each case, releasing such Liens and Back-Up Security Interest, and execute and
deliver to the Seller, at the Seller’s expense, all other documents that the Seller shall reasonably request to evidence such release.
Section 9.3 Survival. Notwithstanding anything to the contrary in this ARTICLE 9, the following provisions shall survive termination
of this Agreement: Section 6.3 (Disclosures), Section 6.4 (Inspections and Audits of the Seller), ARTICLE 7 (Indemnification), ARTICLE 8
(Confidentiality), this Section 9.3 (Survival) and ARTICLE 10 (Miscellaneous). Termination of the Agreement shall not relieve any party of liability in
respect of breaches under this Agreement by any party on or prior to termination.
ARTICLE 10
MISCELLANEOUS
Section 10.1 Headings. The table of contents and the descriptive headings of the several Articles and Sections of this Agreement and
the Exhibits and Schedules are for convenience only, do not constitute a part of this Agreement and shall not control or affect, in any way, the meaning or
interpretation of this Agreement.
Section 10.2 Notices. All notices and other communications under this Agreement shall be in writing and shall be by email with PDF
attachment, facsimile, courier service or personal delivery to the following addresses, or to such other addresses as shall be designated from time to time by
a party hereto in accordance with this Section 10.2:
If to the Seller, to it at:
BioCryst Pharmaceuticals, Inc.
4505 Emperor Blvd., Suite 200
Durham, North Carolina 27703
Attention: Alane Barnes
E-mail: [***]
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with a copy to:
Gibson, Dunn & Crutcher LLP
555 Mission Street
San Francisco, CA 94105
Attention: Ryan Murr; Todd Trattner
E-mail: rmurr@gibsondunn.com; ttrattner@gibsondunn.com
If to the Buyer, to it at:
OCM IP Healthcare Holdings Limited
c/o OMERS Capital Markets
[***]
[***]
Canada
Attention: [***]
Email: [***]
with a copy to:
Sidley Austin LLP
2850 Quarry Lake Drive, Suite 301
Baltimore, MD 21209
Attention: Asher M. Rubin; Adriana V. Tibbitts
Email: arubin@sidley.com; atibbitts@sidley.com
All notices and communications under this Agreement shall be deemed to have been duly given (i) when delivered by hand, if personally delivered,
(ii) when sent, if sent by facsimile, with an acknowledgement of sending being produced by the sending facsimile machine, (iii) when sent, if by email with
PDF attachment, with an acknowledgment of receipt being produced by the recipient’s email account, or (iv) one Business Day following sending within
the United States by overnight delivery via commercial one-day overnight courier service.
Section 10.3 Expenses. Except as otherwise provided herein, all fees, costs and expenses (including any legal, accounting and banking
fees) incurred in connection with the preparation, negotiation, execution and delivery of this Agreement and to consummate the transactions contemplated
hereby shall be paid by the party hereto incurring such fees, costs and expenses.
Section 10.4 Assignment. The Seller may not assign in whole or in part this Agreement, or any of its rights or obligations hereunder,
without the Buyer’s prior written consent, except (a) for a Permitted Sale; or (b) to a Third Party in connection with the sale or transfer of all or
substantially all of the Seller’s business or assets related to the Product, whether by merger, sale of assets, reorganization, or other conveyance of title and
only if upon closing any such transaction, the Seller causes such Affiliate or Third Party, as applicable, to deliver a writing to the Buyer in which it assumes
all of the obligations of the Seller to the Buyer under this Agreement, and such Affiliate or Third Party shall be deemed an assignee of Seller under this
Agreement (clauses (a) and (b) the “Permitted Assignment Provisions”). The Seller may not assign in whole or in part any of its rights in a Product,
including any Product Rights, without the Buyer’s prior written consent, except (i)) pursuant to the Permitted Assignment Provisions, (ii) pursuant to the
RP Royalty Financing Documents, (iii) pursuant to the Athyrium Loan Documents, or (iv) pursuant to any agreement evidencing any secured Indebtedness
permitted by clause (b)(ii) of the definition of Restricted Indebtedness; provided that, for the avoidance of doubt, nothing in this Section 10.4 shall restrict
the Seller from engaging in a Permitted Sale, from licensing any Product Rights pursuant to a Permitted License, from transferring the Marketing
Approvals for any jurisdiction to a Licensee or a Permitted Purchaser in connection with a Permitted License or Permitted Sale covering such jurisdiction,
or incurring any Permitted Indebtedness. Following the Closing, the Buyer may assign this Agreement in whole or in part to any Person, including to any
Third Party or to one or more of its Affiliates; provided that the Buyer shall cause such Person to become a party to the Intercreditor Agreement in
accordance with the terms thereof or enter into an intercreditor agreement with the administrative agent, trustee or representative under the Athyrium Credit
Agreement, the “Buyer” under the 2020 RP Royalty Financing Documents and the “Buyer” under the 2021 RP Royalty Financing Documents in form and
substance substantially the same as the Intercreditor Agreement. This Agreement shall be binding upon, inure to the benefit of and be enforceable by, the
parties hereto and their respective permitted successors and assigns. Any purported assignment in violation of this Section 10.4 shall be null and void.
Notwithstanding the foregoing, nothing in this Agreement shall prohibit Athyrium or the administrative agent, trustee or representative under the Athyrium
Credit Agreement at such time from taking any action permitted by the Intercreditor Agreement or an Other Intercreditor Agreement, including but not
limited to commencing or maintaining any Enforcement Action (as defined in the Intercreditor Agreement) or such similar term (as defined in an Other
Intercreditor Agreement) or exercising any rights with respect to its collateral under the Bankruptcy Laws.
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Section 10.5 Amendment and Waiver.
this Agreement may be waived only in a writing signed by the party hereto granting such waiver.
(a) This Agreement may be amended, modified or supplemented only in a writing signed by each of the parties hereto. Any provision of
(b) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No course of dealing between the parties hereto shall be effective to amend, modify, supplement or waive any provision of this
Agreement.
Section 10.6 Entire Agreement. This Agreement, the Exhibits annexed hereto and the Disclosure Schedule constitute the entire
understanding between the parties hereto with respect to the subject matter hereof and supersede all other understandings and negotiations with respect
thereto. As of the date hereof, the Non-Disclosure Agreement between OMERS Capital Markets and the Seller, dated as of [***] is hereby terminated
without further force and effect and is superseded by ARTICLE 8 of this Agreement, all “Confidential Information” (or such similar term, as defined
therein) shared thereunder is deemed Confidential Information under this Agreement, and all obligations between the parties relating to confidentiality shall
be governed by ARTICLE 8 of this Agreement.
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Section 10.7 No Third Party Beneficiaries. This Agreement is for the sole benefit of the Seller and the Buyer and their permitted
successors and assigns and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such
successors and assigns, any legal or equitable rights hereunder, except that the Indemnified Parties shall be third party beneficiaries of the benefits provided
for in Section 7.1.
Section 10.8 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New
York without giving effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
Section 10.9 Jurisdiction; Venue.
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS RESPECTIVE PROPERTY AND ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, NEW YORK, AND ANY APPELLATE COURT THEREOF, IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT IN RESPECT THEREOF, AND THE BUYER AND THE SELLER HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH NEW
YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. THE BUYER AND
THE SELLER HEREBY AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY APPLICABLE LAW.
EACH OF THE BUYER AND THE SELLER HEREBY SUBMITS TO THE EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF SUCH
NEW YORK STATE AND FEDERAL COURTS. THE BUYER AND THE SELLER AGREE, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THAT PROCESS MAY BE SERVED ON THE BUYER OR THE SELLER IN THE SAME MANNER THAT NOTICES MAY BE
GIVEN PURSUANT TO SECTION 10.2 HEREOF.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH OF THE BUYER AND THE SELLER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN
ANY SUCH COURT.
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(c) EACH PARTY HEREBY JOINTLY AND SEVERALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT DELIVERED HEREUNDER OR IN
CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE FOREGOING. EACH OF THE
PARTIES REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY, AND VOLUNTARILY GIVEN.
Section 10.10 Severability. If any term or provision of this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any situation in any jurisdiction, then, to the extent that the economic and legal substance of the transactions contemplated hereby is not
affected in a manner that is materially adverse to either party hereto, all other terms and provisions of this Agreement shall nevertheless remain in full force
and effect and the enforceability and validity of the offending term or provision shall not be affected in any other situation or jurisdiction.
Section 10.11 Specific Performance. Each of the parties acknowledges and agrees that the other party would be damaged irreparably in
the event any of the provisions of this Agreement are not performed in accordance with their specific terms or otherwise are breached or violated.
Accordingly, each of the parties agrees that, without posting bond or other undertaking, the other party will be entitled to seek an injunction or injunctions
to prevent breaches or violations of the provisions of this Agreement and to seek to enforce specifically this Agreement and the terms and provisions hereof
in any action, suit or other proceeding instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter in
addition to any other remedy to which it may be entitled, at law or in equity. Each of the parties further agrees that, in the event of any action for specific
performance in respect of such breach of violation, it will not assert the defense that a remedy at law would be adequate.
Section 10.12 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same
agreement. Copies of executed counterparts transmitted by telecopy, facsimile or other similar means of electronic transmission, including “PDF,” shall be
considered original executed counterparts, provided receipt of such counterparts is confirmed.
Section 10.13 Relationship of the Parties. The relationship between the Buyer and the Seller is solely that of purchaser and seller, and
neither the Buyer nor the Seller has any fiduciary or other special relationship with the other party or any of its Affiliates. This Agreement is not a
partnership or similar agreement, and nothing contained herein shall be deemed to constitute the Buyer and the Seller as a partnership, an association, a
joint venture or any other kind of entity or legal form for any purposes, including any Tax purposes. The Buyer and the Seller agree that they shall not take
any inconsistent position with respect to such treatment in a filing with any Governmental Entity.
Section 10.14 Intercreditor Agreement. Notwithstanding anything to the contrary herein, the Liens and Back-Up Security Interest
granted to the Buyer and its successors and assigns pursuant to this Agreement and the exercise of any right or remedy by the Buyer and its successors and
assigns hereunder are subject to the provisions of the Intercreditor Agreement and
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the provisions of any Other Intercreditor Agreement. If there is conflict between the terms of the Intercreditor Agreement or an Other Intercreditor
Agreement (each a “Controlling Agreement”), on the one hand, and the terms of this Agreement, on the other hand, with respect to the Liens, security
interests or the exercise of any right or remedy of the Buyer, the “Buyer” under and as defined in the RP Royalty Financing Documents for so long as such
Person is a party to a Controlling Agreement, or any holder of any Indebtedness that is a party to a Controlling Agreement, then the terms of such
Controlling Agreement will control.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective representatives
thereunto duly authorized as of the date first above written.
SELLER
BIOCRYST PHARMACEUTICALS, INC.
By:
/s/ Anthony Doyle
Name: Anthony Doyle
Title: Chief Financial Officer
BUYER
OCM IP HEALTHCARE HOLDINGS LIMITED
By:
By:
/s/ Rob Missere
Name: Rob Missere
Title: President
/s/ Bernhard Wu
Name: Bernhard Wu
Title: Vice President
[Signature Page to Purchase and Sale Agreement]
Exhibit 10.104
Certain personally identifiable information has been omitted from this exhibit in places marked “[***]” pursuant to Item 601(a)(6) under
Regulation S-K.
BIOCRYST PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of November 19, 2021 by and between BioCryst
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and RPI 2019 Intermediate Finance Trust, a Delaware statutory trust (the “Investor”).
Any capitalized terms used but not defined herein shall be as defined in the 2021 PSA (as defined below).
RECITALS
WHEREAS, on or about the date hereof, the Company and the Investor have entered into that certain 2021 Purchase and Sale Agreement (the
“2021 PSA”);
WHEREAS, pursuant to the terms set forth in this Agreement, the Company desires to issue and sell to the Investor, and the Investor desires to
purchase from the Company, shares of common stock of the Company, par value $0.01 per share (the “Common Stock”);
NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
Purchase and Sale of Shares
1.1 Sale of Shares. Subject to the terms and conditions hereof and of the 2021 PSA, the Company will issue and sell to the Investor, and the
Investor will purchase from the Company, at the Closing (as defined below), 3,846,154 shares of Common Stock (the “Shares”) at a price of $13.00 per
Share.
1.2 Closing. Subject to the satisfaction or waiver of the conditions set forth in Section 4 and Section 5 (other than those conditions that by their
nature are to be satisfied at or immediately prior to the Closing, but subject to the satisfaction or waiver of those conditions), the purchase and sale of the
Shares shall take place remotely via the exchange of documents and signatures (the “Closing”) on the closing date set forth in the 2021 PSA or at such
other date, time and place as the Company and the Investor may agree in writing (the “Closing Date”). At the Closing, the Company will deliver or cause
to be delivered to the Investor a copy of the irrevocable instructions to the Company’s transfer agent instructing such transfer agent to issue the Shares into
book entry to the Investor and, concurrently, the Investor shall pay to the Company a cash amount equal to $50,000,002.00, by wire transfer of immediately
available funds in accordance with the Company’s instructions provided to the Investor in writing prior to the Closing.
SECTION 2
Representations and Warranties of the Company
Except as set forth on the Schedule of Exceptions attached hereto as Schedule I, the Company hereby represents and warrants the following as of
the date hereof:
2.1 Organization and Good Standing and Qualifications. The Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite power and authority to own, lease, operate and occupy its properties and to carry on its
business as now being conducted. Except as set forth on the Schedule of Exceptions, the Company does not own or control, directly or indirectly, any
interest in any other corporation, partnership, trust, joint venture, limited liability company, association, or other business entity. The Company is not a
participant in any joint venture or similar arrangement. The Company is duly qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property owned or leased by it makes such qualification necessary, other than those in
which the failure so to qualify or be in good standing would not have a Material Adverse Effect. For purposes of this Agreement, “Material Adverse
Effect” shall mean any event or condition that would reasonably be likely to have a material adverse effect on the business, operations, properties,
condition (financial or otherwise) or prospects of the Company and its consolidated subsidiaries (if any), taken as a whole, or adversely affect in any
material respect the ability of the Company to perform its obligations, or Investor’s rights, under the 2021 PSA.
2.2 Authorization. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this
Agreement; (ii) the execution and delivery of this Agreement by the Company, the consummation by the Company of the transactions contemplated hereby
and thereby and the issuance, sale and delivery of the Shares have been duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its Board of Directors or stockholders is required; and (iii) this Agreement has been duly executed and delivered and
constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, securities, insolvency, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and
remedies, or indemnification or by other equitable principles of general application.
2.3 Valid Issuance of Shares. The issuance of the Shares has been duly authorized by all requisite corporate action. When the Shares are issued,
sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, the Shares will be duly and validly issued and
outstanding, fully paid, and nonassessable, and will be free of all liens and restrictions on transfer other than restrictions on transfer under applicable state
and federal securities laws, and the Investor shall be entitled to all rights accorded to a holder of shares of Common Stock. The Company has reserved a
sufficient number of shares of Common Stock for issuance to the Investor in accordance with the Company’s obligations under this Agreement.
2.4 No Conflict. The execution, delivery and performance of this Agreement, and any other document or instrument contemplated hereby, by the
Company and the consummation by the Company of the transactions contemplated hereby, do not: (i) violate any provision of the certificate of
incorporation or bylaws of the Company, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust,
indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party where such default or conflict would constitute a
Material Adverse Effect, (iii) create or impose a lien, charge or encumbrance on any property of the Company under any agreement or any commitment to
which the Company is a party or by which the Company is bound, which would constitute a Material Adverse Effect, or (iv) result in a violation of any
federal, state, local or foreign statute, rule, regulation, order, writ, judgment or decree (including federal and state securities laws and regulations)
applicable to the Company or any of its subsidiaries or by which any property or asset of the Company are bound or affected where such violation would
constitute a Material Adverse Effect. The Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization
or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Shares in accordance with the terms hereof (other than any filings that may be required to be made by the
Company with the Securities and Exchange Commission (the “Commission”), the National Association of Securities Dealers Automated Quotation
System (“Nasdaq”), the Nasdaq Global Select Market (the “NASDAQ Market”) or state securities commissions subsequent to the Closing); provided that,
for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and
agreements of the Investor herein.
2
2.5 Consents. Except for the consents that have been obtained on or prior to the Closing or filings required to be made by the Company with
federal or state securities commissions, Nasdaq or the NASDAQ Market, no consent, approval, license, order, authorization, registration, declaration or
filing with or of any governmental entity or other person is required to be done or obtained by the Company (including, without limitation, pursuant to any
material contract to which the Company is subject or to which any of its assets, operations or management may be subject) in connection with (i) the
execution and delivery by the Company of this Agreement, (ii) the performance by the Company of its obligations under this Agreement, the
consummation by the Company of any of the transactions contemplated by this Agreement, including the issuance and sale of the Shares in accordance
with the terms hereof.
2.6 Compliance. The Company is not, and the execution and delivery of this Agreement and the consummation of the transactions contemplated
herewith will not cause the Company to be (i) in violation or default of any provision of any instrument, mortgage, deed of trust, loan, contract or
commitment, (ii) in violation of any provision of any judgment, decree, order or obligation to which it is a party or by which it or any of its properties or
assets are bound, or (iii) in violation of any federal, state or, to its knowledge, local statute, rule or governmental regulation, in the case of each of clauses
(i), (ii) and (iii), which would have a Material Adverse Effect.
2.7 Capitalization. As of October 29, 2021 (the “Reference Date”), a total of 179,936,171 shares of Common Stock were issued and
outstanding, increased thereafter solely as set forth in the next sentence. Other than in the ordinary course of business, the Company has not issued any
capital stock since the Reference Date other than pursuant to (i) employee benefit plans disclosed in the Commission Documents (as hereinafter defined),
and (ii) outstanding warrants, options or other securities disclosed in the Commission Documents. The outstanding shares of capital stock of the Company
have been duly and validly issued and are fully paid and nonassessable, were not issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities, and, for those shares issued until the Closing, have been issued in compliance with all federal and state securities laws, in each
case except as would not reasonably be expected to have a Material Adverse Effect. Except as set forth in the Commission Documents, there are no
outstanding rights (including, without limitation, preemptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for,
any unissued shares of capital stock or other equity interest in the Company, or any contract, commitment, agreement, understanding or arrangement of any
kind to which the Company is a party and relating to the issuance or sale of any capital stock of the Company, any such convertible or exchangeable
securities or any such rights, warrants or options. Without limiting the foregoing, no preemptive right, co-sale right, right of first refusal, registration right,
or other similar right exists with respect to the Shares or the issuance and sale thereof. There are no shareholder agreements, voting agreements or other
similar agreements with respect to the voting or tendering of the Shares to which the Company is a party or, to the knowledge of the Company, between or
among any of the Company’s shareholders.
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2.8 Commission Documents, Financial Statements. The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and during the past 12 months, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act,
including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including filings incorporated by reference therein,
being referred to herein as the “Commission Documents”). The Company’s Common Stock is currently listed on the NASDAQ Market. The Company is
not in violation of the listing requirements of the NASDAQ Market and has no knowledge of any facts that would reasonably lead to delisting or
suspension of its Common Stock from the NASDAQ Market in the foreseeable future. As of its date, each Commission Document filed within the past 12
months complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated
thereunder applicable to such document, and, as of its date, after giving effect to the information disclosed and incorporated by reference therein, no such
Commission Document within the past 12 months contained any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the Commission Documents filed with the Commission during the past 12 months
complied as to form and substance in all material respects with applicable accounting requirements and the published rules and regulations of the
Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the
case of unaudited interim financial statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly
present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).
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2.9 Internal Controls and Procedures. The Company maintains disclosure controls and procedures as such terms are defined in, and required
by, Rule 13a-15 and Rule 15d-15 under the Exchange Act. Such disclosure controls and procedures are effective as of the latest date of management’s
evaluation of such disclosure controls and procedures as set forth in the Commission Documents to ensure that all material information required to be
disclosed by the Company in the reports that it files or furnishes under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Commission. The Company maintains a system of internal controls over financial reporting sufficient to
provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; and (ii) transactions are
recorded as necessary to permit preparation of financial statements in conformity with GAAP.
2.10 Material Adverse Change. Except as disclosed in the Commission Documents, since September 30, 2021, no event or series of events has
or have occurred that would, individually or in the aggregate, have a Material Adverse Effect on the Company.
2.11 No Undisclosed Liabilities. Neither the Company nor any of its subsidiaries has any liabilities, obligations, claims or losses (whether
liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of
the Company or any of its subsidiaries (including the notes thereto) in conformity with GAAP and are not disclosed in the Commission Documents, other
than those incurred in the ordinary course of the Company’s or its subsidiaries’ respective businesses since September 30, 2021.
2.12 No Undisclosed Events or Circumstances. Except for the transactions contemplated by this Agreement and the 2021 PSA, no event or
circumstance has occurred or exists with respect to the Company, its subsidiaries, or their respective businesses, properties, operations or financial
condition, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly
announced or disclosed and which, individually or in the aggregate, would have a Material Adverse Effect on the Company.
2.13 Actions Pending. There is no action, suit, claim, investigation or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any subsidiary which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be
taken pursuant hereto. Except as set forth in the Commission Documents, there is no action, suit, claim, investigation or proceeding pending or, to the
knowledge of the Company, threatened, against or involving the Company, any subsidiary, or any of their respective properties or assets that could be
reasonably expected to have a Material Adverse Effect on the Company. Except as set forth in the Commission Documents, no judgment, order, writ,
injunction or decree or award has been issued by or, to the knowledge of the Company, requested of any court, arbitrator or governmental agency which
could be reasonably expected to result in a Material Adverse Effect.
2.14 Compliance with Law. The businesses of the Company and its subsidiaries have been and are presently being conducted in accordance with
all applicable federal, state and local governmental laws, rules, regulations and ordinances, except as would not reasonably be expected to cause a Material
Adverse Effect. The Company and each of its subsidiaries have all franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now being conducted by it, except for such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals, the failure to possess which, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
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2.15 Exemption from Registration, Valid Issuance. Subject to, and in reliance on, the representations, warranties and covenants made herein by
the Investor, the issuance and sale of the Shares in accordance with the terms and on the bases of the representations and warranties set forth in this
Agreement, may and shall be properly issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), Regulation D
promulgated pursuant to the Act (“Regulation D”) and/or any other applicable federal and state securities laws. The sale and issuance of the Shares
pursuant to, and the Company’s performance of its obligations under, this Agreement will not (i) result in the creation or imposition of any liens, charges,
claims or other encumbrances upon the Shares or any of the assets of the Company, or (ii) entitle the holders of any outstanding shares of capital stock of
the Company to preemptive or other rights to subscribe to or acquire the Shares or other securities of the Company.
2.16 Transfer Taxes. All stock transfer or other taxes (other than income taxes) which are required to be paid in connection with the sale and
transfer of the Shares to be sold to the Investor hereunder will be, or will have been, fully paid or provided for by the Company and all laws imposing such
taxes will be, or will have been, fully complied with by the Company.
2.17 Investment Company. The Company is not, and after giving effect to the offering and sale of the Shares will not be, an “investment
company” as defined in the Investment Company Act of 1940, as amended.
2.18 Brokers. Except as expressly set forth in the 2021 PSA, no brokers, finders or financial advisory fees or commissions will be payable by
the Company or any of its subsidiaries in respect of the transactions contemplated by this Agreement or the 2021 PSA.
SECTION 3
Representations and Warranties of the Investor
The Investor hereby represents and warrants the following as of the date hereof:
3.1 Experience. The Investor is experienced in evaluating companies such as the Company, has such knowledge and experience in financial and
business matters that the Investor is capable of evaluating the merits and risks of the Investor’s prospective investment in the Company, and has the ability
to bear the economic risks of the investment.
3.2 Investment. The Investor is acquiring the Shares for investment for the Investor’s own account and not with the view to, or for resale in
connection with, any distribution thereof. The Investor understands that the Shares have not been and will not be registered under the Securities Act by
reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the
investment intent as expressed herein. The Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to any third person with respect to any of the Shares.
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3.3 Rule 144. The Investor acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act or an
exemption from such registration is available. The Investor is aware of the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions. In connection therewith, the Investor
acknowledges that the Company will make a notation on its stock books regarding the restrictions on transfers set forth in this Section 3, subject to Section
6.2, and will transfer the Shares on the books of the Company only to the extent not inconsistent herewith and therewith.
3.4 Access to Information. The Investor has received and reviewed information about the Company and has had an opportunity to discuss the
Company’s business, management and financial affairs with its management. The Investor has had a full opportunity to ask questions of and receive
answers from the Company, or any person or persons acting on behalf of the Company, concerning the terms and conditions of an investment in the Shares.
The Investor is not relying upon, and has not relied upon, any statement, representation or warranty made by any person, except for the statements,
representations and warranties contained in this Agreement and the 2021 PSA.
3.5 Authorization. This Agreement when executed and delivered by the Investor will constitute a valid and legally binding obligation of the
Investor, enforceable in accordance with its terms, subject to: (i) judicial principles respecting election of remedies or limiting the availability of specific
performance, injunctive relief, and other equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect generally relating to or affecting creditors’ rights.
3.6 Investor Status. The Investor acknowledges that it is either (i) an institutional “accredited investor” as defined in Rule 501(a) of
Regulation D of the Securities Act (an “Institutional Accredited Investor”) or (ii) a “qualified institutional buyer” as defined in Rule 144A of the
Securities Act.
3.7 No Inducement. The Investor was not induced to participate in the offer and sale of the Shares by the filing of any registration statement in
connection with any public offering of the Company’s securities, and the Investor’s decision to purchase the Shares hereunder was not influenced by the
information contained in any such registration statement.
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SECTION 4
Conditions to Investor’s Obligations at Closing
The obligations of the Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions,
any of which may be waived in writing by the Investor (except to the extent not permitted by law):
4.1 No Injunction, etc. No preliminary or permanent injunction or other binding order, decree or ruling issued by a court or governmental
agency shall be in effect which shall have the effect of preventing the consummation of the transactions contemplated by this Agreement. No action or
claim shall be pending before any court or quasi-judicial or administrative agency of any federal, state, local or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree, ruling or charge would be reasonably likely to (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions contemplated by this Agreement to be rescinded following consummation
or (iii) have the effect of making illegal the purchase of, or payment for, any of the Shares by the Investor. No stop order or suspension of trading shall have
been imposed by Nasdaq, the NASDAQ Market, the Commission or any other governmental or regulatory body with respect to public trading in the
Common Stock.
4.2 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall have been true and correct
in all material respects (except for such representations and warranties that are qualified by “materiality” or “Material Adverse Effect” which shall be true
and correct in all respects) on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the
Closing.
4.3 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before the Closing.
4.4 Compliance Certificate. A duly authorized officer of the Company shall deliver to the Investor at the Closing a certificate stating that the
conditions specified in Section 4.2 and Section 4.3 have been fulfilled and certifying and attaching the Company’s certificate of incorporation, bylaws and
authorizing Board of Directors resolutions with respect to this Agreement, the 2021 PSA, the transactions contemplated hereby and thereby and the
issuance of the Shares to the Investor.
4.5 Securities Laws. The offer and sale of the Shares to the Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act and the registration and/or qualification requirements of all applicable state securities laws.
4.6 Authorizations. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the
Closing.
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4.7 Legal Opinion. The Investor shall have received a legal opinion from Gibson, Dunn & Crutcher LLP, counsel to the Company, in the form
attached hereto as Schedule II.
4.8 2021 PSA. The Investor shall have received the 2021 PSA duly executed and delivered by the Company, and closing thereunder shall have
been consummated.
SECTION 5
Conditions to the Company’s Obligations at Closing
The obligations of the Company to the Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the
following conditions by the Investor, any of which may be waived in writing by the Company (except to the extent not permitted by law):
5.1 Representations and Warranties. The representations and warranties of the Investor contained in Section 3 shall be true and correct in all
material respects (except for such representations and warranties that are qualified by materiality which shall be true and correct in all respects) on and as
of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing.
5.2 Securities Law Compliance. The offer and sale of the Shares to the Investor pursuant to this Agreement shall be exempt from the
registration requirements of the Securities Act and the registration and/or qualification requirements of all applicable state securities laws.
5.3 Authorization. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Shares pursuant to this Agreement shall have been duly obtained and shall be effective on and as of the
Closing.
5.4 2021 PSA. The Company shall have received the 2021 PSA duly executed and delivered by the Investor, and closing thereunder shall have
been consummated.
SECTION 6
Resales
6.1 Rule 144 Reporting. With a view to making available to the Investor the benefits of certain rules and regulations of the Commission which
may permit the sale of the Shares to the public without registration, the Company agrees for the 12-month period following Closing, or such longer period
as may be required to permit the sale of the Shares to the public without registration to use commercially reasonable efforts to:
the Securities Act;
(a) Make and keep public information available, as those terms are understood and defined in Rule 144 promulgated under
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Exchange Act; and
(b) File with the Commission in a timely manner all reports and other documents required of the Company under the
(c) Furnish the Investor forthwith upon request (i) a written statement by the Company as to its compliance with the public
information requirements of said Rule 144, (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and
documents as may be reasonably requested in availing the Investor of any rule or regulation of the Commission permitting the sale of any such securities
without registration.
6.2 Restrictive Legend. The certificates representing the Shares, when issued, will bear a restrictive legend in substantially the following form:
“THE SECURITIES EVIDENCED OR CONSTITUTED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, PLEDGED OR
HYPOTHECATED WITHOUT REGISTRATION UNDER THE ACT UNLESS EITHER (i) THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT
REQUIRED IN CONNECTION WITH SUCH DISPOSITION OR (ii) THE SALE OF SUCH SECURITIES IS MADE PURSUANT TO SECURITIES
AND EXCHANGE COMMISSION RULE 144.”
The legend set forth in this Section 6.2 and the related notation in the Company’s stock books shall be removed and the Company shall issue a
certificate without such legend or any other legend to the holder of the Shares or issue to such holder by electronic delivery at the applicable balance
account at the Depository Trust Company, if (i) the Shares are registered for resale under the Securities Act, (ii) the Shares are sold or transferred in
compliance with Rule 144, or (iii) the Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144. Following Rule 144 becoming available for the resale of Shares, without the requirement for the
Company to be in compliance with the current public information required under Rule 144, the Company shall (at the Company’s expense), upon the
written request of Investor, cause its counsel to promptly issue to the Company’s transfer agent a legal opinion authorizing the issuance of a certificate
representing the Shares without any restrictive or other legends, if requested by such transfer agent.
6.3 Further Assurances. Each of the Investor and the Company shall execute such further documents and shall take, or shall cause to be taken,
such further actions as may be reasonably required to carry out the provisions of this Agreement and give effect to the transactions contemplated hereby.
SECTION 7
Indemnification
7.1 General Indemnification. Without derogating from any indemnification rights or obligations of the parties as set forth in the 2021 PSA,
from and after the Closing:
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(a) The Company agrees to indemnify, defend and hold harmless the Investor and its Affiliates and its and their directors, managers,
trustees, officers, agents and employees (the “Investor Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the
Investor Indemnified Parties to the extent arising out of, or resulting from, (i) any breach of any of the representations or warranties of the Company in this
Agreement; and (ii) any breach of any covenant or undertaking of the Company in this Agreement.
(b) The Investor agrees to indemnify, defend and hold harmless the Company and its Affiliates and its and their directors, officers,
agents and employees (the “Company Indemnified Parties”) from, against and in respect of all Losses suffered or incurred by the Company Indemnified
Parties to the extent arising out of, or resulting from, (i) any breach of any of the representations or warranties of the Investor in this Agreement; and (ii)
any breach of any covenant or undertaking of the Investor in this Agreement.
7.2 Notice of Claims. If an event or omission (including, without limitation, any claim asserted or action or proceeding commenced by a third
party) occurs which either an Investor Indemnified Party, on the one hand, or a Company Indemnified Party, on the other hand (such Investor Indemnified
Party on the one hand and such Company Indemnified Party on the other hand hereinafter referred to as an “Indemnified Party”), has suffered any Loss
for which indemnification may be asserted pursuant to this Section 7, the Indemnified Party shall so notify the other party from whom indemnification is
sought under this Section 7 (the “Indemnifying Party”) promptly in writing, setting forth the Loss, the amount or estimated amount thereof, if known or
reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity containing a reference to the provisions of
this Agreement in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding is asserted or instituted by or against a third party
with respect to which an Indemnified Party intends to claim any Losses under this Section 7, such Indemnified Party shall promptly notify the
Indemnifying Party in writing of such claim, action, suit or proceeding. Such notice will be a condition precedent to any obligation of the Indemnifying
Party to act under this Agreement but will not relieve it of its obligations under the indemnity except to the extent that the failure to provide prompt written
notice as provided in this Agreement actually prejudices the Indemnifying Party with respect to the transactions contemplated by this Agreement and to the
defense of the liability.
7.3 Limitations on Liability. Except in cases of fraud, gross negligence, or willful misconduct, no party hereto shall be liable for any
consequential, punitive, special or incidental damages under this Section 7 (and no claim for indemnification hereunder shall be asserted) as a result of any
breach or violation of any covenant or agreement of such party (including under this Section 7) in or pursuant to this Agreement.
7.4 Exclusive Remedy. Except as set forth herein or in the 2021 PSA, from and after Closing, the rights of the parties hereto pursuant to (and
subject to the conditions of) this Section 7 shall be the sole and exclusive remedy of the parties hereto and their respective Affiliates with respect to any
Losses (whether based in contract, tort or otherwise) resulting from or relating to any breach of the representations, warranties covenants and agreements
made under this Agreement or any certificate, document or instrument delivered hereunder, and each party hereto hereby waives, to the fullest extent
permitted under applicable law, and agrees not to assert after Closing, any other claim or action in respect of any such breach. Notwithstanding the
foregoing, claims for fraud, gross negligence, or willful misconduct shall not be waived or limited in any way by this Section 7.
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SECTION 8
Miscellaneous
8.1 Headings. The descriptive headings of the several Sections of this Agreement and the Schedules are for convenience only, do not constitute
a part of this Agreement and shall not control or affect, in any way, the meaning or interpretation of this Agreement.
8.2 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without giving
effect to any choice or conflict of law provision or rule that would cause the application of the laws of any other jurisdiction.
8.3 Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Investor and
the Closing.
8.4 Jurisdiction; Venue.
(a) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS RESPECTIVE PROPERTY AND ASSETS, TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL
COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK COUNTY, NEW YORK, AND ANY APPELLATE COURT THEREOF,
IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT IN RESPECT THEREOF, AND THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH
FEDERAL COURT. THE COMPANY AND THE INVESTOR HEREBY AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY
OTHER MANNER PROVIDED BY APPLICABLE LAW. EACH OF THE COMPANY AND THE INVESTOR HEREBY SUBMITS TO THE
EXCLUSIVE PERSONAL JURISDICTION AND VENUE OF SUCH NEW YORK STATE AND FEDERAL COURTS. COMPANY AND THE
INVESTOR AGREE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THAT PROCESS MAY BE SERVED ON THE COMPANY
OR THE INVESTOR IN THE SAME MANNER THAT NOTICES MAY BE GIVEN PURSUANT TO SECTION 8.7 HEREOF.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH OF THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT.
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(c) EACH PARTY HEREBY JOINTLY AND SEVERALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT DELIVERED HEREUNDER OR IN
CONNECTION HEREWITH, OR ANY TRANSACTION ARISING FROM OR CONNECTED TO ANY OF THE FOREGOING. EACH OF THE
PARTIES REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY, AND VOLUNTARILY GIVEN.
8.5 Severability. If any term or provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any situation in
any jurisdiction, then, to the extent that the economic and legal substance of the transactions contemplated hereby is not affected in a manner that is
materially adverse to either party hereto, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect and the
enforceability and validity of the offending term or provision shall not be affected in any other situation or jurisdiction.
8.6 Successors, Assigns. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto. This Agreement may not be assigned by either party without the prior written
consent of the other; except that either the Investor may assign this Agreement to an Affiliate.
8.7 Notices. All notices and other communications under this Agreement shall be in writing and shall be by email with PDF attachment,
facsimile, courier service or personal delivery to the following addresses, or to such other addresses as shall be designated from time to time by a party
hereto in accordance with this Section 8.7:
If to the Company, to it at:
BioCryst Pharmaceuticals, Inc.
4505 Emperor Blvd., Suite 200
Durham, North Carolina 27703
Attention: Alane Barnes
E-mail: [***]
with a copy to:
Gibson, Dunn & Crutcher LLP
555 Mission Street, Suite 3000
San Francisco, CA 94105
Attention: Ryan Murr
E-mail: rmurr@gibsondunn.com
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If to the Investor, to it at:
RPI 2019 Intermediate Finance Trust
110 E. 59th Street, Suite 3300
New York, New York 10022
Attention: George Lloyd
Email: [***]
with a copy to:
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Attention: Arthur R. McGivern, Jacqueline Mercier &
Robert M. Crawford, Jr.
Email: amcgivern@goodwinlaw.com, jmercier@goodwinlaw.com & rcrawford@goodwinlaw.com
All notices and communications under this Agreement shall be deemed to have been duly given (i) when delivered by hand, if personally delivered,
(ii) when sent, if sent by facsimile, with an acknowledgement of sending being produced by the sending facsimile machine, (iii) when sent, if sent by email
with PDF attachment, with an acknowledgment of receipt being produced by the recipient’s email account, or (iv) one (1) Business Day following sending
within the United States by overnight delivery via commercial one-day overnight courier service.
8.8 Expenses. Except as otherwise provided herein, all fees, costs and expenses (including any legal, accounting and banking fees) incurred in
connection with the preparation, negotiation, execution and delivery of this Agreement and to consummate the transactions contemplated hereby shall be
paid by the party hereto incurring such fees, costs and expenses.
8.9 Finder’s Fees. Each of the Company and the Investor shall indemnify and hold the other harmless from any liability for any commission or
compensation in the nature of a finder’s fee, placement fee or underwriter’s discount (including the costs, expenses and legal fees of defending against such
liability) for which the Company or the Investor, or any of its respective partners, employees, or representatives, as the case may be, is responsible.
8.10 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Copies of executed
counterparts transmitted by telecopy, facsimile or other similar means of electronic transmission, including PDF, shall be considered original executed
counterparts, provided receipt of such counterparts is confirmed.
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8.11 Entire Agreement. This Agreement and the Schedule of Exceptions appended hereto, together with the 2021 PSA, constitute the entire
understanding between the parties hereto with respect to the subject matter hereof.
8.12 No Third Party Beneficiaries. This Agreement is for the sole benefit of the Company and the Investor and their permitted successors and
assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the parties hereto and such successors and
assigns, any legal or equitable rights hereunder, except that the Indemnified Parties shall be third party beneficiaries of the benefits provided for in Section
7.
8.13 Amendment and Waiver.
provision of this Agreement may be waived only in a writing signed by the party hereto granting such waiver.
(a) This Agreement may be amended, modified or supplemented only in a writing signed by each of the parties hereto. Any
(b) No failure or delay on the part of any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. No course of dealing between the parties hereto shall be effective to amend, modify, supplement or waive any provision of this
Agreement.
8.14 Trustee Capacity of Wilmington Trust, National Association. Notwithstanding anything contained herein to the contrary, it is expressly
understood and agreed by the parties hereto that (i) this Agreement is executed and delivered by Wilmington Trust, National Association, not individually
or personally but solely in its trustee capacity, in the exercise of the powers and authority conferred and vested in it under the trust agreement of the
Investor, (ii) each of the representations, undertakings and agreements herein made on the part of the Investor is made and intended not as a personal
representation, undertaking and agreement by Wilmington Trust, National Association, but is made and intended for the purpose of binding only the
Investor and, (iii) nothing herein contained shall be construed as creating any liability on Wilmington Trust, National Association, individually or
personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties hereto and
by any Person claiming by, through or under the parties hereto, (iv) Wilmington Trust, National Association has made no investigation as to the accuracy or
completeness of any representations and warranties made by the Investor in this Agreement, and (v) under no circumstances shall Wilmington Trust,
National Association be personally liable for the payment of any indebtedness or expenses of the Investor or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by the Investor under this Agreement or any related documents.
[SIGNATURE PAGES FOLLOW]
15
IN WITNESS WHEREOF, the parties have executed this Common Stock Purchase Agreement as of the date first set forth above.
BIOCRYST PHARMACEUTICALS, INC.
By:
/s/ Anthony Doyle
Name: Anthony Doyle
Title: Chief Financial Officer
RPI 2019 INTERMEDIATE FINANCE TRUST
By: Wilmington Trust, National Association, not in its individual capacity
but solely in its capacity as owner trustee
By:
/s/ Cynthia L. Major
Name: Cynthia L. Major
Title: Banking Officer
Subsidiaries of the Registrant
Subsidiary
JPR Royalty Sub, LLC
BioCryst US Sales Co., LLC
BioCryst UK Limited
BioCryst Ireland Limited
BioCryst Pharma Deutschland GmbH
BioCryst France SAS
Jurisdiction of Incorporation
Delaware
Delaware
England and Wales
Ireland
Germany
France
Exhibit 21
Exhibit 23
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
● Registration Statements (Form S-8 Nos. 333-231108, 333-239078, 333-245024, 333-259919) pertaining to the BioCryst Pharmaceuticals,
Inc. Inducement Equity Incentive Plan;
● Registration Statements (Form S-3 Nos. 333-145638, 333-153084, 333-217859, 333-237820 and 333-253719) of BioCryst Pharmaceuticals,
Inc.;
● Registration Statements (Form S-8 Nos. 333-120345, 333-39484, 333-30751 and 333-136703) pertaining to the BioCryst Pharmaceuticals,
Inc. 1991 Stock Option Plan, as amended and restated;
● Registration Statements (Form S-8 Nos. 333-90582, 333-239077 and 333-256624) pertaining to the BioCryst Pharmaceuticals, Inc.
Employee Stock Purchase Plan, as amended and restated;
● Registration Statement (Form S-8 No. 333-145627) pertaining to the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan, as amended and
restated, and the Employment Letter Agreement dated April 2, 2007 between BioCryst Pharmaceuticals, Inc. and David McCullough;
● Registration Statements (Form S-8 Nos. 333-176096, 333-211529, 333-218360, 333-228296, 333-231942, 333-239076 and 333-256625)
pertaining to the BioCryst Pharmaceuticals, Inc. Stock Incentive Plan, as amended and restated;
● Registration Statements (Form S-8 Nos. 333-152570, 333-167830, 333-187193 and 333-195869) pertaining to the BioCryst Pharmaceuticals,
Inc. Stock Incentive Plan and the Employee Stock Purchase Plan, each as amended and restated
of our reports dated February 28, 2022, with respect to the consolidated financial statements of BioCryst Pharmaceuticals, Inc. and the effectiveness of
internal control over financial reporting of BioCryst Pharmaceuticals, Inc. included in this Annual Report (Form 10-K) of BioCryst Pharmaceuticals, Inc.
for the year ended December 31, 2021.
/s/ Ernst & Young LLP
Raleigh, North Carolina
February 28, 2022
Exhibit 31.1
I, Jon P. Stonehouse, certify that:
1.
I have reviewed this annual report on Form 10-K of BioCryst Pharmaceuticals, Inc.;
CERTIFICATIONS
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 28, 2022
/s/ Jon P. Stonehouse
Jon P. Stonehouse
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
I, Anthony J. Doyle, certify that:
1.
I have reviewed this annual report on Form 10-K of BioCryst Pharmaceuticals, Inc.;
CERTIFICATIONS
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f) for the registrant and have:
a.
b.
c.
d.
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.
b.
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date: February 28, 2022
/s/ Anthony J. Doyle
Anthony J. Doyle
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of BioCryst Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2021
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jon P. Stonehouse, Chief Executive Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 28, 2022
/s/ Jon P. Stonehouse
Jon P. Stonehouse
Chief Executive Officer
(Principal Executive Officer)
This certification is furnished with this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to
the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically incorporates it by reference.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of BioCryst Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the period ending December 31, 2021
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anthony J. Doyle, Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: February 28, 2022
/s/ Anthony J. Doyle
Anthony J. Doyle
Chief Financial Officer
(Principal Financial Officer)
This certification is furnished with this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the
extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the
Exchange Act, except to the extent that the Company specifically incorporates it by reference.