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TABLE OF CONTENTS
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PART IV
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For the fiscal year ended December 31, 2020
OR
Commission file number: 001-35726
Radius Health, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
80-0145732
(I.R.S. Employer
Identification No.)
22 Boston Wharf Road, 7th Floor
Boston, Massachusetts 02210
(Address of principal executive offices)
617-551-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: Common Stock
Title of each class
Common Stock, par value $0.0001 per share
Trading Symbol(s)
RDUS
Name of each exchange on which registered
The Nasdaq Global 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 Section 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 aggregate market value of the registrant’s common stock, $0.0001 par value per share (“Common Stock”), held by non-affiliates of the registrant, based on the last sale price of
the Common Stock at the close of business on June 30, 2020 was $0.6 billion. For the purpose of the foregoing calculation only, all directors and executive officers of the registrant are
assumed to be affiliates of the registrant.
Number of shares outstanding of the registrant’s common stock, par value $0.0001 per share, as of February 22, 2021: 46,894,429
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive Proxy Statement for its 2021 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
ITEM 1:
ITEM 1A:
ITEM 1B:
ITEM 2:
ITEM 3:
ITEM 4:
ITEM 5:
ITEM 6:
ITEM 7:
ITEM 7A:
ITEM 7:
ITEM 8:
ITEM 8A:
ITEM 8B:
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Radius Health, Inc.
Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2020
INDEX
Special Note Regarding Forward-Looking Statements
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
PART I
PART II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART III
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
Signatures
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report, including in the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains, in
addition to historical information, forward-looking statements. We may, in some cases, use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,”
“continue,” “should,” “would,” “could,” “potentially,” “will,” “may” or similar words and expressions that convey uncertainty of future events or outcomes to identify these forward-
looking statements. Forward-looking statements in this Annual Report on Form 10-K may include, among other things, statements about:
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our expectations regarding commercialization of TYMLOS in the U.S., including our market access coverage expectations;
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the therapeutic benefits and effectiveness of TYMLOS and our investigational product candidates and the potential indications and market opportunities therefor;
our ability to obtain U.S. and foreign regulatory approval for our product candidates, including supplemental regulatory approvals for TYMLOS, and the timing thereof;
our ability to compete with other companies that are or may be developing or selling products that are competitive with TYMLOS or our investigational product candidates;
the direct and indirect impact of the COVID-19 pandemic on the U.S. and global economies and our business and operations, including sales, expenses, supply chain,
manufacturing, research and development costs, clinical trials and employees;
our plans with respect to collaborations and licenses related to the development, manufacture or sale of TYMLOS and our investigational product candidates;
our goals and expectations with respect to development and commercialization of RAD011, our newly acquired assets related to formulations of cannabidiol (“CBD”) related to
the oral administration of a solution of CBD for therapeutic use in humans or animals;
our plans with respect to expanding our product portfolio;
our plans and expectations with respect to our intellectual property profile;
our expectations regarding the timing of our regulatory submissions;
our expectations for our Phase 3 studies of abaloparatide-SC for men and abaloparatide transdermal system (abaloparatide-TD) or our other clinical trials, including projected
costs, study designs or the timing for initiation, recruitment, completion, or reporting top-line data;
the progress of, timing of and amount of expenses associated with our research, development and commercialization activities;
the safety profile and related adverse events of TYMLOS and our investigational product candidates;
our expectations regarding federal, state and foreign regulatory requirements;
our expectations as to future financial performance, expense levels, future payment obligations and liquidity sources; and
our ability to attract, motivate, and retain key personnel;
The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other important factors that could cause actual
results to differ materially from the results anticipated by these forward-looking statements. These important factors include our financial performance, the uncertainties inherent in
commercializing pharmaceutical products or the initiation, execution and completion of clinical trials, uncertainties surrounding the timing of availability of data from our clinical trials,
ongoing discussions with and actions by regulatory authorities and patent and trademark authorities and offices, our ability to attract and retain customers, our development activities and
those other factors we discuss in Item 1A of this Annual Report on Form 10-K under the caption “Risk Factors.” You should read these factors and the other cautionary statements made
in this report as being applicable to all related forward-looking statements wherever they appear in this report. These risk factors are not exhaustive and other sections of this report may
include additional factors which could adversely impact our business and financial performance.
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ITEM 1. BUSINESS.
PART I
Unless otherwise provided in this report, all references in this report to “we,” “us,” “Radius,” “our company,” “our,” or the “Company” refer to Radius Health, Inc. and our
subsidiaries.
Overview
We are a science-driven fully integrated biopharmaceutical company that is committed to developing and commercializing innovative endocrine and other therapeutics.
In April 2017, our first commercial product, TYMLOS (abaloparatide) injection, was approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of
postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture, multiple risk factors for fracture, or patients who have failed or are intolerant
to other available osteoporosis therapy. In May 2017, we commenced U.S. commercial sales of TYMLOS and as of January 1, 2021, TYMLOS was available and covered for
approximately 267 million U.S. insured lives, representing approximately 99% of U.S. Commercial and 83% of Medicare Part D insured lives.
We are conducting additional research towards potential additional indications for TYMLOS, including a clinical trial in men with osteoporosis and a bone histomorphometry study
evaluating the early effects of TYMLOS on tissue-based indices of formation in postmenopausal women. We are also developing an abaloparatide transdermal system (“abaloparatide-
TD”), for potential use in the treatment of postmenopausal women with osteoporosis. We initiated our Phase 3 wearABLe study of abaloparatide-TD in August 2019 and completed
enrollment in September 2020.
As part of our ongoing initiatives to expand our product portfolio, in December 2020, our wholly owned subsidiary, Radius Pharmaceuticals, Inc., entered into an Asset Purchase
Agreement with Fresh Cut Development, LLC and Benuvia Therapeutics Inc. for the acquisition of certain assets related to formulations of cannabidiol (“CBD”) related to the oral
administration of a solution of CBD for therapeutic use in humans or animals (“RAD011”). RAD011 was granted fast track designation by the FDA in 2017 and orphan drug designation
in August 2020 for the treatment of hyperphagia behavior and weight loss in patients with Prader-Willi syndrome (“PWS”).
In July 2020, we entered into a license agreement with Berlin-Chemie AG, a company of the Menarini Group (“Berlin-Chemie”), under which we granted Berlin-Chemie an
exclusive license to develop and commercialize products containing elacestrant (RAD1901), a selective estrogen receptor degrader (“SERD”), worldwide. Elacestrant is being developed
for potential use in the treatment of hormone receptor-positive breast cancer.
Completing the divestment of our oncology program, in September 2020 we sold RAD140, our internally discovered non-steroidal selective androgen receptor modulator (“SARM”)
to Ellipses Pharma. Pursuant to the Asset Purchase Agreement (“APA”), Ellipses Pharma will be responsible for the clinical development and commercialization of the asset. We will be
entitled to receive royalties under the APA.
Our Marketed Product and Investigational Product Candidates
The success of our business is primarily dependent upon our ability to maximize the commercialization of TYMLOS and to develop and commercialize our current and future
product candidates. We hold worldwide commercialization rights for these product candidates, other than abaloparatide for subcutaneous injection (“abaloparatide-SC”), for which we hold
worldwide commercialization rights except in Japan and Canada, where we have entered into exclusive license and development agreements for abaloparatide-SC, and elacestrant, for
which we have licensed our rights to Berlin-Chemie. The following table illustrates the current and/or expected status of our clinical trials and investigational product portfolio.
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Our Strategy
To achieve our corporate and strategic goals, we plan to:
• Expand use of TYMLOS and abaloparatide-SC. We commenced U.S. commercial sales of TYMLOS in May 2017 and we remain focused on growing our U.S.-based sales
through a refined focus on patients with a high risk of fracture. We intend to continue to expand our global abaloparatide footprint, including through our collaboration with Teijin Limited
(“Teijin”) in Japan.
• Expand abaloparatide's market potential through continued abaloparatide research and development activities. We are conducting additional research towards potential
additional indications for TYMLOS, including a clinical trial in men with osteoporosis that we initiated in March 2018, which, if successful, will form the basis of a supplemental New
Drug Application (“NDA”) seeking to expand the use of TYMLOS to increase bone mass in men with osteoporosis at high risk for fracture. We completed patient enrollment in September
2020 and expect to report top-line data from the study in the second half of 2021. In May 2020, we also announced that our bone histomorphometry study, which evaluated the early effects
of TYMLOS on tissue-based indices of formation in postmenopausal women, met its primary endpoint of change from baseline to 3 months in mineralizing surface in the cancellous bone
envelope (one of the dynamic indicators of bone formation). We presented data from this study in September 2020.
We are developing our investigational abaloparatide-TD as a short-wear-time transdermal patch. In May 2019, we received a special protocol assessment agreement from the FDA
for our Phase 3 (wearABLe) study of abaloparatide-TD, which means the FDA considers the study design to be adequate and well-controlled to support marketing approval provided the
study endpoints are achieved. We initiated our Phase 3 wearABLe study of abaloparatide-TD in August 2019 and completed enrollment in September 2020. We expect to report top-line
data from the study in the second half of 2021.
• Develop our new CBD asset, RAD011. In December 2020, we acquired certain assets related to formulations of CBD related to the oral administration of a solution of CBD for
therapeutic use in humans or animals. RAD011 was granted fast track designation by the FDA in 2017 and orphan drug designation in August 2020 for the treatment of hyperphagia
behavior and weight loss in patients with PWS. We plan to request a meeting with the FDA to discuss initiation of a pivotal Phase 2/3 study for treatment of PWS.
• Continue to expand our product portfolio. We plan to leverage our drug development expertise to discover and develop additional investigational product candidates. We may
consider opportunistically expanding our product portfolio within these areas through in-licensing, acquisitions or partnerships.
Abaloparatide
We have developed or are developing two formulations of abaloparatide: abaloparatide-SC and abaloparatide-TD.
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Abaloparatide-SC
In April 2017, the FDA approved TYMLOS (abaloparatide-SC) for the treatment of postmenopausal women with osteoporosis at high risk for fracture defined as history of
osteoporotic fracture, multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy. The first commercial sales of TYMLOS in the
United States occurred in May 2017 and as of January 1, 2021, TYMLOS was available and covered for approximately 267 million U.S. insured lives, representing approximately 99% of
U.S. Commercial and 83% of Medicare Part D insured lives.
We are commercializing TYMLOS in the United States through our commercial organization. We hold worldwide commercialization rights to abaloparatide-SC, except for Japan and
Canada, where we are entitled to receive milestones and royalties based on the development and commercialization of abaloparatide-SC under our license and development agreements.
In July 2017, we entered into a license and development agreement with Teijin for abaloparatide-SC in Japan. Pursuant to the agreement, we received an upfront payment and may
receive additional milestone payments upon the achievement of certain regulatory and sales milestones, and a fixed low double-digit royalty based on net sales of abaloparatide-SC in
Japan during the royalty term. In February 2020, we elected not to exercise our option to negotiate for a co-promotion agreement with Teijin for abaloparatide-SC in Japan. In May 2020,
we announced that Teijin submitted an NDA for abaloparatide-SC in Japan for the treatment of osteoporosis in patients who are at high risk for fracture. The application is based on the
positive results of the Phase 3 clinical trial of abaloparatide-SC in Japan in women and men with osteoporosis, which achieved its primary efficacy endpoint.
In March 2018, we initiated a clinical trial in men with osteoporosis which, if successful, will form the basis of a supplemental NDA seeking to expand the use of TYMLOS to
increase bone mass in men with osteoporosis at high risk for fracture. We completed patient enrollment in September 2020 and expect to report top-line data from the study in the second
half of 2021. The study is a randomized, double-blind, placebo-controlled trial that has enrolled 228 men with osteoporosis. The primary endpoint is change in lumbar spine BMD at 12
months compared with placebo. In previous clinical trials, TYMLOS has demonstrated increases in BMD in postmenopausal women. The study includes specialized high-resolution
imaging to examine the effect of abaloparatide on bone structure, such as the hip, in a subset of the study participants.
In May 2020, we announced that our bone histomorphometry study, which evaluated the early effects of TYMLOS on tissue-based indices of formation in postmenopausal women,
met its primary endpoint of change from baseline to 3 months in mineralizing surface in the cancellous bone envelope (one of the dynamic indicators of bone formation). We presented
data from this study in September 2020.
On July 30, 2020 the United States Patent Office extended the term of US patent 7,803,770 (Method of Treating Osteoporosis Comprising Administration of PTHRP Analog) by
1,303 days. As a result, the term of U.S. Patent No. 7,803,770 has been extended until April 28, 2031. US Patent 7,803,770 is listed in the FDA Orange book and covers TYMLOS.
Abaloparatide-TD
We are also developing abaloparatide-TD, based on Kindeva’s patented Microstructured Transdermal System technology, for potential use as a short wear-time transdermal patch. We
hold worldwide commercialization rights to the abaloparatide-TD technology, except in Canada, where we have entered into an exclusive license agreement with respect to abaloparatide-
TD, and are developing abaloparatide-TD toward future global regulatory submissions to build upon the potential success of TYMLOS. Our development strategy for abaloparatide-TD is
to bridge to the established efficacy and safety of our approved abaloparatide-SC formulation.
In May 2019, we received a special protocol assessment (“SPA”) agreement from the FDA for our Phase 3 study of abaloparatide-TD, which means the FDA considers the study
design to be adequate and well-controlled to support marketing approval provided the study endpoints are achieved. We initiated our Phase 3 wearABLe study of abaloparatide-TD in
August 2019 and completed enrollment in September 2020. We expect to report top-line data from the study in the second half of 2021. The wearABLe study is a single, pivotal,
randomized, open label, active-controlled, BMD non-inferiority bridging study with an enrollment of approximately 500 patients with postmenopausal osteoporosis at high risk of fracture,
which if successful, will support an NDA submission. The primary endpoint of the study is percentage change in lumbar spine BMD at 12 months. Non-inferiority of abaloparatide-TD to
abaloparatide-SC will be concluded if the lower bound of the 2-sided 95% confidence interval for the estimated treatment difference (abaloparatide-TD minus abaloparatide-SC) in the
percentage change from baseline in lumbar spine BMD at 12 months is above -2.0%.
In July 2019, we obtained preliminary results from a patient assessment study which evaluated self-administration of abaloparatide-TD over 29 days in 22 post-menopausal women
with low bone density. Study patients were observed at a study site on the first, 15th and 29th day of the study. Top-line results showed that study patients were able to follow the
instructions for use (“IFU”) and applied the patches accurately on 99.7% of all applications. The safety data from this study showed that
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most of the study patients had mild, transient redness at the application site. The mean subject acceptability score on a 5-point scale was 4.5, 4.6 and 4.5 on day 1, 15 and 29,
respectively. The laboratory data from this study included an exploratory assessment of PINP, a biomarker that indicates bone formation. At baseline the median PINP level in this study
was 50.5 ng/ml, increasing to a median value of 100.1 ng/ml at day 29, while, by comparison, the median PINP values observed with abaloparatide-SC in the ACTIVE study were 50.6
ng/ml at baseline and 100.5 ng/ml at one month.
In December 2019, we aligned with the FDA on requirements for NDA filing.
Our new CBD asset, RAD011
As part of our ongoing initiatives to expand our product portfolio, on December 30, 2020, our wholly-owned subsidiary, Radius Pharmaceuticals, Inc., entered into an Asset Purchase
Agreement with Fresh Cut Development, LLC and Benuvia Therapeutics Inc. for the acquisition of certain assets related to oral liquid formulations of cannabidiol (“CBD”) related to the
oral administration of an oral liquid formulation of CBD for therapeutic use in humans or animals (“RAD011”). RAD011 was granted fast track designation by the U.S. Food and Drug
Administration (“FDA”) in 2017 and orphan drug designation in August 2020 for the treatment of hyerphagia behavior and weight loss in patients with Prader-Willi syndrome (“PWS”).
We plan to request a meeting with the FDA to discuss initiation of a pivotal Phase 2/3 study for treatment of PWS.
Our Oncology Portfolio
Given our refined focus on growing our TYMLOS and abaloparatide-SC business and expanding our product portfolio, we evaluated all strategic options for our oncology assets in
2020 and entered into a license agreement with Berlin-Chemie AG, a company of the Menarini Group, for the exclusive license of elacestrant, and completed the divestment of our
oncology program in September 2020, when we sold RAD140, our internally discovered SARM, to Ellipses Pharma.
Manufacturing
We do not own or operate manufacturing facilities for the production of TYMLOS or any of our investigational product candidates, nor do we have plans to develop our own
manufacturing operations in the foreseeable future.
Abaloparatide, the active pharmaceutical ingredient (“API”) for both TYMLOS and abaloparatide-TD, is manufactured for us on a contract basis by Polypeptide Laboratories
Holding (PPL) AB (“PPL”), as successor-in-interest to Lonza Group Ltd., using a solid phase peptide synthesis assembly process, and purification by high pressure liquid chromatography.
Abaloparatide for TYMLOS is supplied as a liquid in a multi-dose cartridge for use in a pen delivery device. The components of the pen delivery device are manufactured by Ypsomed AG
(“Ypsomed”). The multi-dose cartridges and pen delivery device are filled, assembled and packaged by Vetter International GmbH (“Vetter”).
Abaloparatide-TD drug product is manufactured by Kindeva, based on their patented microneedle technology to administer drugs through the skin, as an alternative to subcutaneous
injection. In partnership with 3M, prior to 3M’s sale of its drug delivery business to Kindeva, we selected Thermo Fisher to conduct the abaloparatide-TD coating process and packaging
operations.
Manufacturing is subject to extensive regulations that impose various procedural and documentation requirements, which govern the methods used in, and the facilities and controls
used for, the manufacture, processing, packing and holding of drugs. FDA and International Conference on Harmonisation (“ICH”) current Good Manufacturing Practice (“cGMP”)
requirements include those pertaining to record keeping, manufacturing processes and controls, personnel, quality control and quality assurance, among others. Our contract manufacturing
organizations are required to manufacture TYMLOS and our investigational product candidates under cGMP conditions. cGMP is a regulatory standard for the production of human
pharmaceuticals that imposes extensive substantive, procedural and record keeping requirements on the manufacturing processes, testing methodology, and associated production and
testing facilities.
Intellectual Property
We strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended to cover our investigational product
candidates and compositions, their methods of use and processes for their manufacture and any other inventions that are commercially important to the development of our business. We
also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.
Our success will significantly depend on our ability to obtain and maintain patent and other proprietary protection for commercially important technology and inventions and know-
how related to our business, defend and enforce our patents, preserve the confidentiality of our trade secrets, and operate without infringing the valid and enforceable patents and
proprietary
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rights of third parties. We also rely on know-how and continuing technological innovation to develop and maintain our proprietary position.
Abaloparatide
We acquired and maintain exclusive worldwide rights, excluding development and commercialization rights for Japan and Canada, to certain patents, data and technical information
related to abaloparatide through a license agreement with an affiliate of Ipsen Pharma SAS ("Ipsen"). Patents covering the composition of matter of abaloparatide (e.g., U.S. Patent
No. 5,969,095), expired in 2016. The subcutaneous formulation of abaloparatide for use in treating osteoporosis is covered by Orange Book-listed U.S. Patent No. 7,803,770, which
expires on April 28, 2031. The therapeutic formulation for abaloparatide-SC is covered by Orange Book-listed U.S. Patent No. 8,148,333 until November 8, 2027 and Orange Book-listed
U.S. Patent No. 8,748,382 until October 3, 2027. Related patents granted in Australia, Brazil, China, Europe, Hong Kong, Israel, Japan, South Korea, Mexico, Norway, New Zealand, and
Singapore and additional patent applications pending in Brazil and Canada, will have a patent expiration date of 2027, not taking into account extension under any applicable laws. Patent
applications covering various aspects of abaloparatide for microneedle application have been granted in the United States and additional patent applications are currently pending in the
United States, Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Japan, South Korea, Mexico, New Zealand, and Singapore. These patents and applications are co-owed with,
and licensed from, Kindeva. The issued patents and any patents that might issue from the pending applications will have a statutory expiration dates of 2036, not taking into account
extension under any applicable laws.
We own the federal trademark registration in the United States for Radius
in association with pharmaceuticals and TYMLOS for use in the treatment of bone diseases. In addition,
we own the federal trademark registrations for TYMLOS in Canada, the European Union and Mexico; Radius in Mexico and Europe; and trademark applications on potential brand names
for our product candidates in the U.S. and in other countries.
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Elacestrant (RAD1901)
In July 2020, we entered into a license agreement with Berlin-Chemie AG, a company of the Menarini Group (“Berlin-Chemie”), under which we granted Berlin-Chemie an
exclusive license to develop and commercialize products containing elacestrant worldwide.
RAD011
In December 2020, our wholly owned subsidiary, Radius Pharmaceuticals, Inc., entered into an Asset Purchase Agreement with Fresh Cut Development, LLC and Benuvia
Therapeutics Inc. for the acquisition of certain assets related to formulations of cannabidiol (“CBD”) related to the oral administration of a liquid formulation of CBD for therapeutic use in
humans or animals (“RAD011”). The acquired assets include issued patents in Australia and Japan and pending patent applications in Australia, Canada, the People’s Republic of China,
the European Patent Office, Japan, Israel, Mexico, New Zealand, South Africa, and the U.S.
Competition
The development and commercialization of new products to treat the targeted indications of our marketed and investigational product candidates is faces some competition from
major pharmaceutical, biotechnology and specialty pharmaceutical companies that currently market and/or are seeking to develop products for similar indications. Many of our
competitors have comparable resources to us, including financial, manufacturing, marketing, research and drug development resources. In addition, some of these companies have longer
operating histories and more experience than us in preclinical and clinical development, manufacturing, regulatory and global commercialization, while others have less experience.
Abaloparatide
Osteoporosis drugs currently available in the United States include anti-resorptive agents, anabolic agents, and an agent that has both anabolic and anti-resorptive characteristics.
Anti-resorptive agents including bisphosphonates, estrogen, SERMs and Amgen's Prolia are the most common treatments for osteoporosis. Teriparatide, marketed by Lilly under the name
Forteo/Forsteo (outside the U.S.), is one of two other anabolic drug targeting the PTH receptor approved in the United States for the treatment of osteoporosis. In 2020, Pfenex, Inc., which
was acquired by Ligand Inc., along with its commercialization partner Alvogen began marketing another teriparatide injection drug, Bonsity. We are aware of companies pursuing
development in the United States of biosimilar and/or generic versions of teriparatide through various regulatory pathways, including Teva Pharmaceutical Industries, Ltd., under
regulatory review and APOTEX, under regulatory review. We believe other companies may be in earlier stages of development of a generic version of teriparatide. Romosozumab, an anti-
sclerostin monoclonal antibody for the treatment of osteoporosis, marketed by Amgen and UCB under the name Evenity, received marketing approval in Japan in January 2019, the United
States in April 2019, and the European Union in December 2019. In
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addition, we may also face competition from companies that seek to market generic versions of TYMLOS through an abbreviated new drug (“ANDA”) application.
Other organizations are also working to develop new therapies to treat osteoporosis. For example, we are aware that Corium is developing a transdermal formulation of parathyroid
hormone (“PTH”) (1-34) that is in Phase 2 clinical development and which, if approved, would compete with abaloparatide-TD, if approved.
RAD011
We expect to develop RAD011 for treatment of hyperphagia related to Prader-Willi syndrome. While there is no treatment for Prader-Willi syndrome (“PWS”) currently approved in
the United States, there have been select competitive molecules in development, including intranasal carbetocin for the treatment of hyperphagia and behavior associated with PWS, by
Levo Therapeutics Inc.; intranasal oxytocin for the treatment of hyperphagia in PWS by Montefiore Medical Center; cannabidivarin for treatment of irritability, restricted/repetitive
behaviors, hyperphagia in PWS, by GW Pharmaceuticals plc; CSTI-500 for the treatment of hyperphagia in PWS, by ConSynance Therapeutics Inc.; HM04 for the treatment of
hyperphagia in PWS, by Helsinn Group; GDD3898 for the treatment of etabolic conditions associated with PWS, by Lipidio Pharmaceuticals Inc.; NS200 to suppress food intake and
mood disorders in PWS, by Neuracle Science; OPN-300 for the treatment of PWS, by OptiNose Inc.; RM-853 for the treatment of PWS, by Rhythm Pharmaceuticals; and Tesomet for the
treatment of hyperphagia in PWS, by Saniona AB.
We cannot assure you that any of our current investigational product candidates, if successfully developed and approved, will be able to compete effectively against these, or any
other competing therapeutics that may become available on the market.
Collaborations and License Agreements
Kindeva
In February 2018, the Company entered into a Scale-Up and Commercial Supply Agreement (the “Supply Agreement”) with 3M Company and 3M Innovative Properties Company
(collectively with 3M Company, “3M”), pursuant to which 3M agreed to exclusively manufacture Phase 3 and global commercial supplies of an abaloparatide-coated transdermal patch
product (“Product”) and associated applicator devices (“Applicator”). In May 2020, 3M announced that it completed its sale of its drug delivery business to Kindeva Drug Delivery
(“Kindeva”), an affiliate of Altaris Capital Partners, LLC (“Altaris”). The Supply Agreement was assigned to Kindeva as part of the transaction. Under the Supply Agreement, Kindeva
will manufacture Product and Applicator for the Company according to agreed-upon specifications in sufficient quantities to meet the Company’s projected supply requirements. Kindeva
will manufacture commercial supplies of Product at unit prices that decrease with an increase in the quantity the Company orders. The Company will pay Kindeva a mid-to-low single-
digit royalty on worldwide net sales of Product and reimburse Kindeva for certain capital expenditures incurred to establish commercial supply of Product. The Company is responsible for
providing, at its expense, supplies of abaloparatide drug substance to be used in manufacturing Product. During the term of the Supply Agreement, Kindeva and the Company have agreed
to work exclusively with each other with respect to the delivery of abaloparatide, parathyroid hormone (“PTH”), and/or PTH related proteins via active transdermal, intradermal, or
microneedle technology.
The initial term of the Supply Agreement began on its effective date, February 27, 2018, and will continue for five years after the first commercial sale of Product. The Supply
Agreement then automatically renews for successive three-year terms, unless earlier terminated pursuant to its terms or upon either party’s notice of termination to the other 24 months
prior to the end of the then-current term. The Supply Agreement may be terminated by either party upon an uncured material breach of its terms by the other party, or due to the other
party’s bankruptcy, insolvency, or dissolution. The Company may terminate the Supply Agreement upon the occurrence of certain events, including for certain clinical, technical, or
commercial reasons impacting Product, if it is unable to obtain U.S. regulatory approval for Product within a certain time period, or if it ceases development or commercialization of
Product. Kindeva may terminate the Supply Agreement upon the occurrence of certain events, including if there are certain safety issues related to Product, if the Company is unable to
obtain U.S. regulatory approval for Product within a certain time period, or if the Company fails to order Product for a certain period of time after commercial launch of the Product in the
U.S. Upon certain events of termination, Kindeva is required to transfer the manufacturing processes for Product and Applicator to the Company or a mutually agreeable third party and
continue supplying Product and Applicator for a period of time pursuant to the Company’s projected supply requirements.
In partnership with 3M, prior to 3M’s sale of its drug delivery business to Kindeva, the Company selected Thermo Fisher to conduct the abaloparatide-TD coating process and
packaging operations. In October 2018, the Company committed to fund 3M’s purchase of capital equipment totaling approximately $9.6 million in preparation for manufacturing Phase 3
and potential commercial supplies of Product. Milestone payments for the equipment commenced in the fourth quarter of 2018 and are expected to be paid in full in the second quarter of
2021. In addition, there are cancellable purchase commitments in place to
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fund the facility build out and future purchases of capital equipment. The Company has paid 3M and Kindeva approximately $30.0 million, in the aggregate, through December 31, 2020
with respect to performance under the Supply Agreement, including the purchase of capital equipment.
In June 2009, the Company entered into a Development and Clinical Supplies Agreement with 3M, as amended (the “Development Agreement”), under which Product and
Applicator development activities occur and 3M has manufactured phase 1 and 2 clinical trial supplies on an exclusive basis. The initial term of the Development Agreement remained in
effect until June 2019, after which it automatically renews for successive one-year terms, unless earlier terminated, until the earliest of (i) the expiration or termination of the Supply
Agreement, (ii) the mutual written agreement of the parties, or (iii) prior written notice by either party to the other party at least ninety days prior to the end of the then-current term of the
Development Agreement that such party declines to extend the term. Either party may terminate the agreement in the event of an uncured material breach by the other party. The Company
pays 3M for services delivered pursuant to the agreement on a fee-for-service or a fee-for-deliverable basis as specified in the agreement. The Company has paid 3M approximately
$30.2 million, in the aggregate, through December 31, 2020 with respect to services and deliverables delivered pursuant to the Development Agreement.
Ipsen Pharma
In September 2005, the Company entered into a license agreement (the “License Agreement”), as amended, with an affiliate of Ipsen Pharma SAS (“Ipsen”) under which the
Company exclusively licensed certain Ipsen compound technology and related patents covering abaloparatide to research, develop, manufacture, and commercialize certain compounds
and related products in all countries, except Japan and France (where the Company’s commercialization rights were subject to certain co-marketing and co-promotion rights exercisable by
Ipsen, provided that certain conditions included in the License Agreement were met). The Company believes that Ipsen’s co-marketing and co-promotion rights in France have
permanently expired. Ipsen also granted the Company an exclusive right and license under the Ipsen compound technology and related patents to make, and have made, compounds or
products in Japan. Ipsen further granted the Company an exclusive right and license under certain Ipsen formulation technology and related patents solely for purposes of enabling the
Company to develop, manufacture, and commercialize compounds and products covered by the compound technology license in all countries, except Japan and France (as discussed
above).
In consideration for these rights, to date, the Company has made nonrefundable, non-creditable payments in the aggregate of $13.0 million to Ipsen, including payment in
recognition of certain milestones having been achieved through December 31, 2020. The License Agreement provides for further payments upon the achievement of certain future
regulatory and commercial milestones. Total additional milestone payments that could be payable under the agreement are €24.0 million (approximately $29.5 million). In connection with
the FDA’s approval of TYMLOS in April 2017, the Company paid Ipsen a milestone of €8.0 million (approximately $8.7 million on the date paid) under the License Agreement, which the
Company recorded as an intangible asset within the consolidated balance sheet and will amortize over the remaining patent life or the estimated useful life of the underlying product. The
agreement also provides that the Company will pay to Ipsen a fixed five percent royalty based on net sales of the product by the Company or its sublicensees on a country-by-country basis
until the later of the last to expire of the licensed patents or for a period of 10 years after the first commercial sale in such country. The royalty expense was $10.4 million, $8.7 million and
$5.0 million for the twelve months ended December 31, 2020, 2019 and 2018, respectively, and is included within cost of sales within the consolidated statement of operations and
comprehensive loss. The date of the last to expire of the abaloparatide patents licensed from or co-owned with Ipsen, barring any extension thereof, is expected to be March 26, 2028.
If the Company sublicenses abaloparatide to a third party, then the agreement provides that the Company would pay Ipsen a percentage of certain payments received from such
sublicensee (in lieu of milestone payments not achieved at the time of such sublicense). The applicable percentage is in the low double-digit range. In addition, if the Company or its
sublicensees commercialize a product that includes a compound discovered by it based on or derived from confidential Ipsen know-how, then the agreement provides that the Company
would pay to Ipsen a fixed low single-digit royalty on net sales of such product on a country-by-country basis until the later of the last to expire of licensed patents that cover such product
or for a period of 10 years after the first commercial sale of such product in such country.
The License Agreement expires on a country-by-country basis on the later of (1) the date the last remaining valid claim in the licensed patents expires in that country, or (2) a period
of 10 years after the first commercial sale of the licensed products in such country, unless it is sooner terminated in accordance with its terms.
The License Agreement may be terminated by us with prior notice to Ipsen. The License Agreement may be terminated by Ipsen upon notice to us with immediate effect, if we, in
any country of the world, bring an action or proceeding to challenge any Ipsen patent. The License Agreement can also be terminated by Ipsen if we fail to use reasonable commercial
efforts to develop the licensed product for sale and commercialization in those countries within the territory where it is commercially
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reasonable to do so as contemplated by the License Agreement, or fail to use reasonable commercial efforts to perform our obligations under the latest revised version of the development
plan approved by the joint steering committee, or fail to use reasonable commercial efforts to launch and sell one licensed product in those countries within the territory where it is
commercially reasonable to do so. Either party may also terminate the License Agreement upon an uncured material breach by the other party. Ipsen may terminate the License Agreement
if the License Agreement is assigned or sublicensed, if a third party acquires us, or if we acquire control over a PTH or a PTHrP compound that is in clinical development or is
commercially available in the territory, and if following such assignment, sublicense, acquisition, or acquisition of control by us, such assignee, sublicensee, acquirer or we, fail to meet the
timetable under the latest revised version of the development plan approved by the joint steering committee under the License Agreement.
Pursuant to a June 2018 final decision in arbitration proceedings with Ipsen in connection with the License Agreement, the Company paid Ipsen $10.0 million (and pre-award
interest of $0.8 million) and is obligated to pay Ipsen (i) $5.0 million if abaloparatide receives marketing approval in Japan, and (ii) a fixed mid single-digit royalty based on net sales of
abaloparatide in Japan. The Company recorded the $10.8 million payment to other operating expenses in its consolidated statement of operations and comprehensive loss in the second
quarter of 2018. The $5.0 million payment upon abaloparatide receiving marketing approval in Japan will be accrued in the period in which the approval is determined to be probable.
Royalties based on net sales of abaloparatide in Japan will be accrued during the period that revenue for such sales, which is subject to a royalty arrangement, is recognized and will be
presented as cost of sales within the Company’s consolidated statement of operations and comprehensive loss.
The arbitration decision does not impact the Company’s rights under the License Agreement or its license agreement with Teijin for abaloparatide-SC in Japan, under which the
Company previously received a $10.0 million upfront payment and is entitled to receive up to an aggregate of $40.0 million upon the achievement of certain regulatory and sales
milestones, and a fixed low double-digit royalty based on net sales of abaloparatide-SC in Japan.
Teijin Limited
In July 2017, the Company entered into a license and development agreement (the “Teijin Agreement”) with Teijin Limited (“Teijin”) for abaloparatide-SC in Japan.
Pursuant to the Teijin Agreement, the Company granted Teijin: (i) an exclusive payment-bearing license under certain of the Company’s intellectual property to develop and
commercialize abaloparatide-SC in Japan, (ii) a non-exclusive payment-bearing license under certain of the Company’s intellectual property to manufacture abaloparatide-SC for
commercial supply in Japan, (iii) a right of reference to certain of the Company’s regulatory data related to abaloparatide-SC for purposes of developing, manufacturing and
commercializing abaloparatide-SC in Japan, (iv) a manufacture transfer package, upon Teijin’s request, consisting of information and the Company’s know-how that is necessary for the
manufacture of active pharmaceutical ingredient and abaloparatide-SC, (v) a right to request that the Company manufacture (or arrange for a third party to manufacture) and supply (or
arrange for a third party to supply) the active pharmaceutical ingredient for the clinical supply of abaloparatide-SC in sufficient quantities to enable Teijin to conduct its clinical trials in
Japan, and (vi) a right to request that the Company arrange for Teijin to directly enter into commercial supply agreements with the Company’s existing contract manufacturers on the same
pricing terms and on substantially similar commercial terms to those set forth in the Company’s existing agreements with such contract manufacturers. In consideration for these rights, the
Company received an upfront payment of $10.0 million, and may receive further payments upon the achievement of certain regulatory and sales milestones, as well as a fixed low double-
digit royalty based on net sales of abaloparatide-SC in Japan during the royalty term, as defined below.
Pursuant to the Teijin Agreement, the parties may further collaborate on new indications for abaloparatide-SC, and the Company also maintains full global rights to its development
program for abaloparatide-TD, which is not part of the Teijin Agreement.
Unless earlier terminated, the Teijin Agreement expires on the later of the (i) date on which the use, sale or importation of abaloparatide-SC is no longer covered by a valid claim
under the Company’s patent rights licensed to Teijin in Japan, (ii) expiration of marketing or data exclusivity for abaloparatide-SC in Japan, or (iii) 10th anniversary of the first commercial
sale of abaloparatide-SC in Japan.
Berlin-Chemie
In July 2020, the Company entered into a license agreement (“License Agreement”) with Berlin-Chemie under which the Company granted Berlin-Chemie an exclusive license to
develop and commercialize products containing elacestrant (RAD1901) worldwide.
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Pursuant to the terms of the License Agreement, Berlin-Chemie made a nonrefundable initial license fee payment to the Company of $30.0 million in July 2020. The Company is
also eligible to receive up to $20.0 million in development and regulatory milestone payments and up to $300.0 million in sales milestone payments, with such payments contingent on the
achievement of specified milestones with respect to the licensed products. The Company is also eligible to receive tiered royalties on sales of licensed products at percentages ranging from
low to mid-teens, subject to certain reductions. Royalties on net sales will be payable on a product-by-product and country-by-country basis until the latest of the expiration date of the last
to expire of the relevant patent rights, the expiration of regulatory exclusivity, or ten years from such first commercial sale.
The License Agreement will continue on a licensed product-by-licensed product and country-by-country basis until the last to expire royalty term. Either party may terminate the
License Agreement for an uncured material breach by the other party or upon the bankruptcy or insolvency of the other party. The Company may terminate the License Agreement for
certain patent challenges or if no development, manufacture or commercialization activity occurs in any given 24-month period. Berlin-Chemie may terminate the License Agreement at its
discretion for any reason by delivering 180 days’ prior written notice to the Company; provided that such termination will not be effective prior to the third anniversary of the effective
date.
The Company and Berlin-Chemie simultaneously entered into a Transition Services Agreement (the “TSA”), pursuant to which the Company agreed to perform certain services for
Berlin-Chemie related to the EMERALD Phase 3 monotherapy study until the earlier of the completion of the contemplated services or the filing with the FDA of a New Drug Application
for elacestrant. Pursuant to the TSA, Berlin-Chemie agreed to reimburse the Company for all out-of-pocket and full-time employee costs in performing the services, for total estimated
reimbursements of $111.5 million. The Company will continue to incur research and development expenses in support of scale up costs under the TSA.
Supply and Manufacturing Agreements
In June 2016, we entered into a Supply Agreement with Ypsomed AG (“Ypsomed”), pursuant to which Ypsomed agreed to supply commercial and clinical supplies of a disposable
pen injection device customized for subcutaneous injection of abaloparatide, the API for TYMLOS. We agreed to purchase a minimum number of devices at prices per device that
decrease with an increase in quantity supplied. In addition, we made milestone payments for Ypsomed’s capital developments in connection with the initiation of the commercial supply of
the device and paid a one-time capacity fee. All costs and payments under the agreement are delineated in Swiss Francs. The agreement has an initial term of three years which began on
June 1, 2017, after which, it automatically renewed for a two-year term. Following its current term, the agreement automatically renews for additional two-year terms unless either party
terminates the agreement upon 18 months’ notice prior to the end of the then-current term. For the two-year term beginning May 2020, we are required to purchase a minimum number of
batches CHF 1.9 million ($2.2 million).
In June 2016, we entered into a Commercial Supply Agreement with Vetter Pharma International GmbH (“Vetter”), pursuant to which Vetter has agreed to formulate the finished
abaloparatide-SC drug product, to fill cartridges with the drug product, to assemble the pen delivery device, and to package and label the pen for commercial distribution. We agreed to
purchase the cartridges and pens in specified batch sizes at a price per unit. For labeling and packaging services, the Company has agreed to pay a per unit price dependent upon the
number of pens loaded with cartridges that are labeled and packaged. These prices are subject to an annual price adjustment. The agreement had an initial term of five years, which began
on January 1, 2016, after which, it automatically renewed for a two-year term and will automatically renew for additional two-year terms thereafter unless either party notifies the other
party two years before the end of the then-current term that it does not intend to renew.
In July 2016, we entered into a Manufacturing Services Agreement with Polypeptide Laboratories Holding AB (“PPL”), as successor-in-interest to Lonza Group Ltd., pursuant to
which PPL has agreed to manufacture the commercial and clinical supplies of the API for abaloparatide. The Company has agreed to purchase the API in batches at a price per gram in
euros, subject to an annual increase by PPL. The agreement has an initial term of six years, which began on June 28, 2016, after which, it automatically renews for three-year terms unless
either party provides notice of non-renewal 24 months before the end of the then-current term. The Company was required to purchase a minimum number of batches annually, equal to
€2.9 million ($3.6 million) per year, subject to any annual price adjustments, during the initial term, except in calendar years 2019 and 2020. The Company was not subject to the
minimum purchase requirement in 2019 and 2020.
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Government Regulation
United States—FDA Product Approval Process
The research, development, testing, manufacture, labeling, promotion, marketing, advertising, and distribution, among other things, of our products and product candidates are
extensively regulated by governmental authorities in the United States and other countries. In the United States, the U.S. Food and Drug Administration (“FDA” or the “Agency”)
regulates drugs under the Federal Food, Drug, and Cosmetic Act (the “FDCA”) and its implementing regulations. Failure to comply with the applicable United States requirements may
subject us to administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications (“NDAs”), imposition of clinical holds, warning letters, product recalls,
product seizures, total or partial suspension of production or distribution, injunctions, and/or criminal prosecution. We have active investigational new drug (“IND”) applications for
abaloparatide, elacestrant and RAD011 in the United States, with the goal of filing an NDA for each product candidate.
Approval Process—We are not permitted to market our product candidates in the United States until we receive FDA approval of an NDA. The steps required to be completed before
a drug may be marketed in the United States include, among others:
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preclinical laboratory tests, animal studies, and formulation studies, all performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations;
submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials may begin and for which progress reports
must be submitted annually to the FDA;
approval by an independent institutional review board (“IRB”) or Ethics Committee at each clinical trial site before each trial may be initiated;
adequate and well-controlled human clinical trials, conducted in accordance with applicable IND regulations, Good Clinical Practices (“GCP”), and other clinical trial related
regulations, to establish the safety and efficacy of the drug for each proposed indication to FDA’s satisfaction;
submission to the FDA of an NDA and payment of user fees for FDA review of the NDA (unless a fee waiver applies);
satisfactory completion of an FDA pre-approval inspection of one or more clinical trial site(s) at which the drug was studied in a clinical trial(s) and/or of us as a clinical trial
sponsor to assess compliance with GCP regulations;
satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good
Manufacturing Practices (“cGMPs”) regulations;
agreement with FDA on the final labeling for the product and the design and implementation of any required Risk Evaluation and Mitigation Strategy (“REMS”); and
FDA review and approval of the NDA, including satisfactory completion of an FDA advisory committee review, if applicable, based on a determination that the drug is safe
and effective for the proposed indication(s).
Preclinical tests include laboratory evaluation of product chemistry, toxicity, and formulation, as well as animal studies. The conduct of the preclinical tests and formulation of the
compounds for testing must comply with federal regulations and requirements, including GLP regulations. The results of the preclinical tests, together with manufacturing information and
analytical data, are submitted to the FDA as part of an IND application, which must become effective before human clinical trials may begin. An IND application will automatically
become effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions about issues such as the conduct of the trials as outlined in the IND
application, and places the clinical trial(s) on a clinical hold. In such a case, the IND application sponsor and the FDA must resolve any outstanding FDA concerns or questions before
clinical trials can proceed. We cannot be certain that submission of an IND application will result in the FDA allowing clinical trials to begin.
Clinical trials necessary for product approval are typically conducted in three sequential phases, but the Phases may overlap or be combined. The study protocol and informed
consent information for study subjects in clinical trials must also be approved by an IRB for each institution where the trials will be conducted, and each IRB must monitor the study until
completion. Study subjects must provide informed consent and sign an informed consent form before participating in a clinical trial. Clinical testing also must satisfy the extensive GCP
regulations for, among other things, informed consent and privacy of individually identifiable information.
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Phase 1—Phase 1 clinical trials involve initial introduction of the study drug in a limited population of healthy human volunteers or patients with the target disease or
condition. These studies are typically designed to test the safety, dosage tolerance, absorption, metabolism and distribution of the study drug in humans, evaluate the side
effects associated with increasing doses, and, if possible, to gain early evidence of effectiveness.
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Phase 2—Phase 2 clinical trials typically involve administration of the study drug to a limited patient population with a specified disease or condition to evaluate the
preliminary efficacy, optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to
obtain information prior to beginning larger and more expensive Phase 3 clinical trials.
Phase 3—Phase 3 clinical trials typically involve administration of the study drug to an expanded patient population to further evaluate dosage, to provide substantial
evidence of clinical efficacy and to further test for safety, generally at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the
overall risk/benefit ratio of the study drug and to provide an adequate basis for product approval. Generally, two adequate and well-controlled Phase 3 clinical trials are
required by the FDA for approval of an NDA.
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after receiving initial marketing approval. These trials are used to gain additional experience
from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting. In
certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA or, in certain circumstances, post-approval.
Information about certain clinical trials, including details of the protocol and eventually study results, also must be submitted within specific time frames to the National Institutes of
Health for public dissemination on the Clinicaltrials.gov data registry.
The FDA has various programs, including fast track designation, breakthrough therapy designation, priority review and accelerated approval, which are intended to expedite or
simplify the process for the development, and FDA’s review of drugs (e.g., approving an NDA on the basis of surrogate endpoints subject to post-approval trials). Generally, drugs that
may be eligible for one or more of these programs are those intended to treat serious or life-threatening diseases or conditions, those with the potential to address unmet medical needs for
those disease or conditions, and/or those that provide a meaningful benefit over existing treatments. For example, a sponsor may be granted FDA designation of a drug candidate as a
“breakthrough therapy” if the drug candidate is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary
clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment
effects observed early in clinical development. If a drug is designated as breakthrough therapy, FDA will take actions to help expedite the development and review of such drug. Moreover,
if a sponsor submits an NDA for a product intended to treat certain rare pediatric or tropical diseases or for use as a medical countermeasure for a material threat, and that meets other
eligibility criteria, upon approval such sponsor may be granted a priority review voucher that can be used for a subsequent NDA. From time to time, we anticipate applying for such
programs where we believe we meet the applicable FDA criteria. A company cannot be sure that any of its drugs will qualify for any of these programs, or even if a drug does qualify, that
the review time will be reduced.
The results of the preclinical studies and of the clinical studies, together with other detailed information, including information on the manufacture and composition of the drug, are
submitted to the FDA in the form of an NDA requesting approval to market the product for one or more proposed indications. The testing and approval process requires substantial time,
effort and financial resources. Unless the applicant qualifies for an exemption, the filing of an NDA typically must be accompanied by a substantial “user fee” payment to the FDA. To
support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the product in the proposed patient population to the
satisfaction of the FDA. After an NDA is accepted for filing, the FDA substantively reviews the application and may deem it to be inadequate, and companies cannot be sure that any
approval will be granted on a timely basis, if at all. The FDA may also refer the application to an appropriate advisory committee, typically a panel of clinicians, for review, evaluation and
a recommendation as to whether the application should be approved, but is not bound by the recommendations of the advisory committee.
Before approving an NDA, the FDA usually will inspect the facility or the facilities at which the drug is manufactured and determine whether the manufacturing and production and
testing facilities are in compliance with cGMP regulations. The FDA also may audit the clinical trial sponsor and one or more sites at which clinical trials have been conducted to
determine compliance with GCPs and data integrity. If the NDA and the manufacturing facilities are deemed acceptable by the FDA, it may issue an approval letter, and, if not, the Agency
may issue a Complete Response Letter (“CRL”). An approval letter authorizes commercial marketing of the drug with specific prescribing information for a specific indication(s). A CRL
indicates that the review cycle of the application is complete and the application is not ready for approval. A CRL may require additional clinical data and/or an additional pivotal Phase 3
clinical trial(s), and/or other significant, expensive and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Even if such additional information is
submitted, the
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FDA may ultimately decide that the NDA does not satisfy the criteria for approval. The FDA could also require, as a condition of NDA approval, post-marketing testing and surveillance
to monitor the drug’s safety or efficacy or impose other conditions, or a REMS that may include both special labeling and controls, known as Elements to Assure Safe Use, on the
distribution, prescribing, dispensing and use of a drug product. Once issued, the FDA may withdraw product approval if, among other things, ongoing regulatory requirements are not met,
certain defects exist in the NDA, or safety or efficacy problems occur after the product reaches the market.
After approval, certain changes to the approved product, such as adding new indications, making certain manufacturing changes or making certain additional labeling claims, are
subject to further FDA review and approval. Before a company can market products for additional indications, it must obtain an approval from the FDA for each indication. Obtaining
approval for a new indication generally requires that additional clinical studies be conducted. A company cannot be sure that any additional approval for new indications for any product
will be approved on a timely basis, or at all. In addition, FDA may require certain labeling changes based on its receipt of new safety or efficacy information, such as additional warnings
and information on reduced effectiveness.
Post-Approval Requirements— Even after a drug has been approved by the FDA, the FDA may impose certain post-approval requirements, including the conduct of additional
clinical studies. If such post-approval conditions are not satisfied, the FDA may withdraw its approval of the drug. In addition, holders of an approved NDA are required to comply with
ongoing regulatory requirements governing manufacturing, labeling, packaging, storage, distribution, safety surveillance, advertising, promotion, recordkeeping and reporting of adverse
events and other post-market information. These requirements include registration with the FDA, as well as continued compliance with current GCP regulations for any clinical trials that
we conduct post-approval. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic inspections by the FDA and other regulatory
authorities for compliance with GMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents. Future FDA
inspections may identify compliance issues at the facilities of our third-party contract manufacturers that may disrupt production or distribution or require substantial resources to correct.
In addition, discovery of problems with a product after approval may result in restrictions on a product, including recall or withdrawal of the product from the market, labeling changes,
imposition of REMS, or the requirement to conduct additional studies.
Hatch-Waxman Act—Under the Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, Congress created an abbreviated FDA
review process for generic versions of pioneer (brand name) drug products under section 505(j) of the FDCA. Section 505(j) provides for approval of an abbreviated new drug application
(“ANDA”) that contains information to show that the proposed product is identical in active ingredient, dosage form, strength, route of administration, labeling, quality, performance
characteristics, and intended use, among other things, to a previously approved drug (commonly known as the reference drug). In considering whether to approve such a generic drug
product, the FDA requires that an ANDA applicant demonstrate, among other things, that the proposed generic drug product’s active ingredient is the same as that of the reference product,
that the proposed generic is bioequivalent to the reference product, that any impurities in the proposed product do not affect the product’s safety or effectiveness, and that its manufacturing
processes and methods ensure the consistent potency and purity of its proposed product.
The Hatch-Waxman Act provides five years of data exclusivity for new chemical entities (“NCE”) referred to as NCE exclusivity, which generally (except as discussed below)
prevents the FDA from accepting ANDAs containing the protected active ingredient or active moiety for five years after initial approval of the NCE. A drug is a NCE if the FDA has not
previously approved an NDA for another drug that contains the same active moiety, which FDA defines to mean the molecule or ion (excluding certain specified appended portions)
responsible for the physiological or pharmacological action of the drug substance. TYMLOS qualified as an NCE, thus received five years of NCE exclusivity following the FDA’s
approval in April 2017. Under FDA’s “umbrella policy,” NCE exclusivity protects all drug products that contain the qualifying NCE, so if abaloparatide-TD is approved prior to the
expiration to the NCE exclusivity granted to TYMLOS, we would expect abaloparatide-TD to be protected by any remaining NCE exclusivity period.
Additionally, the Hatch-Waxman Act requires NDA applicants and NDA holders to submit certain information about patents related to their drugs for listing in the FDA’s list of
Approved Drug Products with Therapeutic Equivalence Evaluations (commonly known as the Orange Book).
European Union—Product Approval Process
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In the European Union (“EU”), medicinal products are subject to a variety of EU and EU Member States regulations governing clinical trials, commercial sales, and distribution.
Pharmaceutical companies are required to obtain marketing authorization in the EU before they can market their medicinal products. The conduct of clinical trials in the EU is governed
by, among others, Directive 2001/20/EC and the EU Good Clinical Practice rules. These impose legal and regulatory obligations that are similar to those provided in applicable U.S. laws.
The conduct of clinical trials in the EU must be approved by the competent authorities of each of the EU Member States in which the clinical trials take place following the submission of a
related clinical trial application. In addition, an application for a positive opinion must be submitted to the competent Ethics Committee in these EU Member States and a related positive
opinion must be obtained prior to initiation of the conduct of the clinical trial. The objective of Directive 2001/20/EC was to harmonize the EU clinical trials regulatory framework. The
actual authorization procedure and its duration vary, however, between the EU Member States. This is due to the fact that the transposition of the Directive into the national laws of the EU
Member States is not always uniform. To address this issue, the EU legislator adopted Regulation (EU) No 536/2014 (the “Clinical Trials Regulation”) in 2014. The new EU Clinical
Trials Regulation, which will replace the EU Clinical Trials Directive, introduces a complete overhaul of the existing regulation of clinical trials for medicinal products in the EU,
including a new coordinated procedure for authorization of clinical trials that is reminiscent of the mutual recognition procedure for marketing authorization of medicinal products, and
increased obligations on sponsors to publish clinical trial results. The Clinical Trials Regulation is not expected to start to apply before early 2022.
In the EU, medicinal products are authorized following a similar demanding process as that required in the United States and applications for marketing authorization must be
submitted based on the ICH Common Technical Document format. The applicable legislation in the EU also requires applicants to either conduct clinical trials in a pediatric population in
accordance with a Pediatric Investigation Plan (“PIP”) approved by the Pediatric Committee of the European Medicines Agency (“EMA”) or to obtain a waiver or deferral from the
conduct of these studies by this Committee. In the European Economic Area (“EEA”) (comprising 27 EU Member States plus Iceland, Liechtenstein and Norway), medicines can be
authorized by using either the centralized authorization procedure or national authorization procedures, albeit through the decentralized or mutual recognition procedure to gain access to
two or more EEA Member States. The marketing authorization process is essentially the same in both types of procedures and its maximum duration is 210 days, excluding clock-stops.
Centralized procedure—Under the centralized procedure governed by Regulation (EC) 726/2004, a single marketing authorization application is submitted to the EMA for its
scientific evaluation of the safety, quality and efficacy. The CHMP then carries out a scientific assessment of the application and issues an opinion on the approvability of the medicine.
Following adoption of the CHMP’s opinion, the European Commission, as the EU licensing authority, will adopt a legally binding decision on granting of a centralized marketing
authorization which is valid across the EU and through the EEA Agreement, the Member States of the EEA. The centralized procedure is mandatory for human medicines derived from
certain biotechnology processes, advanced therapy medicinal products (such as gene therapy, somatic cell therapy and tissue engineered products), medicines containing a new active
substance falling within the mandatory centralized procedure such as those which are indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, or neurodegenerative
disorders, diabetes, autoimmune diseases and other immune dysfunctions, viral diseases, and orphan-designated medicines. The centralized procedure is optional for applicants seeking
marketing authorizations for medicines which contain a new active substance which is not authorized in the EEA. Alternatively, a medicine which is shown to constitute a significant
therapeutic, scientific or technical innovation, or if its authorization via the centralized procedure would be in the interest of public health in the EEA would be considered as eligible for
centralized assessment. Accelerated evaluation may be sought by an applicant and granted by the CHMP in exceptional cases in relation to medicinal products that are expected to be of a
“major public health interest” provided that three cumulative criteria are fulfilled. These relate to the seriousness of the disease; the absence or insufficiency of an appropriate alternative
therapeutic approach; and the anticipated high therapeutic benefit of the medicinal product. CHMP delivers its opinion within 150 days in the framework of accelerated procedures.
National authorization procedure—Pure national authorization procedure is applicable where the applicant intends to market the product only in one Member State. However, if an
applicant intends to market the product in two or more Member States, there are two other possible regulatory procedures for products that fall outside the scope of the mandatory or the
optional centralized procedure:
• Decentralized procedure. Where a medicinal product has not been authorized anywhere in the EEA and the product does not fall within the mandatory centralized procedure,
an applicant may request a Member State to act as the Reference Member State to lead the assessment of the marketing authorization for it to be considered by the selected
number of Member States which are concerned by the procedure. A positive decision adopted during the decentralized procedure will result in national marketing
authorizations being granted by the Reference and Concerned Member States. Concerned Member States may refuse to approve the assessment made by the Reference
Member State only on the basis of a potential serious risk to public health. In these circumstances, the disputed elements are be referred to the Heads of Medicines Agencies
(“CMDh”) for review. This review, which
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may also be escalated to the CHMP in case of disagreement in CMDh would result in a decision by the European Commission. This decision is binding on all EU Member
States.
• Mutual recognition procedure. Where the medicinal product has been authorized in an EU Member State, the applicant can request the Member State to act as the Reference
Member State for the national marketing authorization to be recognized progressively in the other Concerned Member States.
Under both decentralized and mutual recognition procedures, the Reference Member State leads the assessment for it to be recognized by the national authorities in Member States
concerned by the procedure. A satisfactory conclusion of a procedure will result in granting of a national marketing authorization.
Marketing authorizations granted in the EU are initially valid for five years and can be subsequently renewed and remain valid for an unlimited period unless the national competent
authorities of the EU Member State or the European Commission decides on justified grounds to proceed with one additional five-year renewal period. The renewal of a marketing
authorization is subject to a re-evaluation of the risk-benefit balance of the product by the national competent authorities of the EU Member State or the EMA.
Good manufacturing practices—Like the FDA, the EMA, the competent authorities of the EU Member States and other regulatory agencies regulate and inspect equipment,
facilities and processes used in the manufacture of pharmaceutical and biologic products. Prior to the CHMP adopting an opinion with respect to approvability of an application for
marketing authorization, the EMA, acting upon the advice of the CHMP, may decide to coordinate an inspection to be undertaken by the designated EU Supervising Authority of the
proposed manufacturing site to verify the manufacturer’s compliance with EU GMP principles and guidelines or to investigate a specific GMP-related matter that may arise from the
assessment of the application. If there is a material change in manufacturing equipment, location, or process, affecting the quality of the product, additional regulatory review and approval
may be required from the relevant competent regulatory authority. Once we or our partners commercialize products, we will be required to comply with GMP with regard to manufacture
and control, and product-specific requirements according to the terms of the marketing authorization. Also, like the FDA, the EMA (as a coordinating body for centrally authorized
medicinal products), the competent authorities of the EU Member States and other regulatory agencies also conduct regular, periodic visits to re-inspect equipment, facilities, and processes
following the initial approval of a product. If it is determined that the equipment, facilities, or processes used to manufacture our product do not comply with applicable regulations and
conditions of product approval, regulatory agencies may seek civil, criminal or administrative sanctions, or enforcement actions and/or remedies against the manufacturer holding the
requisite manufacturing authorization and us, including the suspension of our manufacturing operations or the withdrawal of our product from the market, which in turn could potentially
result in the suspension or withdrawal of the related marketing authorization for the medicinal product.
Data and market exclusivity—Similar to the United States, there is a process for approval of generic versions of innovator drug products in the EU. Abridged applications for the
authorization of generic versions of drugs authorized centrally by the European Commission can be submitted to the EMA through the centralized procedure referencing the innovator’s
non-clinical and clinical data to support generic approval provided always that the following conditions are met: the generic product has the same qualitative and quantitative composition
in the active substances and the same pharmaceutical form as the reference innovator drug product and the generic product is shown to be bioequivalent to the reference product.
Medicinal products authorized in the EU on the basis of a full marketing authorization application (as opposed to an application for marketing authorization that relies on data
available in the marketing authorization dossier for another, previously approved, medicinal product) and not falling within the scope of the so-called “global marketing authorization” will
benefit from eight years of data protection within which the generic applicant cannot rely on the non-clinical and clinical data contained in the dossier of the reference product to support
product approval, and two years of market protection within which the generic applicant is not permitted to place the generic product on the market even if it is approved. This period of
data and market protection can be extended to a maximum of eleven years if during the first eight years of those ten years, the marketing authorization holder obtains an authorization for
one or more new therapeutic indications which during the scientific assessment prior to their authorization are held to bring a significant benefit in comparison with existing therapies.
Other International Markets—Drug approval process
In some international markets (e.g., China or Japan), although data generated in U.S. or EU trials may be submitted in support of a marketing authorization application, additional
clinical trials conducted in the host territory, or studying people of the ethnicity of the host territory, may be required prior to the filing or approval of marketing applications within the
country.
Pricing and Reimbursement
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In the United States and internationally, the commercial success of any products we market, or may market in the future, is dependent, in significant part, on the scope of coverage
and amount of reimbursement from third-party payors such as government health programs and private health insurance. Third-party payors are increasingly focused on controlling the
costs of drug products by managing utilization and reducing payments for drugs. Third party payor initiatives to do so include establishing formularies that limit coverage of drug products
and create financial incentives for patients to use lower cost drugs (through implementation of differential cost-sharing) or requiring prescribing physicians to demonstrate medical
necessity for a drug product for a particular patient before coverage will be authorized (prior authorization). Pharmaceutical manufacturers may be required by law or market conditions to
provide discounts or rebates to third party payors or purchasers in order to ensure coverage or sales of drug products. Coverage and payment of drug products is subject to ongoing scrutiny
and reform efforts. Future legislation or other action by government authorities in the United States and other jurisdictions could affect pricing, coverage and reimbursement for the
products we market and may develop in the future. Any such legislation could impact, in a significant way, our ability to generate revenues from sales of products that, if successfully
developed, we bring to market.
Within the United States, coverage and reimbursement for products can differ significantly from third-party payor to third-party payor. One third party payor’s decision to cover a
particular drug product does not ensure that other payors will also provide coverage for the drug product. As a result, the coverage determination process usually requires manufacturers to
provide scientific and clinical support for the use of their products to each payor separately and can be a time consuming process. Additionally, obtaining coverage does not mean that
reimbursement for covered drugs will be adequate. A significant proportion of patients eligible for TYMLOS are Medicare beneficiaries. Drugs like TYMLOS that are dispensed by
pharmacies to patients for self-administration are potentially eligible for coverage under Medicare Part D. Medicare Part D is a voluntary program that offers prescription drug coverage
through private plans to members enrolled with the plan. Medicare Part D coverage may vary from plan to plan and the plans may implement formularies and certain utilization
management activities as well as negotiate rebates with pharmaceutical manufacturers to manage access and costs. Manufacturers must also provide discounts on Medicare Part D brand
name prescription drugs sold to Medicare beneficiaries in the Medicare Part D coverage gap (i.e., the so called “donut hole”).
Decisions on pricing and reimbursement of medicinal products in the European Union are based upon national rules subject to the control of the Transparency Directive, (Council
Directive 89/105/EEC) which aims to ensure the transparency of measures established by EU countries to control the pricing and reimbursement of medicinal products. It defines a series
of procedural requirements designed to verify that national pricing and reimbursement decisions do not create obstacles to the pharmaceutical trade within the EU’s Internal Market. The
competent authorities of each of the 27 EU Member States have adopted individual national measures aimed at regulating the pricing and reimbursement of medicinal products in their
territory. These measures often vary widely in nature, scope and application. However, a major element that they have in common is an increased move toward reduction in the
reimbursement price of medicinal products, a reduction in the number and type of products selected for reimbursement, and an increased preference for generic products over innovative
products. These efforts have mostly been executed through these countries’ existing price-control methodologies, including price cuts, mandatory rebates, value-based pricing, and
reference pricing (i.e., referencing prices in other countries and using those reference prices to set a price). It is increasingly common in many EU Member States for Marketing
Authorization Holders to be required, in order to get support for reimbursement under national health schemes and, therefore, access to the market, to demonstrate the cost effectiveness or
otherwise added value benefit of their products as compared to products (which are considered as standard of care) already subject to pricing and reimbursement in specific countries. In
order for drugs to be evaluated positively under such criteria, pharmaceutical companies may need to re-examine, and consider altering, a number of traditional functions relating to the
selection, study, and management of drugs, whether currently marketed, under development, or being evaluated as candidates for research and/or development.
Many EU Member States review periodically their decisions concerning the pricing and reimbursement of medicinal products. The outcome of this review cannot be predicted and it
could have an adverse effect on the pricing and reimbursement of our medicinal products in the EU Member States. Potential reductions in prices and changes in reimbursement levels
could be the result of different factors, including reference pricing systems, parallel distribution and parallel trade. It could also result from the application of external reference pricing
mechanisms, which consist of arbitrage between low-priced and high-priced countries. Reductions in the pricing of our medicinal products in one EU Member State could affect the price
in other EU Member States and, thus, have a negative impact on our financial results.
Health Technology Assessment (“HTA”) of medicinal products in the EU is an essential element of the pricing and reimbursement decision-making process in a number of EU
Member States. This includes most of the big markets in the EU, such as France, Germany and Sweden. HTA is currently mainly governed by the national laws of the EU Member States.
The HTA authorities of the EU Member States assess the public health impact, therapeutic benefit and the economic and societal impact of use of a given medicinal product in the national
healthcare system of the individual country. The outcome of HTA has a direct impact on the pricing and reimbursement status granted to the medicinal product. The extent of this impact
varies
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between the EU Member States. Moreover, a negative HTA by a leading and recognized HTA body concerning a medicinal product could undermine the prospects to obtain
reimbursement for such product not only in the EU Member State in which the negative assessment was issued, but also in other EU Member States.
In 2011, Directive 2011/24/EU was adopted at the EU level. This Directive establishes a voluntary network of national authorities or bodies responsible for HTA in the individual
EU Member States. The network facilitates and supports the exchange of scientific information concerning HTAs. Further to this, on January 31, 2018, the European Commission adopted
a proposal for a regulation on HTA. This legislative proposal is intended to boost cooperation among EU Member States in assessing health technologies, including new medicinal
products, and providing the basis for cooperation at the EU level for joint clinical assessments in these areas. The European Commission has stated that the role of the draft HTA regulation
is not to influence pricing and reimbursement decisions in the individual EU Member States. However, this consequence cannot be excluded.
Future legislation, including the current versions being considered at the federal and state level in the United States and at the national level in EU Member States, or regulatory
actions implementing recent or future legislation may have a significant effect on our business. Our ability to successfully commercialize products depends in part on the extent to which
coverage and reimbursement for the costs of our products and related treatments will be available in the United States and worldwide from government health administration authorities,
private health insurers and other organizations. Substantial uncertainty exists as to the reimbursement status of newly approved healthcare products by third-party payors. In addition,
negotiating prices with government authorities under current and proposed legislation can delay the commercialization of our product candidates.
Sales and Marketing
The FDA regulates all advertising and promotion activities for products under its jurisdiction both prior to and after approval. If a product is approved, we must also comply with
post-marketing requirements, including, but not limited to, compliance with advertising and promotion requirements, which include restrictions on promoting products for unapproved uses
or patient populations (known as ‘‘off-label use’’), monitoring and record-keeping activities, reporting of adverse events, product sampling and distribution restrictions, and limitations on
industry sponsored scientific and educational activities. Although physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such
uses. 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. If there are any modifications to the product, including changes in indications, labeling or manufacturing processes or facilities, we may be
required to submit and obtain FDA approval of a new NDA or an NDA supplement, which may require us to develop additional data or conduct additional pre-clinical studies and clinical
trials.
Within the United States, we are subject to various federal, state and local laws targeting fraud and abuse in the healthcare industry, including anti-kickback and false claims laws.
Violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties, and/or exclusion from federal health care programs
(including Medicare and Medicaid). Federal and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical industry, and private individuals
have been active in alleging violations of the laws and bringing suits on behalf of the government under the federal False Claims Act (“FCA”). Violations of these laws can result in
imprisonment, criminal fines, penalties or exclusion from participation in government health care programs. Given the broad scope of these laws, our activities could be subject to scrutiny
under the laws. If we were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed.
The federal anti-kickback statute generally prohibits, among other things, a pharmaceutical manufacturer from directly or indirectly soliciting, offering, receiving, or paying any
remuneration in cash or in kind where one purpose is either to induce the referral of an individual for, or the purchase or prescription of, a particular drug that is payable by a federal health
care program. A person or entity does not need to have actual knowledge of the statute or a specific intent to violate the statute. A claim arising from a violation of the federal Anti-
Kickback Statute also constitutes a false or fraudulent claim for purposes of the FCA.
Federal and state false claims laws generally prohibit anyone from knowingly and willfully, among other activities, presenting, or causing to be presented for payment to third party
payors (including Medicare and Medicaid) claims for drugs or services that are false or fraudulent (which may include claims for services not provided as claimed or claims for medically
unnecessary services). There is also a criminal FCA statute by which individuals or entities that submit false claims can face criminal penalties. In addition, under the federal civil
monetary penalty law, the Department of Health and Human Services Office of Inspector General has the authority to exclude from participation in federal health care programs or to
impose civil penalties against any person who, among other things, knowingly presents, or causes to be presented, certain false or otherwise improper claims. A federal healthcare fraud
statute prohibits the knowing and willful execution, or attempt to execute, a
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scheme to defraud a health care benefit program, including private health plans, or obtain, through false or fraudulent pretenses, money or property owned by, or under the custody or
control of, such a health care benefit program.
The majority of states also have anti-kickback, false claims, and similar fraud and abuse laws and although the specific provisions of these laws vary, their scope is generally broad,
and there may not be regulations, guidance or court decisions that apply the laws to particular industry practices.
Laws and regulations have also been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical manufacturers. The laws
and regulations generally limit financial interactions between manufacturers and health care providers; require pharmaceutical companies to comply with the pharmaceutical industry’s
voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government; and/or require disclosure to the government and/or public of financial
interactions (so-called “sunshine laws”). State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Manufacturers must also submit
information to the FDA on the identity and quantity of drug samples requested and distributed by a manufacturer during each year. Many of these laws and regulations contain ambiguous
requirements or require administrative guidance for implementation. Given the lack of clarity in laws and their implementation, our activities could be subject to the penalty provisions of
the pertinent federal and state laws and regulations.
The advertising of medicinal products in the EU and the United Kingdom (“UK”) is subject to strict regulation set out in the EU, EU Member States’ and UK national laws,
including, among others, the laws governing the promotion of medicinal products, interactions with physicians, misleading and comparative advertising and unfair commercial practices.
Promotional materials for medicinal products must comply with the Summary of Product Characteristics (“SmPC”) as approved by the competent authorities. The SmPC is the document
that provides information to physicians concerning the safe and effective use of the medicinal product and forms an intrinsic and integral part of the related marketing authorization.
Promotional materials that do not comply with the SmPC are considered to constitute off‑label promotion which is prohibited. The direct‑to‑consumer advertising of prescription‑only
medicinal products is also prohibited in the EU and the UK.
Interactions between pharmaceutical companies and physicians in the EU and the UK are subject to strict laws, regulations, industry self‑regulation codes of conduct and physicians’
codes of professional conduct in the individual EU Member States and the UK, including the anti-corruption laws. These rules prohibit the provision of benefits or advantages to
physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products.
In the UK, the Bribery Act 2010 applies to any company incorporated in or “carrying on business” in the UK, irrespective of where in the world the alleged bribery activity occurs
and could have implications for company’s interactions with physicians in and outside the UK.
In addition, transfers of value to physicians in certain EU Member States and the UK must be publicly disclosed. Agreements with physicians must often be the subject of prior
notification and approval by the physician’s employer, his/her competent professional organization, and/or the competent authorities of the individual EU Member States and the UK.
Prohibited promotion of medicinal products in the EU and the UK, prohibited interactions with healthcare professionals or failures to publicly disclose transfers of value to
healthcare professionals in the EU and the UK could lead to restriction of the promotional activities conducted by a company and the imposition of administrative penalties, fines and
imprisonment.
Similar rigid restrictions are imposed on the promotion and marketing of medicinal products in other countries. Laws (including those governing promotion, marketing and anti-
kickback provisions), industry regulations and professional codes of conduct often are strictly enforced. Even in those countries where we are not directly responsible for the promotion
and marketing of our products, inappropriate activity by our international distribution partners can have adverse implications for us.
Other Laws and Regulatory Processes
We are subject to a variety of financial disclosure and securities trading regulations as a public company in the United States, including laws relating to the oversight activities of the
Securities and Exchange Commission (“SEC”) and the regulations of the Nasdaq Global Market or any national securities exchange on which our capital stock may be traded. In addition,
the Financial Accounting Standards Board (“FASB”) the SEC and other bodies that have jurisdiction over the form and content of our accounts, our consolidated financial statements and
other public disclosure are constantly discussing and interpreting proposals and existing pronouncements designed to ensure that companies best display relevant and transparent
information relating to their respective businesses.
Our international operations are subject to compliance with the Foreign Corrupt Practices Act (the “FCPA”) which prohibits corporations and individuals from paying, offering to
pay, or authorizing the payment of anything of value to any
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foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an
official capacity. We also may be implicated under the FCPA for activities by our partners, collaborators, clinical research organizations, vendors or other agents.
Our present and future business has been and will continue to be, subject to various other laws and regulations. Various laws, regulations and recommendations relating to safe
working conditions, laboratory practices, the experimental use of animals, and the purchase, storage, movement, import and export and use and disposal of hazardous or potentially
hazardous substances used in connection with our research work are or may be applicable to our activities. Certain agreements entered into by us involving exclusive license rights or
acquisitions may be subject to national or supranational antitrust regulatory control, the effect of which cannot be predicted. The extent of government regulation, which might result from
future legislation or administrative action, cannot accurately be predicted.
Human Capital
At Radius, attracting and developing high-performing team members is key to our success. As of December 31, 2020, we employed 310 full-time employees. Of the total 310
employees, 79 were engaged in research and development activities, 56 were engaged in support administration, including business development and finance, and 175 were part of our
commercial organization. We use and intend to continue using clinical research organizations and other third parties to perform our clinical studies and manufacturing.
We also seek to build a diverse and inclusive workplace. Our employee base was comprised of 58% females and 42% males, and was comprised of the following ethnicities as of
December 31, 2020: 78% White, 8% Asian, 7% Hispanic, 4% Black, 2% two or more races, and 0.3% additional groups (including American Indian or Alaska Native). We will continue
to support the diversification of our workforce through recruiting, retention, employee development and inclusion efforts.
Our compensation package is competitive and designed to attract, retain, and motivate talented and high-performing team members who have relevant, critical skills and experience
which are important to the achievement of our business objectives. Our employees’ total compensation package includes market-competitive salary, bonuses or sales commissions, and
equity. We also offer a wide range of benefits across areas such as health, family, and finance, which include but are not limited to healthcare, financial wellness and retirement planning
programs, employee assistance programs, generous paid time off, and fitness benefits.
Corporate Information
We were incorporated in the state of Delaware on February 4, 2008 under the name MPM Acquisition Corp. In May 2011, we entered into a reverse merger transaction, or the
Merger, with our predecessor, Radius Health, Inc., a Delaware corporation formed on October 3, 2003 (the “Former Operating Company”) pursuant to which the Former Operating
Company became a wholly-owned subsidiary of ours. Immediately following the Merger, the Former Operating Company was merged with and into us and we assumed the business of the
Former Operating Company and changed our name to Radius Health, Inc.
Legal Proceedings
From time to time, we are party to litigation arising in the ordinary course of our business. As of February 1, 2021, we were not party to any significant litigation.
Investor Information
Financial and other information about us is available on our website at www.radiuspharm.com. We make available on our website, free of charge, copies of our Annual Report 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. In addition, we have previously filed registration statements and other documents
with the SEC. Any document we file may be inspected at the SEC’s internet address at www.sec.gov. These website addresses are not intended to function as hyperlinks, and the
information contained in our website and in the SEC’s website is not intended to be a part of this filing.
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ITEM 1A. RISK FACTORS.
Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition and results of
operations, and you should carefully consider them. Accordingly, in evaluating our business, we encourage you to consider the following discussion of risk factors, in its entirety, in
addition to other information contained in or incorporated by reference into this Annual Report on Form 10-K and our other public filings with the SEC.
Risk Factors Summary
The following is a summary of the principal risks that could adversely affect our business, conditions and financial results.
Risks Related to Our Financial Position and Need for Capital
• We are not currently profitable and may never become profitable.
• Unless and until we become profitable, we may need to raise additional capital, which may not be available on favorable terms, if at all, in order to continue operating our
business.
•
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
Risks Related to the Commercialization and Development of Our Product Candidates
• We are heavily dependent on the commercial success of TYMLOS; we may not be able to meet expectations with respect to TYMLOS sales or attain or maintain profitability and
positive cash-flow from operations.
• Our current and future product candidates may never receive regulatory approval.
• We may never receive approval for, or commercialize, our products outside of the United States.
• Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our product
candidates.
• We have sold or licensed our oncology assets; however there can be no assurance that those or other transactions will yield additional value for stockholders.
•
•
The results of clinical trials may not support our product candidate claims.
If serious adverse or undesirable side effects are identified during the development or commercialization of our product candidates, we may need to abandon our development or
commercialization of some of our product candidates or products.
• Any product candidate for which we have or obtain marketing approval, including TYMLOS, is subject to restrictions or potential withdrawal from the market and we may be
subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
•
The commercial success of TYMLOS and any product candidates that we may develop and that may be approved will depend upon the degree of market acceptance by
regulators, key opinion leaders, physicians, patients, third-party payors and others in the medical community.
• Our ability to successfully commercialize products depends in part on the extent to which coverage and reimbursement for the costs of our products and related treatments will be
available in the United States and worldwide from government authorities and health benefit programs, private health insurers and other organizations.
• We may expend resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which
there is a greater likelihood of success.
Risks Related to Our Dependence on Third Parties
• We currently rely on third parties to manufacture TYMLOS and to produce our product candidates; our dependence on these parties, including any inability on our part to
accurately anticipate product demand and timely secure manufacturing capacity to meet commercial or clinical product demand may impair the commercialization of TYMLOS
and the research and development activities and potential commercialization of our product candidates.
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• We have entered into, and in the future may enter into, licenses and/or collaborations with third parties for the development and commercialization of our product candidates. If
those licenses and/or collaborations, are not successful, we may not be able to capitalize on the market potential of these product candidates.
Risks Related to Marketing and Sale of Our Products
•
•
If we are unable to maintain appropriate and effective commercial capabilities on our own or through partnerships or collaborations, we may not be able to continue to
successfully commercialize TYMLOS or any of our product candidates or generate product revenue.
If we cannot compete successfully against other drug companies, we may not achieve sufficient product revenues and our business will suffer.
• We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.
Risks Related to Our Intellectual Property
•
•
•
•
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to our business.
If our efforts to protect our intellectual property related to TYMLOS/abaloparatide-SC, abaloparatide-TD, and/or our other current or future product candidates fail to adequately
protect these assets or if we are unable to secure all necessary intellectual property, we may lose the ability to license or successfully commercialize one or more of these products
or product candidates.
Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Risks Related to Legislation and Administrative Actions
• Healthcare reform may have a material adverse effect on our industry and our results of operations.
• We are subject to healthcare laws, regulation and enforcement, and our failure to comply with those laws could have a material adverse effect on our results of operations and
financial conditions.
Risks Related to Employee Matters and Managing Our Workforce
•
If we are unable to successfully maintain and further develop internal commercialization capabilities, sales of TYMLOS may be negatively impacted.
• We rely on key executive officers and scientific and medical advisors, and their knowledge of our business and technical expertise would be difficult to replace.
Risks Relating to Our Securities
• Our stock price may be volatile, and the value of an investment in our common stock may decline.
• Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
For a more complete discussion of the material risks facing our business, see below.
Risks Related to Our Financial Position and Need for Capital
We are not currently profitable and may never become profitable.
We are not currently profitable and may never become profitable. We had net losses of $109.2 million, $133.0 million, and $221.3 million for the years ended
December 31, 2020, 2019, and 2018, respectively. As of December 31, 2020, we had an accumulated deficit of $1.3 billion. Even if we succeed in our efforts in continuing to
commercialize TYMLOS, we may incur losses and never achieve or maintain profitability. We also may incur additional operating and capital expenses as we:
•
continue to maintain and build our internal infrastructure, including hiring additional personnel that may be required for our existing or any future product candidates, including
product candidates that we acquire from other companies;
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•
•
•
continue to commercialize TYMLOS or any product candidates, if approved;
continue to undertake preclinical development and clinical trials for product candidates; and
seek regulatory approvals for product candidates.
Unless and until we become profitable, we may need to raise additional capital to continue to operate our business. Our failure to achieve or maintain profitability or to raise
additional capital could negatively impact the value of our securities.
Unless and until we become profitable, we may need to raise additional capital, which may not be available on favorable terms, if at all, in order to continue operating our business.
Our ability to become profitable depends upon our ability to generate sufficient revenue. Despite our commercialization of TYMLOS, we may not be able to generate sufficient
revenue to attain or maintain profitability. Our ability to generate profits from sales of TYMLOS is subject to our ability to manufacture commercial quantities of TYMLOS with third
parties at acceptable cost levels and maintain sales and marketing capabilities. Even though TYMLOS has been approved by the FDA for marketing and commercial sale for the treatment
of postmenopausal women with osteoporosis, it may not sufficiently gain or maintain market acceptance, leadership or commercial success. For the foreseeable future, we expect to fund
our operations and capital expenditures with our product revenues, existing cash and cash equivalents and short and long-term marketable securities, or through strategic financing
opportunities.
Based upon our cash, cash equivalents and marketable securities balance as of December 31, 2020 and funds available to us through our credit facilities, we believe that, prior to the
consideration of proceeds from partnering and/or collaboration activities, we have sufficient capital to fund our development plans, U.S. commercial and other operational activities for at
least twelve months from the date of this filing. We have based this estimate on assumptions that may prove to be wrong, and we could use up our available capital resources sooner than
we currently expect. If we fail to obtain additional capital, should we need it, we may be forced to reduce or forego sales and marketing efforts for TYMLOS or may be unable to complete
our planned preclinical and clinical trials and obtain approval of our product candidates from the FDA and foreign regulatory authorities. In addition, we could be forced to discontinue
product development or forego attractive business opportunities or discontinue our operations entirely. Any additional sources of financing may not be available or may not be available on
favorable terms and will likely involve the issuance of additional equity securities, which will have a dilutive effect on stockholders. Our future capital requirements will depend on many
factors, including the scope and progress made in our research and development activities and our clinical studies.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.
If we are unable to generate substantial product revenues, we may need to finance our cash needs through a combination of collaborations, strategic alliances, licensing arrangements,
other marketing and distribution arrangements, equity offerings, royalty-based financing arrangements and debt financings. To the extent that we raise additional capital through the sale of
equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights
as a stockholder. Debt financing, if available and to the extent permitted under our existing January 2020 senior and secured Credit and Security Agreements with MidCap Financial Trust
(“MidCap”), may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or
declaring dividends. For example, our financing agreements with MidCap contain affirmative and negative covenants customarily applicable to senior secured credit facilities, including
covenants that, among other things, will limit or restrict our ability, subject to negotiated exceptions, to incur additional indebtedness and additional liens on our assets, engage in mergers
or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and
change the nature of our businesses. If we raise additional funds through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with
third parties or royalty-based financing arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or
we may need to grant licenses on terms that may not be favorable to us. We have and may in the future engage in collaborations, sponsored research agreements, and other arrangements
with academic researchers and institutions that have received and may receive funding from U.S. government agencies. As a result of these arrangements, the U.S. government or certain
third parties may have rights in certain inventions developed during the course of the performance of such collaborations and agreements as required by law or by such agreements. If we
are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our commercialization or product development efforts or grant rights to develop
and market product candidates that we would otherwise prefer to develop and market ourselves.
Our financial results may fluctuate from quarter to quarter, which makes our results difficult to predict and could cause our results to fall short of expectations.
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Our financial results may fluctuate as a result of a number of factors, many of which are outside of our control. For these reasons, comparing our financial results on a period-to-
period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Particularly over the near term as we continue to maintain and
refine our commercial capabilities and commercialize TYMLOS, our revenues may fluctuate from quarter to quarter and our future quarterly and annual expenses as a percentage of our
revenues may be significantly different from those we have recorded in the past or which we expect for the future. Our financial results in some quarters may fall below expectations. Any
of these events as well as the various risk factors listed in this “Risk Factors” section could adversely affect our financial results and cause our stock price to fall.
We are subject to foreign currency risk.
A significant portion of our clinical trial activities, in addition to our contract manufacturing processes in support of TYMLOS, are conducted outside of the United States and a large
portion of the costs incurred with these activities are denominated in the local currency of the country in which the activity is being conducted. As such, these costs could be subject to
fluctuations in foreign exchange rates. At present, we do not engage in hedging transactions to protect against uncertainty in future exchange rates between foreign currencies and the U.S.
dollar. A decline in the value of the U.S. dollar against currencies in geographies in which we conduct clinical trials or contract manufacturing activities could have a negative impact on
our research and development costs, our future inventory valuations, or our future cost of sales. We cannot predict the impact of foreign currency fluctuations, and foreign currency
fluctuations in the future may adversely affect our business and our results of operations. For further discussion of our foreign currency risks, see “Item 7A. Quantitative and Qualitative
Disclosures About Market Risk”.
An adverse determination in any current or future lawsuits or arbitration proceedings to which we or partners or suppliers
are a party could have a material adverse effect on our business.
We or our partners or suppliers may be the target of claims asserting violations of securities fraud and derivative actions, or other litigation or arbitration proceedings, including with
respect to intellectual property rights. Any litigation or arbitration proceedings could result in substantial costs and divert management’s attention and resources. These lawsuits or
arbitration proceedings may result in injunctive relief, large judgments or settlements against us, or our partners or suppliers, any of which could have a material adverse effect on our
business, operating results, financial condition and liquidity.
We are also subject to a variety of other types of potential claims, proceedings, investigations and litigation which may be initiated by government agencies or third parties. These
include compliance matters, product regulation or safety, taxes, employee benefit plans, employment discrimination, health and safety, environmental, antitrust, customs, import/export,
government contract compliance, financial controls or reporting, intellectual property, allegations of misrepresentation, false claims or false statements, commercial claims, claims
regarding promotion of our product candidates, or other similar matters. In addition, government investigations related to the use of products, but not the efficacy themselves, may cause
reputational harm to us. Negative publicity-whether accurate or inaccurate-about the efficacy, safety or side effects of our product candidates or product categories, whether involving us or
a competitor, could materially reduce market acceptance for our product candidates, cause consumers to seek alternatives to our product candidates, result in product withdrawals and
cause our stock price to decline. Negative publicity could also result in an increased number of product liability claims, whether or not these claims have a basis in scientific fact. Any such
claims, proceedings, investigations or litigation, regardless of the merits, might result in substantial costs, restrictions on product use or sales, or otherwise injure our business.
Risks Related to the Commercialization and Development of Our Product Candidates
We are heavily dependent on the commercial success of TYMLOS; we may not be able to meet expectations with respect to TYMLOS sales or attain or maintain profitability and
positive cash-flow from operations.
Our ability to continue to successfully commercialize TYMLOS, our first and currently only approved product, is critical to the execution of our business strategy. TYMLOS may not
maintain market acceptance in the United States, or in any international markets where it may subsequently be approved, among physicians, patients, and third-party payors, and may not
be or remain commercially successful. The degree of market acceptance and commercial success of TYMLOS will depend on a number of factors, including the following:
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the acceptance of TYMLOS by patients and the medical community and the availability, perceived advantages and relative cost, safety and efficacy of alternative and competing
treatments;
the cost-effectiveness of TYMLOS, availability and level of coverage and reimbursement by third-party payors, including state and federal governments, pharmacy benefit
managers and health insurance plans, the willingness and ability of patients to pay for TYMLOS, and the commensurate discounts, price concessions or rebates required to secure
coverage and reimbursement by third-party payors;
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the effectiveness of our marketing, sales, and distribution strategy and efforts and the degree to which the approved labeling supports promotional initiatives for commercial
success;
the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas;
the ability of our third-party manufacturer(s) to manufacture commercial supplies of TYMLOS at acceptable costs, to remain in good standing with regulatory agencies, and to
develop, validate and maintain commercially viable manufacturing processes that are, to the extent required, compliant with current good manufacturing practice regulations;
our ability to remain compliant with laws and regulations that apply to us and our commercial activities;
our ability to comply with changes in legislation or regulations in state or federal government programs that increase manufacturer financial obligations;
our ability to obtain marketing approvals from foreign regulatory authorities, where and as applicable;
FDA-mandated package inserts or labeling requirements;
the actual market size for TYMLOS, which may be different than expected;
the sufficiency of our drug supply to meet commercial and clinical demands which could be negatively impacted if our projections regarding the potential number of patients are
inaccurate, we are subject to unanticipated regulatory requirements, our current drug supply is destroyed or negatively impacted at our manufacturing sites, storage sites or in
transit, or any significant portion of our TYMLOS supply expires before we are able to sell it; and
our ability to maintain, enforce and defend third-party challenges to our intellectual property rights in and to TYMLOS.
We may experience fluctuations in sales of TYMLOS from period to period and, ultimately, we may never generate sufficient revenues from TYMLOS to reach or maintain
profitability or sustain our anticipated levels of operations. Any inability on our part to continue to successfully commercialize TYMLOS in the United States and any international
markets where it may subsequently be approved, or any significant delay, could have a material adverse impact on our ability to execute upon our business strategy.
Our current and future product candidates may never receive regulatory approval.
Other than TYMLOS, we have no drug products for sale and may never be able to develop additional approved and marketable drug products. The research, testing, manufacturing,
labeling, approval, sale, marketing and distribution of drug products are subject to extensive regulation by the FDA in the United States and by comparable foreign regulatory authorities.
We cannot assure you that we will receive the approvals necessary to commercialize any additional product candidates, including any product candidates we are currently developing or
may acquire or develop in the future.
Obtaining approval of a product candidate is an extensive, lengthy, expensive and uncertain process, and may be delayed, limited or denied for many reasons, including:
the results of our clinical studies may not meet the level of statistical or clinical significance required for marketing approval;
the FDA or comparable foreign regulatory authorities may disagree with the number, design, size, conduct or implementation of our clinical studies;
• we may not be able to demonstrate that the product candidate is safe and effective to the satisfaction of the FDA or comparable foreign regulatory authorities;
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• we may be unable to demonstrate that the product candidate’s clinical and other benefits outweigh its safety risks;
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the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from our preclinical studies and clinical studies or may require that we conduct
additional studies;
the FDA may not accept clinical data from clinical trials conducted by individual investigators or in countries where the standard of care is potentially different from the United
States; and
the FDA or comparable foreign regulatory authorities may identify deficiencies in the manufacturing processes or facilities of our third-party manufacturers.
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In addition, the FDA or foreign regulatory authorities may change their approval policies or adopt new regulations or guidance.
We have a global pharmacovigilance agreement with Teijin Limited, or Teijin, a Japanese pharmaceutical company, that provides for the exchange of information related to serious
and non-serious adverse reactions to abaloparatide. The purpose of the agreement is to enable safety reporting to global health agencies. Teijin is conducting a Phase 3 clinical trial of
abaloparatide-SC in Japan for the treatment of postmenopausal osteoporosis. Should Teijin advise us in accordance with our agreement of a serious adverse event experienced by patients
enrolled in their study, we would need to report the serious adverse event to the FDA, which could adversely affect or delay our ability to maintain or obtain regulatory approval in the
United States.
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The approval process may also be delayed by changes in government regulation, future legislation or administrative action or changes in policy or guidance that occur prior to or
during the FDA or comparable foreign regulatory authority’s review. Delays in obtaining regulatory approvals may prevent us from commercializing our product candidates.
We may never receive approval for, or commercialize, our products outside of the United States.
Approval procedures vary among countries and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other
countries might differ from that required to obtain FDA approval. The regulatory approval process in other countries may include additional risks not detailed in these Risk Factors.
Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may have a negative effect on the
regulatory process in others.
Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our product
candidates.
The continued development and commercialization of our product candidates will require substantial cash to fund expenses. For some of our product candidates, we may decide to
collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates. We will face significant competition in
seeking appropriate collaborators and/or partners. Moreover, licensing arrangements are complex and time consuming to negotiate, document and implement. We may not be successful in
our efforts to establish and implement such arrangements should we so choose to enter into such arrangements.
The terms of any collaborations or other arrangements that we may establish may not be favorable to us. If that were to occur or if we are not successful in entering into
collaborations or other arrangements, we may have to curtail the development of a particular product candidate, reduce or delay its development program or one or more of our other
development programs, delay its potential commercialization or reduce the scope of our sales or marketing activities, or increase our expenditures and undertake development or
commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain
additional capital, which may require us to divert capital from our other business strategies and initiatives, or may not be available to us at all. If we do not have sufficient funds, we will
not be able to bring our product candidates to market and generate additional product revenue.
Any future collaborations or other arrangement that we enter into may not be successful. The success of our collaboration or other arrangements will depend heavily on the efforts
and activities of our future collaborators and/or partners. Collaborators and/or partners generally have significant discretion in determining the efforts and resources that they will apply to
these collaborations or other arrangements. If a collaborator or partner fails to provide sufficient effort and resources to a development program, we may not realize the full potential or
intended benefit of the collaboration or arrangement, and the development program may be delayed or curtailed.
Pre-clinical studies and clinical trials are very expensive, time-consuming and difficult to design and implement.
Pre-clinical studies and human clinical trials are very time consuming, expensive and difficult to design and implement, in part because they are subject to rigorous regulatory
requirements. Furthermore, failure can occur at any stage of the trials. The commencement and completion of pre-clinical studies and clinical trials may be delayed by several factors,
including:
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changes in government regulation or guidance with respect to pre-clinical studies or clinical trials that change the requirements for approval, including the size of any such trials;
unforeseen safety issues or lack of effectiveness during clinical trials;
unforeseen issues with drug supply, including batch failures and other supply chain issues;
actions, or failures to act, by clinical research organizations or other organizations contracted to perform services for pre-clinical studies or clinical trials;
slower than expected rates of patient recruitment and enrollment in the overall population or other prespecified populations;
failure of sites to comply with requirements for conducting clinical trials;
inability to monitor patients adequately during or after treatment; and
inability or unwillingness of medical investigators to follow our clinical protocols.
There can be no assurance that Phase 1, Phase 2 or Phase 3 testing will be completed successfully within any specified period of time, if at all. For example, delays in subject
enrollment or interruptions in clinical trial supplies or investigational product may significantly extend a trial past its anticipated end date. In addition, we, the FDA, or other equivalent
regulatory authorities and ethics committees with jurisdiction over our studies may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable
health risks or if the FDA or foreign regulatory authorities find deficiencies in our regulatory submissions or the conduct of these trials. Therefore, we cannot predict with any certainty the
schedule for existing
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or future clinical trials. Any such unexpected expenses or delays in our clinical trials could increase our need for additional capital, which may not be available on favorable terms or at all.
We have sold or licensed our oncology assets; however there can be no assurance that those or other transactions will yield additional value for stockholders.
During 2020, we executed on our strategic goal to divest our oncology assets by entering into an exclusive license agreement with Berlin-Chemie AG – Menarini Group (“Berlin-
Chemie”) for elacestrant and selling RAD140 to Ellipses Pharma (“Ellipses”). While both the Berlin-Chemie and Ellipses transactions provided for certain upfront payments, much of the
consideration payable to us is in the form of development and sales milestones and royalties. There can be no assurances that we, Berlin-Chemie or Ellipses will be able to meet the
conditions necessary for such milestones or royalties to be paid. Further, under our license agreement with Berlin-Chemie we retained certain ongoing obligations with respect to
elacestrant, which may be time-consuming, distracting to management and disruptive to our business operations, and if we are unable to effectively manage the process, our business,
financial condition, and results of operations could be adversely affected.
Any strategic acquisition or divestment decision involves risks and uncertainties, and we cannot guarantee that any completed or potential transaction or other strategic option, if
identified, evaluated and consummated, will provide greater value to our stockholders than that reflected in our current stock price. The success of any completed or potential transaction
would be dependent upon a number of factors that may be beyond our control, including, among other factors, market conditions, industry trends and the interest of third parties in our
assets, which may be in the early stages of clinical development.
Any uncertainties related to consummating any future transaction may result in the loss of potential business opportunities and may make it more difficult for us to attract and retain
qualified personnel and business partners.
The results of clinical trials may not support our product candidate claims.
Even if our clinical trials are completed as planned, we cannot be certain that the results will support regulatory approval of our product candidates. Success in preclinical testing and
early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior clinical trials and
preclinical testing. The clinical trial process may fail to demonstrate that our product candidates are safe for humans and effective for proposed uses. This failure would cause us to
abandon a product candidate and may delay development of other product candidates. Any delay in, or termination of, our clinical trials will delay the submission of our NDAs to the FDA
or equivalent applications to foreign regulatory authorities and, ultimately, our ability to commercialize our product candidates and generate product revenues. In addition, our clinical
trials to date have generally involved small patient populations. Because of the small sample sizes, the results of these clinical trials may not be indicative of future results.
In addition, third parties could conduct clinical trials using the product candidates we license. We would have no control over how these trials are conducted and the results could
potentially contradict the results we have obtained, or will obtain, from the clinical trials we conduct.
If serious adverse or undesirable side effects are identified during the development or commercialization of our product candidates, we may need to abandon our development or
commercialization of some of our product candidates or products.
Undesirable side effects caused by our product candidates could cause us, regulatory authorities, and/or ethics committees to interrupt, delay or halt clinical trials and could result in a
more restrictive label or cause the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. If our product candidates result in undesirable side effects or
have characteristics that are unexpected, we may need to abandon their development. Drug-related side effects could affect patient recruitment or the ability of enrolled patients to
complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.
Additionally, if we or others later identify undesirable side effects caused by TYMLOS or any product candidate that may receive marketing approval, a number of potentially
significant negative consequences could result, including:
regulatory authorities may withdraw approvals of such product;
regulatory authorities may require additional warnings on the label;
regulatory authorities may require us to adopt a Risk Evaluation and Mitigation Strategy, or REMS;
regulatory authorities may require us to conduct additional post-market studies, including clinical studies, to assess the safety of the product;
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• we could be sued and held liable for harm caused to patients; and
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our reputation may suffer.
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Any of these events could prevent us from achieving or maintaining market acceptance of the particular product or product candidate and could significantly harm our business,
results of operations and prospects.
Any product candidate for which we have or obtain marketing approval, including TYMLOS, is subject to restrictions or potential withdrawal from the market and we may be subject
to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
TYMLOS and any product candidate for which we have or obtain marketing approval is subject to continuing requirements of and review by the FDA and foreign regulatory
authorities. These requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to
quality control, quality assurance and corresponding maintenance of records and documents, and requirements regarding the distribution of drug products, including drug samples to
physicians and recordkeeping. Marketing approval of TYMLOS and any product candidate for which we obtain marketing approval may be subject to limitations on the indicated uses for
which the product candidate may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor the safety and/or
efficacy of the product.
The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions
of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-label use and, if we market TYMLOS or any of our product candidates
which may be approved for other than their approved indications, we may be subject to enforcement action for off-label marketing.
In addition, later discovery of previously unknown problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may
yield various results, including:
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restrictions on the marketing or manufacturing of a product, withdrawal of a product from the market, or voluntary or mandatory product recalls;
restrictions on the labeling of a product;
requirements to conduct post-marketing clinical trials;
fines, warning or untitled letters or hold on clinical trials;
refusal to approve pending applications or supplements to approved applications that we submit;
suspension or withdrawal of marketing approvals;
refusal to permit the import or export of our products;
product seizure; or
injunctions or the imposition of civil or criminal penalties.
In addition, the FDA’s policies may change and additional government regulations may be enacted that could prevent, limit, or delay regulatory approval of our product candidates.
We cannot predict the likelihood, nature, or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are
slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any
marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business.
The commercial success of TYMLOS and any product candidates that we may develop and that may be approved will depend upon the degree of market acceptance by regulators, key
opinion leaders, physicians, patients, third-party payors and others in the medical community.
Even if the FDA or foreign regulatory authorities approve one or more of our product candidates, physicians may not prescribe our products and patients may not use them.
Acceptance and use of any of our products will depend upon a number of factors including:
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perceptions by members of the healthcare community, including physicians and key opinion leaders, about the safety and effectiveness of our drug;
the approved indicated uses for our product;
cost-effectiveness of our product relative to competing products;
availability and level of coverage and reimbursement by third-party payors, including state and federal governments, pharmacy benefit managers and health insurance plans, the
willingness and ability of patients to pay for TYMLOS, and the commensurate discounts, price concessions or rebates required to secure coverage and reimbursement by third-
party payors; and
effectiveness of marketing and distribution efforts by us and our licensees and distributors, if any.
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If any product candidate is approved but does not achieve or maintain an adequate level of acceptance by physicians, hospitals, healthcare payors and patients, we may not generate
sufficient revenue from these products and we may not become or remain profitable, which would have a material adverse effect on our business.
Our ability to successfully commercialize products depends in part on the extent to which coverage and reimbursement for the costs of our products and related treatments will be
available in the United States and worldwide from government authorities and health benefit programs, private health insurers and other organizations.
Our ability to continue to successfully commercialize TYMLOS or any of our product candidates, if approved, will depend in large part on the scope of coverage and amount of
reimbursement by third-party payors. Government authorities and third-party payors, such as private health plans, decide which drugs they will cover and establish reimbursement levels.
Coverage and reimbursement may vary among third-party payors. Coverage may not be available, and reimbursement may not be adequate, for our current and any future products that we
may develop and commercialize. Also, coverage and reimbursement policies may reduce the demand for, or the price paid for, our products. Patients who are prescribed medications for
the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Patients
are unlikely to use our or our partners’ products unless coverage is provided, and reimbursement is adequate to cover a significant portion of the cost of such products. Third-party payors
may limit coverage or impose conditions on coverage. A third-party payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will apply
or patient copayment will be at an acceptable level. In addition, pharmaceutical manufacturers are required by law to offer certain purchasers discounts and rebates and often also need to
offer third party payors discounts or rebates on the cost of drugs dispensed to the payors’ members in order to increase the possibility of favorable coverage and adequate cost sharing
thresholds for patients. We may be required to provide such rebates to some third-party payors in relation to our product(s). Adequate third-party reimbursement, taking into account such
rebates as applicable, may not be available and we may not be able to maintain price levels sufficient to realize an appropriate profit, including a return on our investment in product
development. See “Government Regulation-Pricing and Reimbursement”.
We expect to experience pricing pressures in connection with the sale of our current and future products due to the healthcare reforms discussed below, the trend toward initiatives
aimed at reducing healthcare costs, the increasing influence of managed care, the scrutiny of pharmaceutical pricing, the ongoing debates on reducing government spending and additional
legislative proposals. There has been significant scrutiny of pharmaceutical pricing and the resulting costs of pharmaceutical products that could cause significant operational and
reimbursement changes for the pharmaceutical industry. There have been a number of federal and state efforts to address drug costs, which generally have focused on increasing
transparency around drug costs or limiting drug prices, price increases or other related costs. Healthcare reform efforts or any future legislation or regulatory actions aimed at controlling
and reducing healthcare costs, including through measures designed to limit reimbursement, restrict access or impose unfavorable pricing modifications on pharmaceutical products, could
impact our ability to obtain or maintain reimbursement for our products at satisfactory levels, or at all, which could materially harm our business and financial results.
Decisions in the European Union on pricing and reimbursement of medicinal products are based upon national rules subject to the control of the Transparency Directive, which aims
to ensure the transparency measures established by EU countries to control the pricing and reimbursement of medicinal products. The Transparency Directive defines a series of procedural
requirements designed to verify that national pricing and reimbursement decisions do not create obstacles to the pharmaceutical trade within the EU’s Internal Market. The competent
authorities of each of the EU Member States have adopted individual policies and rules regulating the pricing and reimbursement of medicinal products in their territory. These national
measures controlling pricing and reimbursement often vary widely in nature, scope and application. However, a major element that they have in common is an increased move toward
reduction in the reimbursement price of medicinal products, a reduction in the number and type of products selected for reimbursement, and an increased preference for generic products
over innovative products. These efforts have mostly been executed through these countries’ existing price-control methodologies, including price cuts, mandatory rebates, value-based
pricing, and reference pricing (i.e., referencing prices in other countries and using those reference prices to set a price). It is increasingly common in many EU Member States for
Marketing Authorization Holders to be required, in order to obtain support for reimbursement under national health systems and, therefore, practical access to the market to demonstrate
the cost-effectiveness or added value benefit of their products as compared to products (which are considered as standard of care) already subject to pricing and reimbursement in specific
countries. In order for drugs to be evaluated positively under such criteria, pharmaceutical companies may need to re-examine, and consider altering, a number of traditional functions
relating to the selection, study, and management of drugs, whether currently marketed, under development, or being evaluated as candidates for research and/or development.
Future legislation, including the current versions being considered at the federal and state level in the United States and at the national level in EU Member States, or regulatory
actions implementing recent or future legislation may have a significant
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effect on our business. If government and other healthcare payors do not provide adequate coverage and reimbursement levels for TYMLOS or our product candidates, once approved,
market acceptance of our products could be reduced. In addition, negotiating prices with government authorities under current and proposed legislation can delay the commercialization of
our product candidates.
We may expend resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which
there is a greater likelihood of success.
We narrowly focus on research programs and product candidates that we identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other
product candidates or for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial
products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any
commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that
product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and
commercialization rights to such product candidate.
If we experience delays in the enrollment of patients in our clinical trials, our clinical trials and receipt of necessary regulatory approvals could be delayed or prevented.
We may not be able to initiate or continue clinical trials for some of our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate
in these trials as required by the FDA or foreign regulatory authorities. In addition, many of our competitors have ongoing clinical trials for product candidates that could be competitive
with our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. In addition, our
ability to enroll patients may be significantly delayed by the evolving COVID-19 pandemic and we do not know the extent and scope of such delays at this point.
Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of our company to decline and limit our
ability to obtain additional financing.
The ongoing COVID-19 pandemic is having and is expected to continue to have an adverse impact on our business, financial condition and results of operations, including our
commercial operations and sales, clinical trials, preclinical studies, and employees.
Since December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019 (COVID-19), has spread worldwide, including the United States. The
COVID-19 pandemic is evolving, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health
safety measures.
In response to the spread of SARS-CoV-2 and COVID-19, in March 2020, we closed our administrative offices. Our employees continue to work remotely and will continue to do so
indefinitely. We have selectively resumed in-person interactions by our customer-facing personnel in compliance with local and state restrictions. We also continue to engage with
customers virtually as we seek to continue to support healthcare professionals and patient care. However, our ability to engage in personal interactions with physicians and customers
remains limited, and it is unknown when in-person interactions will be fully resumed.
We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations because of the COVID-19 pandemic,
including requiring most employees to work remotely. Notwithstanding these measures, the COVID-19 pandemic could affect the health and availability of our workforce as well as those
of the third parties we rely on taking similar measures. If members of our management and other key personnel in critical functions across our organization are unable to perform their
duties or have limited availability due to COVID-19, we may not be able to execute on our business strategy and/or our operations may be negatively impacted.
Business interruptions from the current COVID-19, or a future, pandemic may also adversely impact the third parties we solely rely on to sufficiently manufacture TYMLOS and to
produce our product candidates in quantities we require, which may adversely impact the commercialization of TYMLOS and our research and development activities and potential
commercialization of our product candidates.
Many of the regions in which we operate are currently being, or may in the future be, affected by the COVID-19 pandemic. We are following health authority guidance regarding
missed study visits and procedures. Some factors from the COVID-19 outbreak that may delay or otherwise further adversely affect enrollment in the clinical trials of our product
candidates, as well as adversely impact our business generally, include:
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delays or difficulties in enrolling and retaining patients in our clinical trials;
delays or difficulties in patient and site adherence to all protocol-specified procedures;
diversion of healthcare resources away from the conduct of clinical trials to focus on pandemic concerns;
limitations on travel that could interrupt key trial activities, such as clinical trial site initiations and monitoring, domestic and international travel by employees, contractors or
patients to clinical trial sites, including any government-imposed travel restrictions or quarantines that may impact the ability or willingness of patients, employees or contractors
to travel to our clinical trial sites or secure visas or entry permissions, any of which could delay or adversely impact the conduct or progress of our clinical trials;
potential interruption or delays in the operations of the FDA and comparable foreign regulatory authorities, or independent review boards or ethics committees, which may impact
review and approval timelines;
potential interruption of, or delays in receiving, supplies of our product candidates from our contract manufacturing organizations due to staffing shortages, production slowdowns
or stoppages and disruptions in delivery systems; or in the clinical trial sites’ ability to maintain continuous supply of product candidates to patients;
longer payment and reimbursement cycles and uncertainties regarding the collectability of accounts receivable; and
business disruptions caused by potential workplace, laboratory and office closures and an increased reliance on employees working from home, disruptions to or delays in
ongoing laboratory experiments and operations, staffing shortages, travel imitations or mass transit disruptions, any of which could adversely impact our business operations or
delay necessary interactions with local regulators, ethics committees and other important agencies and contractors.
These and other factors arising from the COVID-19 pandemic could worsen in countries that are afflicted with COVID-19, could continue to spread to additional countries, or could
return to countries where the pandemic has been partially contained, each of which could further adversely impact our ability to conduct clinical trials and our business generally, and
could have a material adverse impact on our operations and financial condition and results. In addition, the trading prices for our common stock and other biopharmaceutical companies
have been, and will likely continue to be, highly volatile as a result of the COVID-19 pandemic, and may limit our ability to raise additional capital.
The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition will depend on future developments that
are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the
economic impact on local, regional, and national markets.
Any product candidates we develop that incorporate CBD will be subject to U.S. controlled substance laws and regulations and failure to comply with these laws and regulations, or
the cost of compliance with these laws and regulations, may adversely affect the results of our business operations, both during clinical development and post approval, and our
financial condition.
We have acquired certain assets related to formulations of CBD related to the oral administration of a solution of CBD for therapeutic use in humans or animals. CBD as an
ingredient in a prescription drug product has been classified as a controlled substance as defined in the federal Controlled Substances Act of 1970 (“CSA”). Controlled substances are
subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export
and other requirements administered by the federal Drug Enforcement Agency (“DEA”). The DEA classifies controlled substances into five schedules: Schedule I, II, III, IV or V
substances. Schedule I substances by definition have a high potential for abuse, have no currently “accepted medical use” in the United States, lack accepted safety for use under medical
supervision, and may not be prescribed, marketed or sold in the United States. Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V,
with Schedule II substances considered to present the highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances. To
date, the only FDA-approved prescription drug with CBD as an active ingredient has been listed as Schedule V.
If and when any of our product candidates receive FDA approval, the DEA will make a scheduling determination. If the FDA or any comparable foreign regulatory authority
determines that our product candidate may have potential for abuse, it may require us to generate more clinical or other data than we currently anticipate.
Facilities conducting research, manufacturing, distributing, importing or exporting, or dispensing controlled substances must be registered (licensed) to perform these activities and
have the security, control, recordkeeping, reporting and inventory mechanisms required by the DEA to prevent drug loss and diversion. All these facilities must renew their registrations
annually, except dispensing facilities, which must renew every three years. The DEA conducts periodic inspections of certain registered establishments that handle controlled substances.
Obtaining the necessary registrations may result in delay of the importation, manufacturing or distribution of any CBD-based drug candidates we may develop.
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The states also maintain separate controlled substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State authorities,
including Boards of Pharmacy, regulate use of controlled substances in each state. Failure to maintain compliance with applicable requirements, particularly as manifested in the loss or
diversion of controlled substances, can result in enforcement action that could have a material adverse effect on our business, operations and financial condition. The DEA may seek civil
penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations.
Risks Related to Our Dependence on Third Parties
Our drug development programs depend upon third-party researchers, investigators and collaborators who are outside our control.
We depend upon independent researchers, investigators and collaborators, to conduct our preclinical studies and clinical trials under agreements with us. These third parties are not
our employees and we cannot control the amount or timing of resources that they devote to our programs. We and our third-party researchers, investigators and collaborators are required
to comply with good clinical practice, or GCP, requirements, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European
Economic Area, or EEA, and comparable foreign regulatory authorities for all of our products in clinical development. Regulatory authorities enforce these GCPs through periodic
inspections of trial sponsors, principal investigators and trial sites. If we or any of these third parties fail to comply with applicable GCPs, the clinical data generated in our clinical trials
may be deemed unreliable and the FDA, EMA or other comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing
applications or require a more restrictive label for the product. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any
of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with product produced under cGMP regulations. Our or our contract manufacturers’
failure to comply with these regulations may delay ongoing or planned clinical trials or require us to repeat clinical trials, which would delay the regulatory approval process. Failure by us
or by third parties we engage to comply with regulatory requirements can also result in fines, adverse publicity, and civil and criminal sanctions. Moreover, our business may be implicated
if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws. If outside collaborators fail to devote
sufficient time and resources to our drug-development programs, or if their performance is substandard, the approval of our FDA or foreign regulatory authority applications, if any, and
our introduction of new drugs, if any, will be delayed. These collaborators may also have relationships with other commercial entities, some of whom may compete with us. If our
collaborators assist competitors at our expense, our competitive position would be harmed.
We currently rely on third parties to manufacture TYMLOS and to produce our product candidates; our dependence on these parties, including any inability on our part to accurately
anticipate product demand and timely secure manufacturing capacity to meet commercial or clinical product demand may impair the commercialization of TYMLOS and the research
and development activities and potential commercialization of our product candidates.
We have no experience in drug formulation or manufacturing and do not intend to establish our own manufacturing facilities. We lack the resources and expertise to internally
formulate or manufacture TYMLOS or our product candidates in the quantities needed to meet commercial demand for TYMLOS, or to internally conduct our research and development
activities and clinical trials for our product candidates. Therefore, we rely on, and expect to continue relying on for the foreseeable future, a limited number of third parties to manufacture
and supply materials (including raw materials and subunits), drug substance, or API, and drug product, as well as to perform additional steps in the manufacturing process, such as filling,
labeling, and storage of TYMLOS and our product candidates.
We have entered into agreements with contract manufacturers to manufacture TYMLOS in the quantities needed to meet commercial demand and our product candidates for use in
research and development activities and clinical trials. These contract manufacturers are currently our only source for the production and formulation of TYMLOS and our product
candidates. If our contract manufacturers are unable to produce, in a timely manner, adequate supplies of TYMLOS or our product candidates to meet our needs, we would be required to
seek new contract manufacturers that may require us to modify our finished product formulation and modify or terminate our clinical studies. Any modification of our finished product or
modification or termination of our clinical studies could adversely affect the commercial potential of TYMLOS or any product candidate that may be approved and impair our ability to
obtain necessary regulatory approvals, which would materially harm our business and impair our ability to raise capital.
In addition, the facilities and processes and controls used by our contract manufacturers to manufacture TYMLOS and our product candidates must be approved by the EMA and by
the FDA pursuant to inspections that will be conducted following our regulatory approval submissions. We do not control the facilities or manufacturing process and are completely
dependent on our contract manufacturing partners for compliance with cGMPs for manufacture of both active drug substances and finished drug products. If our contract manufacturers
cannot successfully manufacture material that conforms to our specifications and
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the strict regulatory requirements of the FDA or other regulatory authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In
addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable
foreign regulatory authority does not approve our contract manufacturers for the manufacture of our product candidates or if they withdraw any such approval in the future, we may need
to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market, with respect to TYMLOS, or for our product
candidates, if approved.
We depend on a number of single source contract manufacturers to supply key components of abaloparatide. For example, we depend on PPL, which has agreed to produce supplies
of abaloparatide API to support the abaloparatide-SC and abaloparatide-TD clinical studies and the commercial supplies of TYMLOS. We also depend on Vetter and Ypsomed for the
production of finished drug product clinical and commercial supplies of TYMLOS, Kindeva for the production of abaloparatide-TD. If our relationship with any of these contract
manufacturers is terminated, or if they are unable to produce abaloparatide or related components in required quantities, on a timely basis or at all, and/or in compliance with the terms of
our agreements, our business and financial condition would be materially harmed. Because the manufacturing process for abaloparatide-TD requires the use of Kindeva's proprietary
technology, Kindeva is the sole source for supplies of abaloparatide-TD.
Our anticipated future reliance on a limited number of third-party manufacturers exposes us to the following risks:
• We may be unable to identify manufacturers on acceptable terms, or at all, because the number of potential manufacturers is limited and the FDA must inspect any manufacturers
for cGMP compliance as part of our application.
• A new manufacturer would have to be educated in, or develop substantially equivalent processes for, production of our products after receipt of FDA approval, if any.
• Our third-party manufacturers might be unable to formulate and manufacture our drugs or related components in the volume and of the quality required to meet our clinical needs
and commercial needs.
• Our contract manufacturers may not perform as agreed or may not remain in the contract manufacturing business for the time required.
• Manufacturers are subject to ongoing periodic unannounced inspection by the FDA and corresponding state agencies to ensure strict compliance with cGMP, and other
government regulations and corresponding foreign standards, and we do not have control over third-party manufacturers’ compliance with these regulations and standards.
• We may not own, or may have to share, the intellectual property rights to any improvements made by our third-party manufacturers in the manufacturing process for our product
candidates.
• Our third-party manufacturers may be subject to litigation or arbitration with respect to the manufacturing and supply of our products, including claims of intellectual property
infringement by third parties.
Each of these risks could delay our clinical trials, the approval of our product candidates by the FDA or foreign regulatory authorities or the commercialization of TYMLOS or any of
our product candidates that may be approved or result in higher costs or deprive us of potential product revenues.
We have entered into, and in the future may enter into, licenses and/or collaborations with third parties for the development and commercialization of our product candidates. If those
licenses and/or collaborations, are not successful, we may not be able to capitalize on the market potential of these product candidates.
We have in the past, currently have, and may in the future, seek third-party licensees and/or collaborators for the development and commercialization of some of our product
candidates on a selective basis. Our likely licensees and/or collaborators for any arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical
companies and biotechnology companies.
To the extent we have, and if we do enter into any further such arrangements with any third parties, we will likely have limited control over the amount and timing of resources that
our licensees and/or collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenues from our license and/or collaboration
arrangements will depend on our licensees’ and/or collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Licenses and
collaborations involving our product candidates would pose numerous risks to us, including the following:
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licensees and/or collaborators have significant discretion in determining the efforts and resources that they will apply to these arrangements and may not perform their obligations
as expected;
licensees and/or collaborators may deemphasize or not pursue development and commercialization of our product candidates or may elect not to continue or renew development
or commercialization programs based on clinical trial results, changes in their strategic focus, including as a result of a sale or disposition of a business unit or development
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function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities;
licensees and/or collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or
conduct new clinical trials or require a new formulation of a product candidate for clinical testing;
licensees and/or collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates if
they believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; license
or collaboration arrangements may subject us to exclusivity provisions which could restrict our ability to compete in certain territories, including those licensed to the licensee
and/or collaborator;
a licensee or collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative
to other products;
licensees or collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in
such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or
expose us to potential litigation or other intellectual property related proceedings;
disputes may arise between the licensees and/or collaborators and us that result in the delay or termination of the research, development or commercialization of our products or
product candidates or that result in costly litigation or arbitration that diverts management attention and resources;
licenses and/or collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the
applicable product candidates;
license and/or collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all; and
if a licensee or collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program
could be delayed, diminished or terminated.
If our license or collaboration arrangements are not successful, our business, financial condition, results of operations, prospects and development and commercialization efforts may
be adversely affected. Any termination or expiration of our license or collaboration agreements could adversely affect us financially or harm our business reputation, development and
commercialization efforts.
Risks Related to Marketing and Sale of Our Products
If we are unable to maintain appropriate and effective commercial capabilities on our own or through partnerships or collaborations, we may not be able to continue to successfully
commercialize TYMLOS or any of our product candidates or generate product revenue.
We established a sales force to market and sell TYMLOS in the United States to specialists and continue to pursue collaborative arrangements to market and sell abaloparatide-SC
outside of the United States. Therefore, our future success depends, in part, on our ability to enter into and maintain collaborative relationships for such capabilities, the collaborators’ or
partners’ strategic interest in the products under development and such collaborators’ or partners’ ability to successfully develop, market, and sell any such products.
In addition, our ability to maintain effective commercial, medical affairs, marketing, sales, market access, managerial and other non-technical capabilities will depend on a number of
factors, including our ability to:
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identify, recruit, hire, train, incentivize and retain commercial and medical affairs personnel, including a sales force with appropriate technical expertise;
train our sales representatives, to deliver clear and compelling messages within the scope of the approved labeling and in accordance with other applicable FDA requirements
regarding TYMLOS, or any of our product candidates that may be approved, and to be credible and persuasive in educating physicians on the appropriate situations to consider
prescribing as set forth in the approved labeling;
ensure our commercial customer-facing team, including sales, market access, and field logistics professionals, effectively build relationships with their respective customers;
•
• manage a geographically dispersed national commercial customer-facing organization; and
• manage our growth and the integration of new personnel.
If we cannot compete successfully against other drug companies, we may not achieve sufficient product revenues and our business will suffer.
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The market for our product candidates is characterized by intense competition and rapid technological advances. TYMLOS and any of our product candidates that may receive FDA
or foreign regulatory authority approval will compete with a number of existing and future drugs and therapies developed, manufactured and marketed by others. Existing or future
competing products may provide greater therapeutic convenience or clinical or other benefits for a specific indication than our products, or may offer comparable performance at a lower
cost. If TYMLOS or any of our potential products fail to capture and maintain market share, we may not achieve sufficient product revenues and our business will suffer.
TYMLOS competes in the U.S. against well-known treatment options, including teriparatide, marketed by Lilly in the U.S. as Forteo. TYMLOS may also face competition from
generic or biosimilar versions of teriparatide. The availability of a generic or biosimilar teriparatide on the market would likely exert pricing and reimbursement pressure on the anabolic
class in which TYMLOS competes. In order to compete successfully, we will have to demonstrate to patients, physicians and third-party payors that the treatment of postmenopausal
women with osteoporosis at high risk of fracture with TYMLOS is worthwhile and is a better alternative to existing or new therapies.
We may also face competition from companies that seek to market generic versions of TYMLOS through an ANDA application.
We face significant competition from many fully integrated pharmaceutical companies and smaller companies that are collaborating with larger pharmaceutical companies, academic
institutions, government agencies and other public and private research organizations. Many of these competitors have compounds already approved or in development. In addition, many
of these competitors, either alone or together with their collaborative partners, operate larger research and development programs or have substantially greater financial resources than we
do, as well as significantly greater experience in:
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developing drugs;
undertaking preclinical testing and human clinical trials;
obtaining FDA and other regulatory approvals of drugs;
formulating and manufacturing drugs; and
launching, marketing, distributing, and selling drugs.
Developments by competitors may render our products or technologies obsolete or non-competitive.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid and significant technological change. Our product TYMLOS, and our product
candidates, if approved, will or may compete against new or existing therapies. In addition, a large number of companies are pursuing the development of pharmaceuticals that target the
same diseases and conditions that we are targeting. We face competition from pharmaceutical and biotechnology companies in the United States and abroad. In addition, companies doing
business in different but related fields represent substantial competition. Many of these organizations competing with us have substantially greater capital resources, larger research and
development staffs and facilities, longer drug development history in obtaining regulatory approvals, and greater manufacturing and marketing capabilities than we do. These organizations
also compete with us to attract qualified personnel and parties for acquisitions, joint ventures or other collaborations, and therefore, we may not be able to hire or retain qualified personnel
to run all facets of our business. These risks could render our products or technologies obsolete or non-competitive.
We may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability lawsuits.
The testing and marketing of medical products entail an inherent risk of product liability. If we cannot successfully defend ourselves against product liability claims, we may incur
substantial liabilities or be required to limit commercialization of our products. Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential
product liability claims could prevent or inhibit the commercialization of pharmaceutical products we develop, alone or with collaborators.
Risks Related to Our Intellectual Property
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to our business.
We are a party to a number of intellectual property license agreements with third parties and expect to enter into additional license agreements in the future. Our existing license
agreements impose, and we expect that any future license agreements will impose, various diligence, milestone payment, royalty, insurance and other obligations on us. If we fail to
comply with these obligations, our licensors may have the right to terminate these agreements, in which event we might not be able to develop and market any product that is covered by
these agreements. Termination of these licenses or reduction or elimination of our
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licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms. The occurrence of such events could materially harm our business.
If our efforts to protect our intellectual property related to TYMLOS/abaloparatide-SC, abaloparatide-TD, and/or our other current or future product candidates fail to adequately
protect these assets or if we are unable to secure all necessary intellectual property, we may lose the ability to license or successfully commercialize one or more of these products or
product candidates.
Our commercial success is significantly dependent on intellectual property related to our portfolio of product and product candidates. We are either the licensee or assignee of
numerous issued and pending patent applications that cover various aspects of our assets, including TYMLOS/abaloparatide-SC, abaloparatide-TD, and our other product candidates. We
could encounter challenges or difficulties in maintaining and/or defending our intellectual property both in the United States and abroad.
We and Ipsen are also co-assignees to U.S. Patent No. 7,803,770 that we believe provides exclusivity until April 28, 2031 for abaloparatide-SC. We and Ipsen are also co-assignees to
U.S. Patent Nos. 8,148,333 and 8,748,382 for the therapeutic formulation for abaloparatide-SC that we believe provides exclusivity until November 8, 2027 and October 3, 2027,
respectively.
We and Kindeva are co-assignees to several foreign and corresponding U.S. patents and patent applications, which cover various aspects of abaloparatide for microneedle application.
Any issued patents resulting from these applications will have a statutory expiration date of 2036, not taking into account extension under any applicable laws. However, pending patent
applications in the United States and elsewhere may not issue since the interpretation of the legal requirements of patentability in view of claimed inventions are not always predictable.
Additional intellectual property covering abaloparatide-TD technology exists in the form of proprietary information protected as trade secrets. These can be accidentally disclosed to,
independently derived by or misappropriated by competitors, possibly reducing or eliminating the exclusivity advantages of this form of intellectual property, thereby allowing those
competitors more rapid entry into the marketplace with a competitive product, which reduces our advantage with abaloparatide-TD. In addition, trade secrets may in some instances
become publicly available through required disclosures in regulatory files. Alternatively, competitors may sometimes reverse engineer a product once it becomes available on the market.
Even where a competitor does not use an identical technology for the delivery of abaloparatide, it is possible that they could achieve an equivalent or even superior result using another
technology. Such occurrences could lead to either one or more alternative competitor products becoming available on the market and/or one or more generic competitor products on the
market gaining market share and causing a corresponding decrease in market share and/or price for abaloparatide-TD even if it were to be successfully developed and approved by the
FDA.
Since patents are technical legal documents that are frequently subject to intense litigation pressure, there is risk that even if one or more patents related to our products does issue
and is asserted that the patent(s) will be found invalid, unenforceable and/or not infringed when subject to said litigation. Finally, the intellectual property laws and practices can vary
considerably from one country to another and also can change with time. As a result, we could encounter challenges or difficulties in building, maintaining and defending our intellectual
property both in the United States and abroad.
We may become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to patents issued or licensed to us,
including interference proceedings or post grant or inter partes reviews, reexaminations, or other proceedings before the USPTO. Third parties also may assert infringement claims against
us in courts in various jurisdictions. If we are found to infringe a third-party's intellectual property rights, we could be required to obtain a license from such third-party to continue
developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were able to
obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease
commercializing the infringing technology or product. In addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our
product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or
trade secrets of third parties could have a similar negative impact on our business.
Our trademarks are considered to be material to our business. These trademarks are covered by registrations or pending applications for registration in the U.S. Patent and Trademark
Office and in other countries. Trademark protection continues in some countries for as long as the mark is used and, in other countries, for as long as it is registered. Registrations generally
are for fixed, but renewable, terms. We cannot assure you that the trademark protection that we have pursued or will pursue in the future will afford us significant commercial protection.
Trade secret protection is available only for trade secrets as defined by applicable laws. Trade secret laws may vary depending upon the jurisdiction and various statutes. Trade
secrets do not prevent reverse engineering by competitors. We
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cannot assure you that information that we have sought or will seek to maintain secret is or will be a trade secret under the applicable law or will afford us significant commercial
protection.
If we are unable to obtain and maintain patent protection for our technology and products, or if our licensors are unable to obtain and maintain patent protection for the technology
or products that we license from them, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully
commercialize our technology and products may be adversely affected.
Our success depends in large part on our and our licensors' ability to obtain and maintain patent protection in the United States and other countries with respect to our proprietary
technology and products. In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering
technology or products that we license from third parties. Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with
the best interests of our business. In addition, if third parties who license patents to us fail to maintain these patents, or lose rights to those patents, the rights we have licensed may be
reduced or eliminated.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the
subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our and our licensors' patent rights are highly uncertain. Our and our licensors'
pending and future patent applications may not result in patents being issued that protect our technology or products or that effectively prevent others from commercializing competitive
technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow
the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Assuming the other requirements for
patentability are met, in the United States, prior to March 16, 2013, the first to make the claimed invention was entitled to the patent, or a "first-to-invent" system, while outside the United
States, the first to file a patent application is entitled to the patent, or a "first-to-file" system. With the implementation of the Leahy-Smith America Invents Act, the United States now has a
first-to-file system for patent applications filed on or after March 16, 2013. We may become involved in opposition, interference or derivation proceedings challenging our patent rights or
the patent rights of others. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions
are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we or our licensors were the first to make the inventions claimed in
our owned and licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions. An adverse determination in any
such proceeding could reduce the scope of, or invalidate our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment
to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.
Even if our owned and licensed patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from
competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative
technologies or products in a non-infringing manner. The issuance of a patent is not conclusive as to its scope, validity or enforceability, and our owned and licensed patents may be
challenged in the courts or patent offices in the United States and abroad. Any challenges may result in patent claims being narrowed, invalidated or held unenforceable, which could limit
our ability to stop or prevent us from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our
technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire
before or shortly after such candidates are approved or commercialized. As a result, our owned and licensed patents may not provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours.
Of particular concern for a company like ours, having one marketed product, is that third parties may seek to market generic versions of TYMLOS by filing an Abbreviated New
Drug Application, or ANDA, with the FDA in which they claim that patents protecting TYMLOS owned or licensed by us and listed with the FDA in what is called "the Orange Book" are
invalid, unenforceable and/or not infringed, a so-called Paragraph IV filing. April 28, 2021 is the first opportunity under United States law for a generic company to file an ANDA and
make a Paragraph IV filing. If such a filing is made, we may need to defend and/or assert our patents, including by filing lawsuits against the Paragraph IV filer alleging patent
infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our patents invalid, not infringed and/or unenforceable, which would have a material
adverse impact on our business and results of operations. During the period in which such litigation is pending, the uncertainty of its outcome may cause investors to disfavor our stock,
and our stock price could decline. Even if we are successful in prosecuting such claims, litigation could result in substantial costs and be a distraction to management.
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Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time.
Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the unadjusted or unextended expiration of a patent is generally 20 years from its earliest
U.S. non-provisional filing date. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are
obtained, once the patent life has expired for a product candidate, we may be open to competition from competitive medications, including generic medications. Given the amount of time
required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product
candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing product candidates
similar or identical to ours for a meaningful amount of time, or at all.
The primary composition of matter patent covering TYMLOS in the United States and several additional countries has expired. We own or have licensed rights to a limited number
of patents directed toward methods of treating osteoporosis with the therapeutic dose for TYMLOS and for the therapeutic formulation of TYMLOS. We cannot be sure that patents will be
granted with respect to any of our pending patent applications for TYMLOS, our other drug candidates, or our research technologies or with respect to any patent applications filed by us
in the future; nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting TYMLOS, our other drug
candidates or our other technology.
Payments, fees, submissions and various additional requirements must be met in order for pending patent applications to advance in prosecution and issued patents to be maintained.
Rigorous compliance with these requirements is essential to procurement and maintenance of patents integral to our product portfolio.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will come due for payment periodically throughout
the lifecycle of patent applications and issued patents. In order to help ensure that we comply with any required fee payment, documentary and/or procedural requirements as they might
relate to any patents for which we are an assignee or co-assignee, we employ competent legal help and related professionals as needed to comply with those requirements. Our outside
patent counsel uses third parties for patent annuity payments. Failure to meet a required fee payment, document production or procedural requirement can result in the abandonment of a
pending patent application or the lapse of an issued patent. In some instances, the defect can be cured through late compliance but there are situations where the failure to meet the required
event cannot be cured. Any failures could compromise the intellectual property protection around our preclinical or clinical candidates and possibly weaken or eliminate our ability to
protect our eventual market share for that product.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to our patented technology and products, we rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our
competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties that have access to our trade secrets, such as
our corporate collaborators, outside scientific collaborators, sponsored researchers, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality
and invention or patent assignment agreements with our employees and consultants. However, any of these parties may breach the agreements and disclose our proprietary information,
and we may not be able to obtain adequate remedies for any breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-
consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets
were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us. If any of
our trade secrets were to be disclosed to, or independently developed by a competitor, our competitive position would be harmed.
If we infringe the rights of third parties, we could be prevented from selling products and could be forced to pay damages and defend against litigation.
If our products, methods, processes and other technologies infringe the proprietary rights of other parties, we could incur substantial costs and may have to:
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obtain licenses, which may not be available on commercially reasonable terms, if at all;
abandon an infringing drug candidate;
redesign our products or processes to avoid infringement;
stop using the subject matter claimed in the patents held by others;
pay damages; or
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•
defend litigation or administrative proceedings which may be costly whether we win or lose, which could result in a substantial diversion of our financial and management
resources.
We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.
Competitors may infringe our patents or misappropriate our trademarks or trade secrets. To counter infringement, misappropriation, or unauthorized use, we may be required to file
proceedings, which can be expensive and time consuming. In addition, in such a proceeding, a court may decide that a patent of ours is invalid and/or unenforceable, confidential
information is not a trade secret under the appropriate statute or was not misappropriated, a trademark was not protectable or misappropriated, or may refuse to stop the other party from
using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents or
other intellectual property rights at risk, such as by of being invalidated and/or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection
with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, our licensors
may have rights to file and prosecute these types of claims, and we may be reliant on them to do so.
We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
Some of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although
we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used
or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee's former employer. Litigation may be necessary to defend against these
claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in
defending against such claims, litigation could result in substantial costs and be a distraction to management.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical
and management personnel from their normal responsibilities, delaying the development of our product candidates. In addition, there could be public announcements of the results of
hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the
price of our common stock. Litigation or other proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not
have sufficient financial or other resources to adequately conduct any litigation or proceedings. Some of our competitors may be able to sustain the costs of any litigation or proceedings
more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings
could have a material adverse effect on our ability to compete in the marketplace.
Risks Related to Legislation and Administrative Actions
Healthcare reform may have a material adverse effect on our industry and our results of operations.
In the U.S., federal and state governments continue to propose and pass legislation designed to reform delivery of, or payment for, health care, which include initiatives to reduce the
cost of healthcare. For example, in March 2010, the U.S. Congress enacted the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the
“Healthcare Reform Act”), which expanded health care coverage through Medicaid expansion, implemented the “individual mandate” for health insurance coverage (by imposing a tax
penalty on individuals who did not obtain insurance) and changed the coverage and reimbursement of drug products under government healthcare programs. Under the Trump
administration, there have been ongoing efforts to modify or repeal all or certain provisions of the Healthcare Reform Act. Tax reform legislation was enacted at the end of 2017 that
includes provisions that will affect healthcare insurance coverage and payment, such as the elimination of the tax penalty for individuals who do not maintain sufficient health insurance
coverage. The Healthcare Reform Act has also been subject to judicial challenge. The case Texas v. Azar, which challenges the constitutionality of the Healthcare Reform Act, including
provisions that are unrelated to healthcare reform but were enacted as part of the Healthcare Reform Act, was argued before the Supreme Court in November 2020. Pending resolution of
the litigation, all of the Healthcare Reform Act but the individual mandate to buy health insurance remains in effect.
Beyond the Healthcare Reform Act, there have been ongoing health care reforms efforts, including a number of recent actions. In 2020 and early 2021, the U.S. Department of Health
and Human Services issued various rules that affect pricing or
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payment for drug products. For example, effective January, 2022, revisions to the federal anti-kickback statute would remove protection for traditional Medicare Part D discounts offered
by pharmaceutical manufacturers to PBMs and health plans. Additional healthcare reform efforts have sought to address certain issues related to the COVID-19 pandemic, including an
expansion of telehealth coverage under Medicare and accelerated or advanced Medicare payments to healthcare providers. Some of these changes have been and may continue to be
subject to legal challenge. For example, courts temporarily enjoined a new “most favored nation” payment model for select drugs covered under Medicare Part B that was to take effect on
January 1, 2021 and would limit payment based on international drug price. The nature and scope of health care reform in the wake of the transition from the Trump administration to the
Biden administration remains uncertain. President Biden has temporarily halted implementation of new rules issued immediately prior to the transition that had not yet taken effect (which
include a number of health care reforms) to allow for review by the new administration. More generally, President Biden supported reforms to lower drug prices during his campaign for
the presidency. Adoption of new healthcare reform legislation at the federal or state level could affect demand for, or pricing of, our products or product candidates if approved for sale. We
cannot predict, however, the ultimate content, timing or effect of any healthcare reform legislation or action, or its impact on us, and healthcare reform could increase compliance costs and
may adversely affect our future business and financial results.
There have also been efforts by government officials or legislators to implement measures to regulate prices or payment for pharmaceutical products, including legislation on drug
importation. Recently, there has been considerable public and government scrutiny of pharmaceutical pricing and proposals to address the perceived high cost of pharmaceuticals. There
have also been recent state legislative efforts to address drug costs, which generally have focused on increasing transparency around drug costs or limiting drug prices, including
California, Oregon, Vermont, and Nevada. Certain state legislation has been subject to legal challenges. Adoption of new legislation regulating drug pricing at the federal or state level
could further affect demand for, or pricing of, our products.
General legislative cost control measures may also affect reimbursement for our products. The Budget Control Act of 2011, as amended, resulted in the imposition of 2% reductions
in Medicare (but not Medicaid) payments to providers in 2013 and remains in effect through 2030 (except May 1, 2020 to March 31, 2021) unless additional Congressional action is taken.
Any significant spending reductions affecting Medicare, Medicaid or other publicly funded or subsidized health programs that may be implemented and/or any significant taxes or fees that
may be imposed on us could have an adverse impact on our results of operations.
The full impact on our business of these laws, or future laws and regulations is uncertain. We cannot predict whether other legislative or administrative changes will be adopted, if
any, or how such changes would affect the pharmaceutical industry generally or our business in particular.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay
for healthcare products and services, which could result in reduced demand for our product candidates once approved or additional pricing pressures, and may adversely affect our
operating results. Such legislation may also reduce our flexibility in setting prices for our product candidates, or in taking price increases.
We are subject to healthcare laws, regulation and enforcement, and our failure to comply with those laws could have a material adverse effect on our results of operations and
financial conditions.
Our business operations and current and future arrangements with investigators, healthcare professionals, consultants, third-party payors, patient organizations and customers, may
expose us to broadly applicable fraud and abuse and other healthcare laws and regulations now or in the future. These laws may constrain the business or financial arrangements and
relationships through which we conduct our operations, including how we research, market, sell and distribute our product candidates, if approved. Within the U.S., such laws include:
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The federal anti-kickback statute makes it illegal for any person or entity to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is in
exchange for or to induce the referral of business, including the purchase, order, lease of any good, facility, item or service for which payment may be made under a federal
healthcare program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value.
Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or
causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or
fraudulent.
The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), as amended, which prohibits executing a scheme to defraud any healthcare benefit program
or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually
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identifiable health information on certain types of entities, which include many healthcare providers and health plans with which we interact;
The Federal Food, Drug, and Cosmetic Act, which among other things, strictly regulates drug product and medical device marketing, prohibits manufacturers from marketing
such products prior to approval or for unapproved indications and regulates the distribution of samples;
Federal laws, including the Medicaid Drug Rebate Program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide
certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs; and
The so-called “federal sunshine” law, which requires pharmaceutical and medical device companies to monitor and report certain financial interactions with physicians and
teaching hospitals (and additional categories of healthcare practitioners beginning with reports submitted in 2022) to the federal government for re-disclosure to the public.
Also, many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may apply to claims reimbursed by private payors
as well as government programs or regardless of reimbursement. Additionally, we may be subject to state laws that require pharmaceutical companies to comply with the federal
government’s and/or pharmaceutical industry’s voluntary compliance guidelines, impose specific restrictions on interactions between pharmaceutical companies and healthcare providers
or require pharmaceutical companies to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures. Other
state laws may require pharmaceutical companies to file reports relating to pricing and marketing information and state and local laws that require the registration of pharmaceutical sales
representatives. Finally, there are state laws governing the privacy and security of health information, many of which differ from each other in significant ways and often are not preempted
by HIPAA. Many of these laws and regulations also contain ambiguous requirements or require administrative guidance for implementation.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. Given the breadth of the
laws and regulations, limited guidance for certain laws and regulations and evolving government interpretations of the laws and regulations, governmental authorities may possibly
conclude that our operations and commercial activities in connection with TYMLOS or any product candidate that may be approved may not comply with such laws. If our operations are
found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties,
damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of our operations. Further, defending against
any such actions can be costly, time-consuming and may require significant personnel resources. Therefore, even if we are successful in defending against any such actions that may be
brought against us, our business may be impaired.
We may be exposed to liability claims associated with the use of hazardous materials and chemicals.
Our research and development activities may involve the controlled use of hazardous materials and chemicals. Although we believe that our safety procedures for using, storing,
handling and disposing of these materials comply with federal, state and local laws and regulations, we cannot completely eliminate the risk of accidental injury or contamination from
these materials. In the event of such an accident, we could be held liable for any resulting damages and any liability could materially adversely affect our business, financial condition and
results of operations. In addition, the federal, state and local laws and regulations governing the use, manufacture, storage, handling and disposal of hazardous or radioactive materials and
waste products may require us to incur substantial compliance costs that could materially adversely affect our business, financial condition and results of operations.
Recent decisions from the European General Court on public access to clinical trial data held by the EMA could result in disclosure of our pre-clinical and clinical trial data to
competitors, or other third parties, which could harm our business, financial condition or results of operations.
In the EU, Regulation 1049/2001/EC, commonly known as the EU Freedom of Information Regulation or Public Access Regulation (the “Transparency Regulation”), allows any EU
citizens and any natural or legal persons residing or having their headquarters in an EU country to request access to the documents held by a EU institution on grounds relating to public
interest. The Transparency Regulation applies to the EMA, which has implemented the provisions in its established policy. The EMA policy favors public access, subject to certain limited
exceptions if disclosure undermines, among others, the protection of commercial interests. The EMA policy has been the subject of a number of recent rulings of the EU General Court in
the following cases: Pari Pharma GmbH v EMA (Case T-235/1); MSD Animal Health Innovation and Intervet International v EMA(Case T-729/15); PTC Therapeutics International v
EMA (Case T-718/15); Intercept Pharma and Intercept Pharmaceuticals v EMA (Case T-377/18); and Amicus Therapeutics UK and Amicus Therapeutics v EMA (Case T-33/17). These
decisions responded to demands for greater transparency and disclosure of pre-clinical and clinical data and validated the EMA’s transparency policy to provide greater public access to
information held and documents drawn up by the EMA. These decisions clarified that there is no presumption of confidentiality of documents held by the EMA, that the potential risk of
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misuse of the data by a competitor is not relevant to an assessment of confidentiality under the Transparency Regulation and the argument that data exclusivity or protection in countries
outside the EU may be lost due to use of the disclosed documents does not make the data in question confidential. In two of these cases, the rulings of the General Court were appealed to
the Court of Justice of the European Union (Cases C-178/18 P - MSD Animal Health Innovation and Intervet International v EMA and C-175/18 P - PTC Therapeutics International v
EMA). The Court of Justice upheld the rulings of the General Court and dismissed the appeals.
The potential risk to our business under the Transparency Regulation is significant. For example, our marketing authorisation application for abaloparatide-SC in the EU was
reviewed centrally by the EMA and its advisory committees, which application was rejected in January 2019. According to the established EMA policy, the information contained in our
marketing authorisation application, responses we provided to the questions raised by the EMA and its advisory committees as well as the assessment reports drawn up by the EMA and its
advisory committees were not disclosed during the course of the EMA’s review. However, now that the EMA has completed its review of our marketing application, such information may
now be susceptible to disclosure to third parties, including to our competitors, in light of the recent rulings of the General Court and the Court of Justice in relation to the Transparency
Regulation. The potential disclosure of such information to third parties, including our competitors, and the potential loss of data exclusivity or protections in countries outside the EU
could adversely affect our business, financial condition, operating results and cash flows.
The EMA has also implemented a policy for the proactive publication of clinical data submitted by pharmaceutical companies to support their applications for marketing
authorization. The implementation of this policy is currently suspended due to Brexit and the relocation of the EMA to the Netherlands. While, due to this suspension, the clinical data
contained in our application for marketing authorization for abaloparatide-SC in the EU was not published, such proactive publication by the EMA cannot be excluded should the
implementation of the EMA policy for the proactive publication of clinical data be resumed by the EMA.
We are subject to anti‑corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we
could be subject to civil or criminal penalties, other remedial measures and legal expenses, be precluded from developing manufacturing and selling certain products outside the
United States or be required to develop and implement costly compliance programs, which could adversely affect our business, results of operations and financial condition.
Our operations are subject to anti‑corruption laws, including the U.S. Foreign Corrupt Practices Act, or FCPA, the U.K. Bribery Act 2010, or Bribery Act, and other anti‑corruption
laws that apply in countries where we do business and may do business in the future. The FCPA, Bribery Act and these other laws generally prohibit us, our officers, and our employees
and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business
advantage. Compliance with the FCPA, in particular, is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents
particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered
foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials. Our clinical trials are
conducted around the world, and our payments to hospitals may lead to FCPA enforcement actions.
Though we currently do not have any partners that commercialize our products in other countries, we may in the future operate in jurisdictions that pose a high risk of
potential FCPA or Bribery Act violations, and we may participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under
the FCPA, Bribery Act or local anti‑corruption laws. In addition, we cannot predict the nature, scope or effect of future regulatory requirements to which our international operations might
be subject or the manner in which existing laws might be administered or interpreted. If we expand our operations outside of the United States, we will need to dedicate additional
resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
We are also subject to other laws and regulations governing our international operations, including regulations administered by the governments of the UK and the United States, and
authorities in the EU Member States, including applicable export control regulations, economic sanctions on countries and persons, customs requirements and currency exchange
regulations, collectively referred to as the Trade Control laws. In addition, various laws, regulations and executive orders also restrict the use and dissemination outside of the United
States, or the sharing with certain non‑U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we
expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing,
manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.
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There is no assurance that we will be completely effective in ensuring our compliance with all applicable anti‑corruption laws, including the FCPA, the Bribery Act or other legal
requirements, including Trade Control laws. If we are not in compliance with the FCPA, Bribery Act and other anti‑corruption laws or Trade Control laws, we may be subject to criminal
and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of
operations and liquidity. The SEC also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting provisions. Any investigation of any
potential violations of the FCPA, the Bribery Act, other anti‑corruption laws or Trade Control laws by U.S., U.K. or other authorities could also have an adverse impact on our reputation,
our business, results of operations and financial condition.
We may fail to comply with evolving European Union and other privacy laws, which could adversely affect our business, results of operations and financial condition.
We are subject to the General Data Protection Regulation, (EU) 2016/679, or GDPR, which became effective on May 25, 2018. GDPR deals with the processing of personal data and
on the free movement of such data. The GDPR imposes a broad range of strict requirements on companies subject to the GDPR, including requirements relating to having legal bases for
processing personal information relating to identifiable individuals and transferring such information outside the EEA, including to the United States, providing details to those individuals
regarding the processing of their personal information, keeping personal information secure, having data processing agreements with third parties who process personal information on our
behalf, responding to individuals’ requests to exercise their rights in respect of their personal information, reporting security breaches involving personal data to the competent national
data protection authority and affected individuals, appointing data protection officers, conducting data protection impact assessments, and record-keeping. The GDPR increases
substantially the penalties to which we could be subject in the event of any non-compliance, including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnover
for certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses. Given the limited enforcement of the
GDPR to date, we face uncertainty as to the exact interpretation of the new requirements on our trials and we may be unsuccessful in implementing all measures required by data
protection authorities or courts in interpretation of the new law.
In particular, national laws of member states of the EU have implemented national laws which may partially deviate from the GDPR and impose different and more restrictive
obligations from country to country, so that we do not expect to operate in a uniform legal landscape in the EU. Also, as it relates to processing and transfer of genetic data, the GDPR
specifically allows member state nations to enact laws that impose additional and more specific requirements or restrictions, and European laws have historically differed quite
substantially in this field, leading to additional uncertainty.
In addition, we must also ensure that we maintain adequate safeguards to enable the transfer of personal data outside of the EEA, in particular to the United States, in compliance
with EU data protection laws. We expect that we will continue to face uncertainty as to whether our efforts to comply with our obligations under EU privacy laws will be sufficient. If we
are investigated by an EU Member State data protection authority, we may face fines and other penalties. Any such investigation or charges by EU Member State data protection
authorities could have a negative effect on our existing business and on our ability to attract and retain new clients or pharmaceutical partners. We may also experience hesitancy,
reluctance, or refusal by European or multi-national clients or pharmaceutical partners to continue to use our products and solutions due to the potential risk exposure as a result of the
current (and, in particular, future) data protection obligations imposed on them by certain data protection authorities in interpretation of current law, including the GDPR. Such clients or
pharmaceutical partners may also view any alternative approaches to compliance as being too costly, too burdensome, too legally uncertain, or otherwise objectionable and therefore
decide not to do business with us. Any of the foregoing could materially harm our business, prospects, financial condition and results of operations.
For more information concerning the implications of Brexit for our activities in compliance with the EU data protection laws, please refer to the Risk Factor entitled “The United
Kingdom’s exit from the European Union may have a negative effect on global economic conditions, financial markets and our business”.
Risks Related to Employee Matters and Managing Our Workforce
We may encounter difficulties with managing the size and makeup of our workforce, which could adversely affect our results of operations.
Although we have already added several capabilities, we may need to add additional qualified personnel and resources as we continue to grow our TYMLOS business and expand
into other therapeutic areas. In particular, we may need to grow or transition our internal sales, marketing, and distribution capabilities to market TYMLOS and any other drug that we may
successfully develop. That growth or transition would impose significant added responsibilities on members of management, including the need to identify, recruit, maintain and integrate
additional employees, and may take time away from running other aspects of our business, including development and commercialization of our product candidates.
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In connection with our acquisition of certain RAD011, our newly acquired assets related to formulations of cannabidiol (“CBD”) related to the oral administration of a solution of
CBD for therapeutic use in humans or animals, we have hired or entered into consulting agreements with certain individuals who will provide assistance with the management and
oversight of the assets’ assimilation into our current product portfolio and its development and commercialization. There can be no guarantee that these individuals will smoothly and
successfully integrate into our workforce or workstreams or accomplish the development or commercialization activities assigned to them within the desired timelines.
Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage our workforce
effectively. In particular, as our commercialization plans and strategies change and develop, we will recruit and train new personnel. To that end, we must be able to:
• manage our development efforts effectively;
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• maintain sufficient administrative, accounting and management information systems and controls.
integrate additional management, administrative and manufacturing personnel; and
We may not be able to accomplish these tasks or successfully manage our operations and, accordingly, may not achieve our research, development, and commercialization goals. Our
failure to accomplish any of these goals could harm our financial results and prospects.
If we are unable to successfully maintain and further develop internal commercialization capabilities, sales of TYMLOS may be negatively impacted.
We have built a commercial team and established the organizational infrastructure we believe necessary for successful commercialization of TYMLOS in the United States. We will
need to commit significant time, financial and managerial resources to maintain and further develop our marketing and sales force to ensure they have the technical expertise required to
address any challenges we may face with our continued commercialization of TYMLOS. Factors that may inhibit our efforts to maintain and develop our commercialization capabilities
include:
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an inability to retain an adequate number of effective commercial personnel;
our ability to train new sales personnel, who may have limited experience with our company or TYMLOS, to deliver a consistent and compliant message regarding TYMLOS that
will be compelling to physicians who may prescribe TYMLOS;
an inability to equip sales personnel with effective materials, including medical and sales literature to help them educate physicians and our healthcare providers regarding
TYMLOS and its proper administration;
unforeseen costs and expenses associated with maintaining and further developing an independent sales and marketing organization.
If we are not successful in maintaining an effective commercial infrastructure, we may have difficulty generating product revenue, which could adversely affect our business and
financial condition.
We may enter into or seek to enter into business combinations and acquisitions which may be difficult to integrate, disrupt our business, divert management attention or dilute
stockholder value.
We may enter into business combinations and acquisitions as part of the continued expansion of our product portfolio. We have limited experience in making acquisitions, which are
typically accompanied by a number of risks, including:
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the difficulty of integrating the operations and personnel of the acquired companies;
the potential disruption of our ongoing business and distraction of management;
the potential for unknown liabilities and expenses;
the failure to achieve the expected benefits of the combination or acquisition;
the maintenance of acceptable standards, controls, procedures and policies; and
the impairment of relationships with employees as a result of any integration of new management and other personnel.
If we are not successful in completing acquisitions that we may pursue in the future, we would be required to reevaluate our business strategy and we may have incurred substantial
expenses and devoted significant management time and resources in seeking to complete the acquisitions. In addition, we could use substantial portions of our available cash as all or a
portion of the purchase price, or we could issue additional securities as consideration for these acquisitions, which could cause our stockholders to suffer significant dilution.
We rely on key executive officers and scientific and medical advisors, and their knowledge of our business and technical expertise would be difficult to replace.
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We are highly dependent on our chief executive officer and our principal scientific, regulatory and medical advisors. We do not have "key person" life insurance policies for any of
our officers. The loss of the technical knowledge and management and industry expertise of any of our key personnel could result in delays in product development, loss of customers and
sales and diversion of management resources, which could adversely affect our operating results.
If we are unable to hire additional qualified personnel, our ability to grow our business may be harmed.
We will need to hire additional qualified personnel with expertise in preclinical testing, clinical research and testing, government regulation, formulation and manufacturing and sales
and marketing. We compete for qualified individuals with numerous biopharmaceutical companies, universities and other research institutions. Competition for such individuals is intense,
and we cannot be certain that our search for such personnel will be successful. Attracting and retaining qualified personnel will be critical to our success.
Significant disruptions of information technology systems or breaches of data security could adversely affect our business.
Our business is increasingly dependent on critical, complex and interdependent information technology systems to support business processes as well as internal and external
communications. Our computer systems are vulnerable to breakdown, malicious intrusion and computer viruses. Any failure to protect against breakdowns, malicious intrusions and
computer viruses may result in the impairment of production and key business processes. In addition, our systems are potentially vulnerable to data security breaches, whether by
employees or others, which may expose sensitive data to unauthorized persons. Such data security breaches could lead to the loss of trade secrets or other intellectual property, or could
lead to the public exposure of personal information of our employees, clinical trial patients, customers, and others. Such disruptions and breaches of security could expose us to liability
and have a material adverse effect on the operating results and financial condition of our business.
Risks Relating to Our Securities
Our stock price may be volatile, and the value of an investment in our common stock may decline.
The trading price of our common stock may be subject to wide fluctuations in response to various factors, some of which are beyond our control, including:
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actions or delays by the FDA, EMA or other foreign regulatory authority in respect of any NDA, MAA or other application we may submit for any of our product candidates;
results of clinical trials of our product candidates or those of our competitors;
our operating performance and the operating performance of similar companies;
the success of competitive products;
the overall performance of the equity markets;
the number of shares of our common stock publicly owned and available for trading;
threatened or actual litigation;
changes in laws or regulations relating to our products, including changes in the structure of healthcare payment systems;
any major change in our board of directors or management;
publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;
large volumes of sales or other transfers of our shares of common stock by existing stockholders;
general political, economic and market conditions; and
the other factors described in this "Risk Factors" section.
In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the
companies whose shares trade in the stock market. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in
the market price of a company's securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management's attention and resources and harm our
business, operating results and financial condition.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
We have never declared or paid cash dividends on our common stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our
business. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
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Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the
percentage ownership of our stockholders and could cause our stock price to fall.
Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders may
experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time
to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may
also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
Pursuant to our equity incentive plan, our management is authorized to grant stock options and other equity-based awards to our employees, directors and consultants and pursuant to
our employee stock purchase plan, eligible employees may also participate in an employee stock purchase plan sponsored by us. All such awards will become eligible for sale in the public
market in the future, subject to certain legal and contractual limitations, which will result in dilution to our existing shareholders.
We may be required to pay severance benefits to our employees who are terminated in connection with a change in control, which could harm our financial condition or results.
Each of our executive officers is party to an employment agreement, and each of our other employees is party to an agreement or participates in a plan, which provides change in
control severance benefits including cash payments for severance and other benefits and acceleration of vesting of stock options and other equity awards in the event of a termination of
employment in connection with a change in control of us. The payment of these severance benefits could harm our financial condition and results. The accelerated vesting of options and
equity awards could result in dilution to our existing stockholders and harm the market price of our common stock.
Anti-takeover provisions contained in our restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover
attempt.
Our restated certificate of incorporation and our amended and restated bylaws contain provisions that could delay or prevent a change in control of our company. These provisions
could also make it more difficult for stockholders to elect directors and take other corporate actions. These provisions include:
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a staggered board of directors;
authorizing the board to issue, without stockholder approval, preferred stock with rights senior to those of our common stock;
authorizing the board to amend our bylaws and to fill board vacancies until the next annual meeting of the stockholders;
prohibiting stockholder action by written consent;
limiting the liability of, and providing indemnification to, our directors and officers;
eliminating the ability of our stockholders to call special meetings; and
requiring advance notification of stockholder nominations and proposals.
Section 203 of the Delaware General Corporation Law prohibits, subject to some exceptions, "business combinations" between a Delaware corporation and an "interested
stockholder," which is generally defined as a stockholder who becomes a beneficial owner of 15% or more of a Delaware corporation's voting stock, for a three-year period following the
date that the stockholder became an interested stockholder.
These and other provisions in our restated certificate of incorporation and our amended and restated bylaws under Delaware law could discourage potential takeover attempts, reduce
the price that investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these
provisions.
Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.
As of December 31, 2020, we had $1,026.0 million of federal and $702.1 million of state net operating loss carryforwards available to offset future taxable income. Under
Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an "ownership change" (generally defined as a greater than 50% change (by value)
in its equity ownership over a three-year period), the corporation's ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change
income may be limited. We have completed studies through December 31, 2015, to determine whether any ownership change has occurred since our formation and have determined that
transactions have
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resulted in two ownership changes, as defined under Section 382. There could be additional ownership changes in the future that could further limit the amount of net operating loss and
tax credit carryforwards that we can utilize.
Under the Tax Cuts and Jobs Act (the “Tax Act”), the amount of post-2017 net operating loss carryforwards that we are permitted to deduct in any taxable year is limited to 80% of
our taxable income in such year, where taxable income is determined without regard to the net operating loss carryforward deduction itself. The Tax Act generally eliminates the ability to
carry back any net operating loss to prior taxable years, while allowing post-2017 unused net operating loss carryforwards to be carried forward indefinitely. There is a risk that due to
changes under the Tax Act, regulatory changes or other unforeseen reasons, our existing net operating loss carryforwards could expire or otherwise be unavailable to offset future income
tax liabilities.
General Risk Factors
The United Kingdom’s exit from the European Union may have a negative effect on global economic conditions, financial markets and our business.
In June 2016, the UK held a referendum in which voters approved an exit from the EU, commonly referred to as “Brexit,” The announcement of Brexit caused significant volatility in
global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar against foreign currencies in which we conduct business. The
strengthening of the U.S. dollar relative to other currencies may adversely affect our operating results. This withdrawal has created political and economic uncertainty, particularly in the
UK and the EU. While the UK’s withdrawal from the EU was completed on January 31, 2020, there remains considerable uncertainty about the terms of the UK’s trade agreements and
other relationships with the EU following the transition period which ends December 31, 2020. During the transition period, which could be extended to December 31, 2022 by the
agreement of the UK and all EU Member States, the UK will continue to follow all of the EU’s rules and will maintain its current trading relationship with the EU. We expect that
uncertainty over the terms of the trade and other agreements between the UK and EU will continue to cause political and economic uncertainty, which could harm our business and
financial results. The withdrawal could, among other outcomes, disrupt the free movement of goods, personal data, services and people between the UK and the EU, and result in increased
legal and regulatory complexities, as well as potential higher costs of conducting business in Europe. Until the terms of the free trade and other agreements that the UK will eventually
enter into with the EU are known, it is not possible to determine the impact that the UK’s departure from the EU and/or any related matters may have on us; however, any of these effects
of Brexit, and others we cannot anticipate, could adversely affect our business, business opportunities, results of operations, financial condition and cash flows. Likewise, similar actions
taken by European and other countries in which we operate could have a similar or even more profound impact.
For example, Brexit could result in the UK significantly altering its regulations affecting the clearance or approval of our product candidates and the transfer of personal data between
the EU and the UK as the UK determines which EU laws to replace or replicate. Any new regulations could add time and expense to the conduct of our business, the transfer of personal
data between the EU and the UK, as well as the process by which our products receive regulatory approval in the UK, the EU and elsewhere. In addition, the announcement of Brexit and
the withdrawal of the UK from the EU have had and may continue to have a material adverse effect on global economic conditions and the stability of global financial markets, and may
significantly reduce global market liquidity and restrict the ability of key market participants to operate in certain financial markets. Any of these effects of Brexit, among others, could
adversely affect our business, our results of operations, liquidity and financial condition.
If securities or industry analysts cease to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the
analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease
coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
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ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Details of each of our principal properties as of December 31, 2020, are provided below:
Location
Boston, MA, USA
Waltham, MA, USA
Wayne, PA, USA
ITEM 3. LEGAL PROCEEDINGS.
Function
Corporate Headquarters
Office space
Office space
Size (approximate
square feet)
Property
Interest
2,500
26,553
26,401
Leased
Leased
Subleased
From time to time, we are party to litigation arising in the ordinary course of our business. As of February 1, 2021, we were not party to any significant litigation.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The information required to be disclosed by Item 201(d) of Regulation S-K, “Securities Authorized for Issuance Under Equity Compensation Plans,” is incorporated herein by
reference. Refer to Item 12 of Part III of this Annual Report on Form 10-K for additional information.
Market Information
Our common stock has been traded on The Nasdaq Global Market under the symbol “RDUS” since the initial public offering of our common stock on June 6, 2014. Prior to that time
there was no public market for our common stock.
On February 22, 2021, the closing price of our common stock was $18.60 per share as reported on The Nasdaq Global Market.
Stock Performance Graph
This performance graph is furnished and shall not be deemed “filed” with the SEC or subject to Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in
any filings under the Securities Act of 1933, as amended.
The graph set forth below compares the cumulative total stockholder return on our common stock between June 6, 2014 (the date of the initial public offering of our common stock)
and December 31, 2020, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the same period. This graph assumes the
investment of $100 on June 6, 2014 in our common stock, the Nasdaq Biotechnology Index and the Nasdaq Composite Index and assumes the reinvestment of dividends, if any. The graph
assumes our closing sales price on June 6, 2014 of $8.01 per share as the initial value of our common stock and not the initial offering price to the public of $8.00 per share.
The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor
is it intended to forecast, the potential future performance of our common stock. Information used in the graph was obtained from the Nasdaq Stock Market LLC, a financial data provider
and a source believed to be reliable. The Nasdaq Stock Market LLC is not responsible for any errors or omissions in such information.
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* $100 invested on June 6, 2014 in stock or index
Holders
As of February 22, 2021, there were 16 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes
stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders
whose shares may be held in trust by other entities.
Dividends
We have not paid any cash dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
We did not make any sales of unregistered securities during the year ended December 31, 2020.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers
There were no such repurchases of shares of common stock made during the fiscal year ended December 31, 2020.
ITEM 6. SELECTED FINANCIAL DATA
None.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussions in conjunction with our consolidated financial statements and related notes included in this report. This discussion includes forward-looking
statements that involve risk and uncertainties. As a result of many factors, such as those set forth under "Risk Factors," actual results may differ materially from those anticipated in these
forward-looking statements.
Executive Overview
We are a science-driven fully integrated biopharmaceutical company that is committed to developing and commercializing innovative endocrine and other therapeutics.
In April 2017, our first commercial product, TYMLOS (abaloparatide) injection, was approved by the U.S. Food and Drug Administration (“FDA”) for the treatment of
postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture, multiple risk factors for fracture, or patients who have failed or are intolerant
to other available osteoporosis therapy. In May 2017, we commenced U.S. commercial sales of TYMLOS and as of January 1, 2021, TYMLOS was available and covered for
approximately 267 million U.S. insured lives, representing approximately 99% of U.S. Commercial and 83% of Medicare Part D insured lives.
We are conducting additional research towards potential additional indications for TYMLOS, including a clinical trial in men with osteoporosis and a bone histomorphometry study
evaluating the early effects of TYMLOS on tissue-based indices of formation in postmenopausal women. We are also developing an abaloparatide transdermal system (“abaloparatide-
TD”), for potential use in the treatment of postmenopausal women with osteoporosis. We initiated our Phase 3 wearABLe study of abaloparatide-TD in August 2019 and completed
enrollment in September 2020.
As part of our ongoing initiatives to expand our product portfolio, in December 2020, our wholly owned subsidiary, Radius Pharmaceuticals, Inc., entered into an Asset Purchase
Agreement with Fresh Cut Development, LLC and Benuvia Therapeutics Inc. for the acquisition of certain assets related to formulations of cannabidiol (“CBD”) related to the oral
administration of a solution of CBD for therapeutic use in humans or animals (“RAD011”). RAD011 was granted fast track designation by the FDA in 2017 and orphan drug designation
in August 2020 for the treatment of hyperphagia behavior and weight loss in patients with Prader-Willi syndrome (“PWS”).
In July 2020, we entered into a license agreement with Berlin-Chemie AG, a company of the Menarini Group (“Berlin-Chemie”), under which we granted Berlin-Chemie an
exclusive license to develop and commercialize products containing elacestrant (RAD1901), a selective estrogen receptor degrader (“SERD”), worldwide. Elacestrant is being developed
for potential use in the treatment of hormone receptor-positive breast cancer.
Completing the divestment of our oncology program, in September 2020 we sold RAD140, our internally discovered non-steroidal selective androgen receptor modulator (“SARM”)
to Ellipses Pharma. Pursuant to the Asset Purchase Agreement (“APA”), Ellipses Pharma will be responsible for the clinical development and commercialization of the asset. We will be
entitled to receive royalties under the APA.
Abaloparatide
We have developed or are developing two formulations of abaloparatide: abaloparatide-SC and abaloparatide-TD.
Abaloparatide-SC
In April 2017, the FDA approved TYMLOS (abaloparatide-SC) for the treatment of postmenopausal women with osteoporosis at high risk for fracture defined as history of
osteoporotic fracture, multiple risk factors for fracture, or patients who have failed or are intolerant to other available osteoporosis therapy. The first commercial sales of TYMLOS in the
United States occurred in May 2017 and as of January 1, 2021, TYMLOS was available and covered for approximately 267 million U.S. insured lives, representing approximately 99% of
U.S. Commercial and 83% of Medicare Part D insured lives. In October 2018, the FDA approved a labelling supplement for TYMLOS to reflect that after 24 months of open-label
alendronate therapy, the vertebral fracture risk reduction achieved with TYMLOS therapy was maintained.
We are commercializing TYMLOS in the United States through our commercial organization. We hold worldwide commercialization rights to abaloparatide-SC, except for Japan and
Canada, where we are entitled to receive milestones and royalties based on the development and commercialization of abaloparatide-SC in Japan under our license and development
agreements.
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In July 2017, we entered into a license and development agreement with Teijin for abaloparatide-SC in Japan. Pursuant to the agreement, we received an upfront payment and may
receive additional milestone payments upon the achievement of certain regulatory and sales milestones, and a fixed low double-digit royalty based on net sales of abaloparatide-SC in
Japan during the royalty term. In February 2020, we elected not to exercise our option to negotiate for a co-promotion agreement with Teijin for abaloparatide-SC in Japan. In May 2020,
we announced that Teijin submitted an NDA for abaloparatide-SC in Japan for the treatment of osteoporosis in patients who are at high risk for fracture. The application is based on the
positive results of the Phase 3 clinical trial of abaloparatide-SC in Japan in women and men with osteoporosis, which achieved its primary efficacy endpoint.
In March 2018, we initiated a clinical trial in men with osteoporosis which, if successful, will form the basis of a supplemental NDA seeking to expand the use of TYMLOS to
increase bone mass in men with osteoporosis at high risk for fracture. We completed patient enrollment in September 2020 and expect to report top-line data from the study in the second
half of 2021. The study is a randomized, double-blind, placebo-controlled trial that has enrolled 228 men with osteoporosis. The primary endpoint is change in lumbar spine BMD at 12
months compared with placebo. In previous clinical trials, TYMLOS has demonstrated increases in BMD in postmenopausal women. The study includes specialized high-resolution
imaging to examine the effect of abaloparatide on bone structure, such as the hip, in a subset of the study participants.
In May 2020, we announced that our bone histomorphometry study, which evaluated the early effects of TYMLOS on tissue-based indices of formation in postmenopausal women,
met its primary endpoint of change from baseline to 3 months in mineralizing surface in the cancellous bone envelope (one of the dynamic indicators of bone formation). We presented
data from this study in September 2020.
On July 30, 2020 the United States Patent Office extended the term of US patent 7,803,770 (Method of Treating Osteoporosis Comprising Administration of PTHRP Analog) 1,303
days to April 28, 2031. US Patent 7,803,770 is listed in the FDA Orange book and covers TYMLOS.
Abaloparatide-TD
We are also developing abaloparatide-TD, based on Kindeva’s patented Microstructured Transdermal System technology, for potential use as a short wear-time transdermal patch. We
hold worldwide commercialization rights to the abaloparatide-TD technology, except in Canada, where we have entered into an exclusive license agreement with respect to abaloparatide-
TD, and are developing abaloparatide-TD toward future global regulatory submissions to build upon the potential success of TYMLOS. Our development strategy for abaloparatide-TD is
to bridge to the established efficacy and safety of our approved abaloparatide-SC formulation.
In May 2019, we received a special protocol assessment (“SPA”) agreement from the FDA for our Phase 3 study of abaloparatide-TD, which means the FDA considers the study
design to be adequate and well-controlled to support marketing approval provided the study endpoints are achieved. We initiated our Phase 3 wearABLe study of abaloparatide-TD in
August 2019 and completed enrollment in September 2020. We expect to report top-line data from the study in the second half of 2021. The wearABLe study is a single, pivotal,
randomized, open label, active-controlled, BMD non-inferiority bridging study with an enrollment of approximately 500 patients with postmenopausal osteoporosis at high risk of fracture,
which if successful, will support an NDA submission. The primary endpoint of the study is percentage change in lumbar spine BMD at 12 months. Non-inferiority of abaloparatide-TD to
abaloparatide-SC will be concluded if the lower bound of the 2-sided 95% confidence interval for the estimated treatment difference (abaloparatide-TD minus abaloparatide-SC) in the
percentage change from baseline in lumbar spine BMD at 12 months is above -2.0%.
In July 2019, we obtained preliminary results from a patient assessment study which evaluated self-administration of abaloparatide-TD over 29 days in 22 post-menopausal women
with low bone density. Study patients were observed at a study site on the first, 15th and 29th day of the study. Top-line results showed that study patients were able to follow the
instructions for use (“IFU”) and applied the patches accurately on 99.7% of all applications. The safety data from this study showed that most of the study patients had mild, transient
redness at the application site. The mean subject acceptability score on a 5-point scale was 4.5, 4.6 and 4.5 on day 1, 15 and 29, respectively. The laboratory data from this study included
an exploratory assessment of PINP, a biomarker that indicates bone formation. At baseline the median PINP level in this study was 50.5 ng/ml, increasing to a median value of 100.1 ng/ml
at day 29, while, by comparison, the median PINP values observed with abaloparatide-SC in the ACTIVE study were 50.6 ng/ml at baseline and 100.5 ng/ml at one month.
In December 2019, we aligned with the FDA on requirements for NDA filing.
RAD011
As part of our ongoing initiatives to expand our product portfolio, on December 30, 2020, our wholly-owned subsidiary, Radius Pharmaceuticals, Inc., entered into an Asset Purchase
Agreement with Fresh Cut Development, LLC and Benuvia
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Therapeutics Inc. for the acquisition of certain assets related to formulations of cannabidiol (“CBD”) related to the oral administration of a solution of CBD for therapeutic use in humans
or animals (“RAD011”). RAD011 was granted fast track designation by the U.S. Food and Drug Administration (“FDA”) in 2017 and orphan drug designation in August 2020 for the
treatment of hyerphagia behavior and weight loss in patients with Prader-Willi syndrome (“PWS”). We plan to request a meeting with the FDA to discuss initiation of a pivotal Phase 2/3
study for treatment of PWS.
Financial Overview
Product Revenue
Product revenue is derived from sales of our product, TYMLOS , in the United States.
®
License Revenue
License revenue is derived from payments received from contracts with customers, which include upfront payments for licenses.
Cost of Product Revenue
Cost of product revenue consists primarily of costs associated with the manufacturing of TYMLOS, royalties owed to our licensor for such sales, and certain period costs.
Research and Development Expenses
Research and development expenses consist primarily of clinical testing costs, including payments made to contract research organizations, or CROs, salaries and related personnel
costs, fees paid to consultants and outside service providers for regulatory and quality assurance support, licensing of drug compounds and other expenses relating to the manufacture,
development, testing, and enhancement of our investigational product candidates. We expense our research and development costs as they are incurred.
None of the research and development expenses, in relation to our investigational product candidates, are currently borne by third parties. Abaloparatide represents the largest
portion of our research and development expenses for our investigational product candidates since our inception. We began tracking program expenses for abaloparatide-SC in 2005, and
program expenses from inception to December 31, 2020 were approximately $239.7 million. We began tracking program expenses for abaloparatide-TD in 2007, and program expenses
from inception to December 31, 2020 were approximately $144.5 million. We began tracking program expenses for elacestrant in 2006, and program expenses from inception to
December 31, 2020 were approximately $128.1 million. We began tracking program expenses for RAD140 in 2008, and program expenses from inception to December 31, 2020 were
approximately $18.3 million. We began tracking program expenses for RAD011 in 2020, and program expenses from inception to December 31, 2020 were approximately $16.0 million.
These expenses relate primarily to external costs associated with manufacturing, preclinical studies, and clinical trial costs.
Costs related to facilities, depreciation, stock-based compensation and research and development support services are not directly charged to programs as they benefit multiple
research programs that share resources.
The following table sets forth our research and development expenses related to abaloparatide-SC, abaloparatide-TD, elacestrant, RAD140, and RAD011 for the years ended
December 31, 2020, 2019 and 2018 (in thousands):
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Program-specific costs - external:
Abaloparatide-SC
Abaloparatide-TD
Elacestrant
RAD140
RAD011
Total program-specific costs - external
Shared-services costs - external:
R&D support costs
Other operating costs
Total shared-services costs - external:
Shared-services costs - internal:
Personnel-related costs
Share-based compensation
Occupancy costs
Depreciation
Total shared-services costs - internal:
Total R&D costs
2020
Year Ended December 31,
2019
2018
9,252 $
66,133
15,366
1,143
16,000
107,894 $
14,264
765
15,029 $
28,530
6,654
1,083
522
36,789 $
8,234 $
26,185
27,267
2,126
—
63,812 $
13,217
2,152
15,369 $
26,114
8,769
1,853
840
37,576 $
7,591
10,112
17,433
4,055
—
39,191
11,554
2,468
14,022
32,094
11,657
1,914
1,033
46,698
159,712 $
116,757 $
99,911
$
$
$
$
$
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related expenses for pre-launch and post-launch commercial operations, executive, finance and other
administrative personnel, professional fees, business insurance, rent, general legal activities, including the cost of maintaining our intellectual property portfolio, and other corporate
expenses.
Our results also include stock-based compensation expense as a result of the issuance of stock option, restricted stock unit, and performance unit grants to our employees, directors
and consultants. The stock-based compensation expense is included in the respective categories of expense in our consolidated statements of operations and comprehensive loss (i.e.,
research and development or general and administrative expenses). We expect to record additional non-cash compensation expense in the future, which may be significant.
Other Operating Expenses
Other operating expenses reflect a payment we made to Ipsen in November 2018, pursuant to a final decision in arbitration proceedings with Ipsen.
Interest Income and Other Income
Interest income reflects interest earned on our cash, cash equivalents and marketable securities.
Interest Expense
Interest expense consists of interest expense related to the aggregate $305.0 million principal amount of Convertible Notes the Company issued in a registered underwritten public
offering on August 14, 2017 (“Convertible Notes”). A portion of the interest expense on the Convertible Notes is non-cash expense relating to accretion of the debt discount and
amortization of issuance costs.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which we have prepared in
accordance with the rules and regulations of the Securities and
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Exchange Commission ("SEC") and generally accepted accounting principles in the United States ("U.S. GAAP"). The preparation of these consolidated financial statements requires us to
make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well
as the reported revenues and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. Estimates include useful lives with respect to long-lived
assets and intangible assets, revenue recognition, inventory obsolescence, accounting for stock-based compensation, contingencies, tax valuation reserves, fair value measures, and accrued
expenses. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different
assumptions or conditions.
While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements appearing at the end of this Annual Report on Form 10-K, we
believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our financial condition and results of operations.
Accrued Clinical Expenses
When preparing our consolidated financial statements, we are required to estimate our accrued clinical expenses. This process involves reviewing open contracts and purchase orders,
communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service
when we have not yet been invoiced or otherwise notified of actual cost. Payments under some of the contracts we have with parties depend on factors such as successful enrollment of
certain numbers of patients, site initiation and the completion of clinical trial milestones. Examples of estimated accrued clinical expenses include:
•
•
•
fees paid to investigative sites and laboratories in connection with clinical studies;
fees paid to CROs in connection with clinical studies, if CROs are used; and
fees paid to contract manufacturers in connection with the production of clinical trial materials.
When accruing clinical expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If possible, we obtain
information regarding unbilled services directly from our service providers. However, we may be required to estimate the cost of these services based only on information available to us.
If we underestimate or overestimate the cost associated with a trial or service at a given point in time, adjustments to research and development expenses may be necessary in future
periods. Historically, our estimated accrued clinical expenses have approximated actual expense incurred. Subsequent changes in estimates may result in a material change in our accruals.
Revenue recognition
On April 28, 2017, the FDA approved TYMLOS in the U.S. After receiving FDA approval, we entered into a limited number of arrangements with wholesalers in the U.S.
(collectively, our “Customers”) to distribute TYMLOS. These arrangements are our initial contracts with customers and, as a result, we adopted Accounting Standards Codification
(“ASC”) Topic 606 - Revenue from Contracts with Customers (“Topic 606”). There is no transition to Topic 606 because we had no historical revenue. This standard applies to all
contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements, and financial instruments. Under Topic
606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to be entitled in
exchange for those goods or services.
To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s)
with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the
contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to arrangements that meet the definition of a contract
under Topic 606, including when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to our customer. At contract
inception, once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance
obligations and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance
obligation when (or as) the performance obligation is satisfied.
Product Revenue, Net
We sell TYMLOS to our Customers. These Customers subsequently resell our products to specialty pharmacy providers, as well as other retail pharmacies and certain medical
centers or hospitals. In addition to distribution agreements with
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Customers, we enter into arrangements with specialty pharmacies, health care providers and payors that provide for government mandated and/or privately negotiated rebates, chargebacks,
and discounts with respect to the purchase of our products.
We recognize revenue on product sales when the Customer obtains control of our product, which occurs at a point in time (upon delivery). Product revenues are recorded net of
applicable reserves for variable consideration, including discounts and allowances. Payment from Customers is typically due within 31 calendar days of the invoice date.
If taxes should be collected from Customers relating to product sales and remitted to governmental authorities, they will be excluded from revenue. We expense incremental costs of
obtaining a contract when incurred, if the expected amortization period of the asset that we would have recognized is one year or less. However, no such costs were incurred during the
twelve months ended December 31, 2020.
Reserves for Variable Consideration
Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components
of variable consideration include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates, payor rebates, and other incentives, such as
voluntary patient assistance, and other allowances that are offered within contracts between us and our Customers, payors, and other indirect customers relating to the sale of our products.
These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to
the Customer) or a current liability (if the amount is payable to a party other than a Customer). These estimates take into consideration a range of possible outcomes which are probability-
weighted in accordance with the expected value method in Topic 606 for relevant factors such as current contractual and statutory requirements, specific known market events and trends,
industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which it is entitled based on the
terms of the respective underlying contracts.
The amount of variable consideration which is 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 under the contract will not occur in a future period. Our analyses also contemplated application of the constraint in
accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period for the estimates detailed below as of December 31, 2020 and,
therefore, the transaction price was not reduced further during the twelve months ended December 31, 2020. Actual amounts of consideration ultimately received may differ from our
estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become
known.
Trade Discounts and Allowances
We generally provide Customers with discounts which include incentive fees that are explicitly stated in our contracts and are recorded as a reduction of revenue in the period the
related product revenue is recognized.
Product Returns
Consistent with industry practice, we generally offer Customers a limited right of return for product that has been purchased from us based on the product’s expiration date, which
lapses upon shipment to a patient. We estimate the amount of product sales that may be returned by our Customers and record this estimate as a reduction of revenue in the period the
related product revenue is recognized, as well as reductions to trade receivables, net on the consolidated balance sheets. We currently estimate product return liabilities using available
industry data and our own sales information, including our visibility into the inventory remaining in the distribution channel. We have received an immaterial amount of returns to date and
believe that returns of product in future periods will be minimal.
Our limited right of return policy allows for eligible returns of TYMLOS from Customers in the following circumstances:
•
Shipment errors that were the result of an error by us;
• Quantity delivered that is greater than the quantity ordered;
•
•
Product distributed by us that is damaged in transit prior to receipt by the customer;
Expired product, previously purchased directly from us, that is returned during the period beginning six months prior to the product’s expiration date and ending twelve months
after the product’s expiration date;
Product subject to a recall; and
Product that we, at our sole discretion, have specified to be returned.
•
•
In addition, our limited right of return policy allows for eligible returns of TYMLOS from indirect purchasers in the following circumstances:
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•
•
•
Expired product that is returned during the period beginning six months prior to the product’s expiration date and ending twelve months after the product’s expiration date;
Product subject to a recall; and
Product that we, at our sole discretion, have specified to be returned.
Provider Chargebacks and Discounts
Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices
lower than the list prices charged to Customers who directly purchase the product from us. Customers charge us for the difference between what they pay for the product and the ultimate
selling price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and
trade receivables, net. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by Customers, and we generally issue credits for such
amounts within a few weeks of the Customer’s notification to us of the resale. Reserves for chargebacks consist of credits that we expect to issue for units that remain in the distribution
channel inventories at each reporting period-end that we expect will be sold to qualified healthcare providers, and chargebacks that Customers have claimed, but for which we have not yet
issued a credit.
Government Rebates
We are subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related revenue is recognized, resulting in a
reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the consolidated balance sheets. For
Medicare, we also estimate the number of patients in the prescription drug coverage gap for whom we will owe an additional liability under the Medicare Part D program. Our liability for
these rebates consist of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current
quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel inventories at the end of each
reporting period.
Payor Rebates
We contract with certain private payor organizations, primarily insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of our
products. We estimate these rebates and record such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a
current liability.
Other Incentives
Other incentives which we offer include voluntary patient assistance programs, such as our co-pay assistance program, which are intended to provide financial assistance to qualified
commercially-insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost
per claim that we expect to receive associated with product that has been recognized as revenue, but remains in the distribution channel inventories at the end of each reporting period. The
adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included as a
component of accrued expenses and other current liabilities on the consolidated balance sheets.
Licenses of Intellectual Property
We enter into out-licensing agreements within the scope of Topic 606, under which we license certain rights to our product candidates to third parties. Such agreements may include
the transfer of intellectual property rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and development services, and participation on
certain committees with the counterparty. Payments made by the customers may include one or more of the following: non-refundable, up-front license fees; payments upon the exercise of
customer options; development, regulatory, and commercial milestone payments; payments for manufacturing supply services we provide through our contract manufacturers; and
royalties on net sales of licensed products if they are successfully approved and commercialized. Each of these payments may result in license, collaboration, or other revenue, except
revenue from royalties on net sales of licensed products, which would be classified as royalty revenue.
In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our out-licensing agreements, we perform the following steps: (i)
identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are
distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv)
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allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. At contract inception, once the
contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determines those that are performance obligations, and assess
whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as)
the performance obligation is satisfied.
If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue from the transaction
price allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. We evaluate all other promised goods or services
in the agreement to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is
distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are
not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights,
and are accounted for as performance obligations.
We utilize judgment to determine the transaction price. In connection therewith, we evaluate contingent milestones at contract inception to estimate the amount which is not probable
of a material reversal to include in the transaction price using the most likely amount method. Milestone payments that are not within our control, such as regulatory approvals, are not
considered probable of being achieved until those approvals are received and, therefore, the variable consideration is constrained. At the end of each reporting period, we re-evaluate the
probability of achieving development milestone payments which may not be subject to a material reversal and, if necessary, adjust our estimate of the overall transaction price. Any such
adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.
The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance
obligations under the contract are satisfied.
We then determine whether the performance obligations or combined performance obligations are satisfied over time or at a point in time and, if over time, the appropriate method of
measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress, as applicable, each reporting period and, if necessary,
adjust the measure of performance and related revenue recognition. When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring
goods or services to the customer under the terms of a contract, a contract liability is recorded within deferred revenue. Contract liabilities within deferred revenue are recognized as
revenue after control of the goods or services is transferred to the customer and all revenue recognition criteria have been met.
For arrangements that include sales-based royalties, including sales-based milestone payments, and the license is deemed to be the predominant item to which the royalties relate, the
Company recognizes revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or
partially satisfied). To date, we have not recognized any royalty revenue resulting from our out-licensing arrangements.
Manufacturing Supply Services
Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply, at the customer’s discretion, are
generally considered as options. We assess if these options provide a material right to the licensee and, if so, they are accounted for as separate performance obligations. If we are entitled
to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration, or other revenue when the customer obtains control of the
goods, which is upon delivery.
Results of Operations
The following discussion summarizes the key factors our management team believes are necessary for an understanding of our consolidated financial statements.
Years Ended December 31, 2020 and December 31, 2019
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Revenues:
Product revenue, net
License revenue
Total revenue
Operating expenses:
Cost of sales - product
Cost of sales - intangible amortization
Research and development
Selling, general and administrative
Loss from operations
Other (expense) income:
Other (expense) / income, net
Interest (expense) / income, net
Net loss
Years Ended December 31,
2020
2019
Change
$
%
(in thousands)
$
$
208,395 $
30,250
238,645
16,403
798
159,712
144,154
(82,422)
(212)
(26,574)
(109,208) $
173,317 $
—
173,317
15,287
798
116,757
152,704
(112,229)
242
(21,006)
(132,993) $
35,078
30,250
65,328
1,116
—
42,955
(8,550)
29,807
(454)
(5,568)
23,785
20 %
100 %
38 %
7 %
— %
37 %
(6)%
(27)%
(188)%
27 %
(18)%
Product revenue—We began commercial sales of TYMLOS within the United States in May 2017, following receipt of FDA marketing approval on April 28, 2017. For the year
ended December 31, 2020 we recorded approximately $208.4 million of net product revenue compared to $173.3 million for the year end December 31, 2019. The increase in product
revenue was primarily driven by a combination of price and sales volume.
License revenue—We entered into the License Agreement with Berlin-Chemie on July 23, 2020. For the year ended December 31, 2020, we recorded $30.0 million of license
revenue in connection with this agreement compared to none for the year end December 31, 2019.
Cost of sales—For the year ended December 31, 2020, cost of sales was $17.2 million compared to $16.1 million for the year end December 31, 2019. The increase in cost of sales
was primarily driven by the increase in product revenue.
Research and development expenses—For the year ended December 31, 2020, research and development expense was $159.7 million, as compared to $116.8 million for the year
ended December 31, 2019, an increase of $43.0 million, or 37%. This increase was primarily a result of an increase of $39.9 million in program spending for the abaloparatide-TD
program, a $1.1 million increase in professional services, a $1.0 million increase in program spending for the abaloparatide-SC program, and an increase of $16.0 million in other costs due
to the Benuvia licensing expense. These increases were partially offset by a $0.9 million decrease in program spending for RAD-140 program, a $1.0 million decrease in occupancy and
depreciation, a $1.3 million decrease in compensation related costs, and a $11.9 million decrease in program spending for elacestrant research which is a result of $39.3 million of
reimbursable expenses offsetting year to date expenses. We are being reimbursed for the costs incurred in connection with the elacestrant project pursuant to the terms of the TSA with
Berlin-Chemie, under which the Company will perform certain services for Berlin-Chemie related to the EMERALD Phase 3 monotherapy study until the earlier of the completion of the
contemplated services or the filing with the FDA of a NDA for elacestrant.
Selling, general and administrative expenses—For the year ended December 31, 2020, selling, general, and administrative expense was $144.2 million, as compared to $152.7
million for the year ended December 31, 2019, a decrease of $8.6 million, or 6%. This decrease was primarily due to a $6.3 million decrease in professional fees related to commercial
operations and general and administrative activities, a $4.0 million decrease in compensation and travel entertainment costs. These decrease were partially offset by an increase of
$1.7 million in other costs.
Other Income, net— For the year ended December 31, 2020, other expense, net of other income, was $0.2 million, as compared to $0.2 million during the year ended December 31,
2019. Other expense, net of other income, of $0.2 million for the year ended December 31, 2020 consisted primarily of other foreign currency revaluation losses. The $0.2 million of other
expense, net of income, for the year ended December 31, 2019 consisted primarily of other foreign currency revaluation gains.
Interest income (expense), net—For the year ended December 31, 2020, net interest expense was $26.6 million, as compared to net interest expense of $21.0 million during the year
ended December 31, 2019, a total change of $5.6 million, or
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27%. This change was primarily the result of the increasing interest expense incurred over the term of the convertible notes that was partially offset by the interest income earned on
investments.
Years Ended December 31, 2019 and December 31, 2018
Revenues:
Product revenue, net
License revenue
Total revenue
Operating expenses:
Cost of sales - product
Cost of sales - intangible amortization
Research and development
Selling, General and administrative
Other operating expense
Loss from operations
Other (expense) income:
Other income / (expense), net
Interest (expense) / income, net
Net loss
Years Ended December 31,
2019
2018
Change
$
%
(in thousands)
$
$
173,317 $
—
173,317
15,287
798
116,757
152,704
—
(112,229)
242
(21,006)
(132,993) $
99,239
—
99,239
7,627
799
99,911
184,164
10,801
(204,063)
59
(17,333)
(221,337)
74,078
—
74,078
7,660
(1)
16,846
(31,460)
(10,801)
91,834
183
(3,673)
88,344
75 %
— %
75 %
100 %
— %
17 %
(17)%
100 %
(45)%
310 %
21 %
(40)%
Product revenue— We began commercial sales of TYMLOS within the United States in May 2017, following receipt of FDA marketing approval on April 28, 2017. For the year
ended December 31, 2019 we recorded approximately $173.3 million of net product revenue compared to $99.2 million for the year end December 31, 2018. The increase in product
revenue was primarily driven by an increase in sales volume as a result of greater market penetration.
Cost of sales—For the year ended December 31, 2019, cost of sales of $16.1 million compared to $8.4 million for the year end December 31, 2018. The increase in cost of sales was
driven by the increase in product revenue.
Research and development expenses—For the year ended December 31, 2019, research and development expense was $116.8 million compared to $99.9 million for the year ended
December 31, 2018, an increase of $16.8 million, or 17%. This increase was primarily a result of an increase of $16.1 million in program spending for the abaloparatide-TD program, a
$9.8 million increase in program spending for elacestrant research, a $1.7 million increase in professional services, and $0.6 million increase in program spending for the abaloparatide-SC
program. These increases were partially offset by a $1.9 million decrease in program spending for RAD-140 program, a $0.3 million decrease in R&D support costs as well as an
$9.2 million decrease in compensation related costs.
Selling, General and administrative expenses—For the year ended December 31, 2019, general and administrative expense was $152.7 million compared to $184.2 million for the
year ended December 31, 2018, a decrease of $31.5 million, or 17%. This decrease was primarily due to a $10.0 million decrease in professional fees related to commercial operations and
general and administrative activities, a $17.9 million decrease in compensation and travel entertainment costs and a $3.6 million decrease in other costs.
Other operating expenses—For the year ended December 31, 2019, other operating expenses were approximately $0.0 million compared to $10.8 million for the year
ended December 31, 2018, an increase of $10.8 million. This decrease was the result of a $10.8 million payment made to Ipsen pursuant to a final decision in arbitration proceedings with
Ipsen during the second quarter of 2018.
Other (expense) income, net—For the year ended December 31, 2019, other expense, net of other income, was $0.2 million, as compared to $0.1 million during the year ended
December 31, 2018. Other expense, net of other income, of $0.2 million for the year ended December 31, 2019 consisted primarily of other taxes. The $0.1 million of other expense, net of
income, for the year ended December 31, 2018 was primarily due to other taxes and foreign currency revaluation losses.
Interest (expense) income—For the year ended December 31, 2019, interest expense was $21.0 million, as compared to $17.3 million in interest income during the year ended
December 31, 2018, a total change of $3.7 million, or 21%. This change
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was a result of the issuance of the convertible notes during the year ended December 31, 2019, which resulted in the Company incurring interest expense charges to partially offset the
interest income earned on investments. During the prior year, no debt was outstanding and the Company was earning interest on investments.
Liquidity and Capital Resources
From inception to December 31, 2020, we have incurred an accumulated deficit of $1.3 billion, primarily as a result of expenses incurred through a combination of research and
development activities related to our various investigational product candidates and expenses supporting those activities. Our total cash, cash equivalents and marketable securities balance
as of December 31, 2020 was $114.7 million. We have financed our operations since inception primarily through the public offerings of our common stock, private sale of preferred stock,
convertible debt, and borrowing under credit facilities. Following our U.S. commercial launch of TYMLOS in May 2017, we have begun financing a portion of our operations through
product revenue.
Based upon our cash, cash equivalents, marketable securities, and investments balance as of December 31, 2020 and funds available to us through our credit facilities, we believe
that, prior to the consideration of potential proceeds from partnering and/or collaboration activities, we have sufficient capital to fund our development plans, U.S. commercial and other
operational activities for at least twelve months from the date of this filing. We expect to finance the future U.S. commercial activities and development costs of our clinical product
portfolio with our existing cash, cash equivalents, marketable securities, and investments, as well as through future product sales, or through strategic financing opportunities, that could
include, but are not limited to partnering or other collaboration agreements, future offerings of equity, royalty-based financing arrangements, the incurrence of additional debt, or other
alternative financing arrangements, which may involve a combination of the foregoing. On January 10, 2020, we entered into entered into a secured, non-dilutive credit facility for up to an
aggregate amount of $95 million, comprised of a term loan of up to $55.0 million and a $20.0 million revolving credit facility based on accounts receivable and inventory, with the right,
subject to certain conditions, to increase the revolver by $20.0 million.
There is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. Our
future capital requirements will depend on many factors, including the scope of and progress in our research and development and commercialization activities, the results of our clinical
trials, and the review and potential approval of our products by the FDA or other foreign regulatory authorities. The successful development of our product candidates is subject to
numerous risks and uncertainties associated with developing drugs, which could have a significant impact on the cost and timing associated with the development of our product
candidates. If we fail to obtain additional future capital, we may be unable to complete our planned commercialization activities or complete preclinical and clinical trials and obtain
approval of any of our product candidates from the FDA and foreign regulatory authorities.
TYMLOS is our only approved product and our business currently depends heavily on its successful commercialization. Successful commercialization of an approved product is an
expensive and uncertain process. See “Risk Factors - Risks Related to the Commercialization and Development of Our Product Candidates” set forth in Part I, “Item 1A. Risk Factors” in
this Annual Report.
The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):
Net cash (used in) provided by:
Operating activities
Investing activities
Financing activities
Net increase in cash and cash equivalents
Cash Flows from Operating Activities
2020
Years ended December 31,
2019
2018
$
$
(73,948) $
67,485
28,013
21,550 $
(82,414) $
87,277
5,709
10,572 $
(204,726)
134,316
11,672
(58,738)
Net cash used in operating activities during the year ended December 31, 2020 was $73.9 million, which was primarily the result of a net loss of $109.2 million, partially offset by
net changes in working capital of $12.5 million and $47.7 million of net non-cash adjustments to reconcile net loss to net cash used in operations. The $47.7 million net non-cash
adjustments to reconcile net loss to net cash used in operations included stock-based compensation expense of $24.7 million, amortization of the value of debt discount and issuance costs
of $18.1 million, and depreciation and amortization of $1.7 million, impairment charge for the right of use operating lease of $2.4 million, and loss of fixed assets disposal of $0.6 million
offset by amortization of premiums (discounts) on marketable securities of $0.3 million.
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Net cash used in operating activities during the year ended December 31, 2019 was $82.4 million, which was primarily the result of a net loss of $133.0 million, partially offset by
net changes in working capital of $8.7 million and $41.9 million of net non-cash adjustments to reconcile net loss to net cash used in operations. The $133.0 million net loss was primarily
due to costs related to the continued commercial operations for TYMLOS such as compensation costs, professional support costs, and consulting fees as well as ongoing research and
development costs. The $41.9 million net non-cash adjustments to reconcile net loss to net cash used in operations included stock-based compensation expense of $23.6 million,
amortization of debt discount and issuance costs of $15.8 million, depreciation and amortization of $2.3 million, impairment charge for the right of use operating lease of $0.3 million, and
loss on disposal of fixed assets of $0.2 million offset by amortization of premiums (discounts) on marketable securities of $0.4 million.
Net cash used in operating activities during the year ended December 31, 2018 was $204.7 million, which was primarily the result of a net loss of $221.3 million, partially offset by
net changes in working capital of $28.4 million and $45.0 million of net non-cash adjustments to reconcile net loss to net cash used in operations. The $221.3 million net loss was
primarily due to costs related to the continued commercial operations for TYMLOS such as compensation costs, professional support costs, and consulting fees as well as ongoing research
and development costs. The $45.0 million net non-cash adjustments to reconcile net loss to net cash used in operations included stock-based compensation expense of $28.7 million,
amortization of debt discount and issuance costs of $13.8 million, and depreciation and amortization of $2.9 million, offset by amortization of discounts on marketable securities of $0.4
million.
Cash Flows from Investing Activities
Net cash provided by investing activities for the year ended December 31, 2020 was $67.5 million, as compared to net cash used in investing activities of $87.3 million for the year
ended December 31, 2019.
The net cash provided by investing activities during the year ended December 31, 2020 was primarily a result of $107.4 million of net proceeds received from the sale or maturity of
marketable securities, offset by $39.9 million in purchases of marketable securities. The net cash provided by investing activities during the year ended December 31, 2019 was primarily a
result of $206.8 million of net proceeds received from the sale or maturity of marketable securities, offset by $119.5 million in purchases of marketable securities.
Our investing cash flows will be impacted by the timing of purchases and sales of marketable securities. All of our marketable securities have contractual maturities of less than one
year. Due to the short-term nature of our marketable securities, we would not expect our operational results or cash flows to be significantly affected by a change in market interest rates
due to the short-term duration of our investments.
Cash Flows from Financing Activities
Net cash provided by financing activities for the year ended December 31, 2020 was $28.0 million as compared to $5.7 million of net cash provided by financing activities for the
year ended December 31, 2019.
Net cash provided by financing activities during the year ended December 31, 2020 consisted of $25.0 million of proceeds received from the issuance of the term loan offset by
issuance costs, $1.5 million of proceeds as the result of stock option exercises, and $1.6 million of proceeds received from the issuance of stock in connection with the employee stock
purchase plan.
Net cash provided by financing activities during the year ended December 31, 2019 consisted of $3.9 million of proceeds as the result of stock option exercises, and $1.8 million of
proceeds received from the issuance of stock in connection to the stock purchase plan.
Borrowings and Other Liabilities
In August 2017, we issued $300.0 million aggregate principal amount of the Convertible Notes, as discussed in more detail in Note 9, “Convertible Notes Payable,” to our
consolidated financial statements included in this Annual Report on Form 10-K. We received net proceeds of approximately $290.8 million from the sale of the Convertible Notes, after
deducting fees and expenses of $9.2 million. In addition, in September 2017, we issued an additional $5.0 million aggregate principal amount of the Convertible Notes pursuant to the
exercise of an over-allotment option granted to the underwriters in the offering. We received net proceeds of approximately $4.8 million from the exercise of the over-allotment option,
after deducting fees and expenses of $0.2 million.
Future minimum payments on our long-term debt as of December 31, 2020 were as follows (in thousands):
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Year ended December 31,
2021
2022
2023
2024 and thereafter
Total minimum payments
Less: interest
Less: unamortized discount
Less: current portion
Long Term Debt
Future Minimum Payments
$
$
$
9,150
9,150
9,150
314,150
341,600
(36,600)
(91,355)
—
213,645
In January 2020, we entered into the Term Loan, as discussed in more detail in Note 10, “Term Loan and Credit Facility,” to our consolidated financial statements included in this
Annual Report on Form 10-K.
Future minimum payments on our Term Loan as of December 31, 2020 are as follows (in thousands):
Years ended December 31,
Future Minimum Payments
2021
2022
2023
2024
Total minimum payments
Less: interest
Less: unamortized issuance costs
Less: current portion
Long Term Debt
$
$
$
1,864
1,964
17,610
9,027
30,465
(5,465)
(95)
—
24,905
Leases
We adopted ASC 842 effective January 1, 2019, as discussed in more detail in Note 18, “Leases,” to our consolidated financial statements included in this Annual Report on Form
10-K.
Future payments of operating lease liabilities as of December 31, 2020 are as follows (in thousands):
Year ending December 31,
2021
2022
2023
2024
Thereafter
Total Lease payments
Less: effect of discounted cash flows during the period
Total
$
$
$
2,780
1,131
980
1,005
857
6,753
(745)
6,008
In June 2016, the Massachusetts Life Sciences Center awarded us approximately $0.5 million of tax incentives under its Life Science Tax Incentive Program, which allows us a cash
refund equivalent to $0.5 million of state research and development tax credits. We received this payment in the first quarter of 2017. In exchange for these incentives, we hired an
incremental 35 employees in Massachusetts and agreed to maintain the additional headcount through at least December 31, 2020. Failure to do so could result in us being required to repay
some or all of these incentives. This contingent obligation has not been included in the above table as we cannot estimate if, or when, it will become payable.
Contractual Obligations and Commitments
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Contractual obligations represent future cash commitments and liabilities under agreements with third parties and exclude contingent liabilities for which we cannot reasonably
predict future payment. We enter into contracts in the normal course of business for marketing and promotion, commercial related activities, preclinical and clinical research studies,
research supplies, and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancellable contracts and not
included in the table of contractual obligations and commitments. In addition, we have certain obligations to make future payments to third parties that become due and payable on the
achievement of certain development, regulatory and commercial milestones, such as the start of a clinical trial, filing of an NDA, approval by the FDA, or product launch. The disclosed
balances below exclude the potential payments we may be required to make under our agreements because the timing of payments and actual amounts paid under those agreements may be
different depending on the timing of receipt of goods or services or changes to agreed-upon terms or amounts for some obligations, and those agreements are cancellable upon written
notice by us and therefore, not long-term liabilities. Additionally, the expected timing of payment of the obligations discussed below is estimated based on current information.
Supply and Manufacturing Agreements—In June 2016, we entered into a Supply Agreement with Ypsomed AG (“Ypsomed”), pursuant to which Ypsomed agreed to supply
commercial and clinical supplies of a disposable pen injection device customized for subcutaneous injection of abaloparatide. We agreed to purchase a minimum number of devices at
prices per device that decrease with an increase in quantity supplied. In addition, we made milestone payments for Ypsomed’s capital developments in connection with the initiation of the
commercial supply of the device and paid a one-time capacity fee. All costs and payments under the agreement are delineated in Swiss Francs. The agreement has an initial term
of three years which began on June 1, 2017, after which, it automatically renews for two-year terms unless either party terminates the agreement upon 18 months’ notice prior to the end of
the then-current term. The Company will purchase the device subject to minimum annual quantity requirements over the initial three-year term of the agreement. The Company is required
to purchase a minimum number of batches for CHF 1.9 million ($2.2 million) through the year ended December 31, 2022.
In June 2016, we entered into a Commercial Supply Agreement with Vetter Pharma International GmbH (“Vetter”), pursuant to which Vetter has agreed to formulate the finished
abaloparatide-SC drug product, to fill cartridges with the drug product, to assemble the pen delivery device, and to package the pen for commercial distribution. We agreed to purchase the
cartridges and pens in specified batch sizes at a price per unit. For labeling and packaging services, the Company has agreed to pay a per unit price dependent upon the number of pens
loaded with cartridges that are labeled and packaged. These prices are subject to an annual price adjustment. The agreement had an initial term of five years, which began on January 1,
2016, after which it automatically renewed for a two-year term and will automatically renew for additional two-year terms thereafter unless either party notifies the other party two years
before the end of the then-current term that it does not intend to renew.
In July 2016, we entered into a Manufacturing Services Agreement with Polypeptide Laboratories Holding AB (“PPL”), as successor-in-interest to Lonza Group Ltd., pursuant to
which PPL has agreed to manufacture the commercial and clinical supplies of the API for abaloparatide. The Company has agreed to purchase the API in batches at a price per gram in
euros, subject to an annual increase by PPL. The Company is also required to purchase a minimum number of batches annually, equal to €2.9 million ($3.6 million) per year and $17.2
million in total through the year ended December 31, 2022. The agreement has an initial term of a six years, after which, it automatically renews for three-year terms unless either party
provides notice of non-renewal 24 months before the end of the then-current term.
License Agreement Obligations
TYMLOS (Abaloparatide)
In September 2005, we entered into a License Agreement with Ipsen Pharma SAS, as amended, under which we exclusively licensed certain Ipsen compound technology and related
patents covering abaloparatide to research, develop, manufacture and commercialize certain compounds and related products in all countries, except Japan and France (where our
commercialization rights were subject to certain co-marketing and co-promotion rights exercisable by Ipsen, provided that certain conditions included in the License Agreement were met).
We believe that Ipsen’s co-marketing and co-promotion rights in France have permanently expired. Ipsen also granted us an exclusive right and license under the Ipsen compound
technology and related patents to make and have made compounds or product in Japan. Ipsen further granted us an exclusive right and license under certain Ipsen formulation technology
and related patents solely for purposes of enabling us to develop, manufacture and commercialize compounds and products covered by the compound technology license in all countries,
except Japan and France (as discussed above).
In consideration for these rights, we made nonrefundable, non-creditable payments in the aggregate of $13.0 million to Ipsen, including payment in recognition of certain milestones
having been achieved through December 31, 2020. The License Agreement provides for further payments upon the achievement of certain future regulatory and commercial milestones.
Total additional milestone payments that could be payable under the agreement are €24.0 million (approximately $29.5 million). In connection with the FDA’s approval of TYMLOS in
April 2017, we paid Ipsen a milestone of €8.0 million (approximately $8.7
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million) under the License Agreement, which we recorded as an intangible asset within the consolidated balance sheet and will amortize over the remaining patent life or the estimated
useful life of the underlying product. The License Agreement provides that we are obligated to pay to Ipsen a fixed five percent royalty based on net sales of products containing
abaloparatide by us or our sublicensees on a country-by-country basis until the later of the last to expire of the licensed patents or for a period of 10 years after the first commercial sale in
such country. The royalty expense was approximately $10.4 million for the year ended December 31, 2020. The date of the last to expire of the abaloparatide patents licensed from or co-
owned with Ipsen, barring any extension thereof, is expected to be March 26, 2028.
If we sublicense abaloparatide to a third party, the agreement provides that we would pay a percentage of certain payments received from such sublicensee (in lieu of milestone
payments not achieved at the time of such sublicense). The applicable percentage is in the low double-digit range. In addition, if we or our sublicensees commercialize a product that
includes a compound discovered by us based on or derived from confidential Ipsen know-how, the agreement provides that we would pay to Ipsen a fixed low single-digit royalty on net
sales of such product on a country-by-country basis until the later of the last to expire of our patents that cover such product or for a period of 10 years after the first commercial sale of
such product in such country.
The License Agreement expires on a country-by-country basis on the later of (1) the date the last remaining valid claim in the licensed patents expires in that country, or (2) a period
of 10 years after the first commercial sale of the licensed products in such country, unless it is sooner terminated in accordance with its terms.
Prior to executing the License Agreement for abaloparatide with Radius, Ipsen licensed the Japanese rights for abaloparatide to Teijin. Teijin has initiated a Phase 3 clinical trial of
abaloparatide-SC in Japan for the treatment of postmenopausal osteoporosis. We maintain full global rights to our development program for abaloparatide-TD, except in Canada.
Pursuant to a final decision in arbitration proceedings with Ipsen in connection with the License Agreement, we are obligated to pay Ipsen $5.0 million if abaloparatide receives
marketing approval in Japan and a fixed mid single-digit royalty based on net sales of abaloparatide in Japan.
Abaloparatide-SC (Teijin Limited)
In July 2017, we entered into a license and development agreement with Teijin for abaloparatide-SC in Japan (the “Teijin Agreement”). Teijin is developing abaloparatide-SC in
Japan under an agreement with Ipsen and has initiated a Phase 3 trial in Japanese patients with osteoporosis. Pursuant to the Teijin Agreement, we granted Teijin (i) an exclusive payment
bearing license under certain of our intellectual property to develop and commercialize abaloparatide-SC in Japan, (ii) a non-exclusive payment bearing license under certain of our
intellectual property to manufacture abaloparatide-SC for commercial supply in Japan, (iii) a right of reference to certain of our regulatory data related to abaloparatide-SC for purposes of
developing, manufacturing and commercializing abaloparatide-SC in Japan, (iv) a manufacture transfer package, upon Teijin’s request, consisting of information and our know-how that is
necessary for the manufacture of active pharmaceutical ingredient and abaloparatide-SC, (v) a right to request that we manufacture (or arrange for a third party to manufacture) and supply
(or arrange for a third party to supply) the active pharmaceutical ingredient for the clinical supply of abaloparatide-SC in sufficient quantities to enable Teijin to conduct its clinical trials in
Japan, and (vi) a right to request that we arrange for Teijin to directly enter into commercial supply agreements with our existing contract manufacturers on the same pricing terms and on
substantially similar commercial terms to those set forth in our existing agreements with such contract manufacturers.
In consideration for these rights, we received an upfront payment of $10.0 million. The Teijin Agreement also provides for additional payments to us of up to an aggregate of $40.0
million upon the achievement of certain regulatory and sales milestones, and requires Teijin to pay us a fixed low double-digit royalty based on net sales of abaloparatide-SC in Japan
during the royalty term, as defined below.
Teijin granted us (i) an exclusive license under certain of Teijin’s intellectual property to develop, manufacture and commercialize abaloparatide-SC outside Japan and (ii) a right of
reference to certain of Teijin’s regulatory data related to abaloparatide-SC for purposes of developing, manufacturing and commercializing abaloparatide-SC outside Japan. Except in
Canada, we maintain full global rights to our development program for abaloparatide-TD, which is not part of the Teijin Agreement. Pursuant to the Teijin Agreement, the parties may
further collaborate on new indications for abaloparatide-SC.
Unless earlier terminated, the Teijin Agreement expires on the later of the (i) date on which the use, sale or importation of abaloparatide-SC is no longer covered by a valid claim
under our patent rights licensed to Teijin in Japan, (ii) expiration of marketing or data exclusivity for abaloparatide-SC in Japan, or (iii) 10th anniversary of the first commercial sale of
abaloparatide-SC in Japan.
Abaloparatide-TD
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In February 2018, we entered into a Scale-Up and Commercial Supply Agreement (the “Supply Agreement”) with 3M Company and 3M Innovative Properties Company
(collectively with 3M Company, “3M”), pursuant to which 3M agreed to exclusively manufacture Phase 3 and global commercial supplies of abaloparatide-coated transdermal patch
product (“Product”) and associated applicator devices (“Applicator”). In May 2020, 3M announced that it completed its sale of its drug delivery business, which manufactures clinical trial
supplies of abaloparatide-TD, to Kindeva Drug Delivery (“Kindeva”), an affiliate of Altaris Capital Partners, LLC (“Altaris”). Under the Supply Agreement, Kindeva manufactures
Product and Applicator for us according to agreed-upon specifications in sufficient quantities to meet our projected supply requirements. 3M agreed to manufacture commercial supplies of
Product at unit prices that decrease with an increase in the quantity we order. We are obligated to pay Kindeva a mid-to-low single-digit royalty on worldwide net sales of Product and
reimburse Kindeva for certain capital expenditures incurred to establish commercial supply of Product. We are responsible for providing, at our expense, supplies of abaloparatide drug
substance to be used in manufacturing Product. During the term of the Supply Agreement, Kindeva and Radius have agreed to work exclusively with each other with respect to the
delivery of abaloparatide, parathyroid hormone (“PTH”), and/or PTH related proteins via active transdermal, intradermal, or microneedle technology. In October 2018, the Company
committed to fund 3M’s purchase of capital equipment totaling approximately $9.6 million in preparation for manufacturing Phase 3 and potential commercial supplies of Product.
Milestone payments for the equipment commenced in the fourth quarter of 2018 and are expected to be paid in full in the second quarter of 2021.
The initial term of the Supply Agreement began on its effective date and will continue for five years after the first commercial sale of Product. The Supply Agreement then
automatically renews for successive three-year terms, unless earlier terminated pursuant to its terms or upon either party’s notice of termination to the other 24 months prior to the end of
the then-current term. The Supply Agreement may be terminated by either party upon an uncured material breach of its terms by the other party, or due to the other party’s bankruptcy,
insolvency, or dissolution. We may terminate the Supply Agreement upon the occurrence of certain events, including for certain clinical, technical, or commercial reasons impacting
Product, if we are unable to obtain U.S. regulatory approval for Product within a certain time period, or if we cease development or commercialization of Product. Kindeva may terminate
the Supply Agreement upon the occurrence of certain events, including if there are certain safety issues related to Product, if we are unable to obtain U.S. regulatory approval for Product
within a certain time period, or if we fail to order Product for a certain period of time after commercial launch of the Product in the U.S. Upon certain events of termination, Kindeva is
required to transfer the manufacturing processes for Product and Applicator to us or a mutually agreeable third party and continue supplying Product and Applicator for a period of time
pursuant to our projected supply requirements.
In June 2009, we entered into a Development and Clinical Supplies Agreement with 3M, as amended (the “Development Agreement”), under which Product and Applicator
development activities occur and 3M has manufactured phase 1 and 2 clinical trial supplies for us on an exclusive basis. The term of the Development Agreement runs until June 2019 and
then automatically renews for additional one-year terms, unless earlier terminated, until the earliest of (i) the expiration or termination of the Supply Agreement, (ii) the mutual written
agreement of the parties, or (iii) prior written notice by either party to the other party at least ninety days prior to the end of the then-current term of the Development Agreement that such
party declines to extend the term. Either party may terminate the agreement in the event of an uncured material breach by the other party. We pay 3M for services delivered pursuant to the
agreement on a fee-for-service or a fee-for-deliverable basis as specified in the agreement. We have paid 3M approximately $30.2 million, in the aggregate, through December 31, 2020
with respect to services and deliverables delivered pursuant to the Development Agreement.
Elacestrant (RAD1901)
In June 2006, we entered into a license agreement with Eisai Co. Ltd.(the “Eisai Agreement’). Under the Eisai Agreement, Eisai granted us an exclusive right and license to research,
develop, manufacture and commercialize elacestrant and related products from Eisai in all countries, except Japan. In consideration for the rights to elacestrant, we paid Eisai an initial
license fee of $0.5 million, which was expensed during 2006. In March 2015, we entered into an amendment to the Eisai Agreement (the “Eisai Amendment”) in which Eisai granted us
the exclusive right and license to research, develop, manufacture and commercialize elacestrant in Japan. In consideration for the rights to elacestrant in Japan, we paid Eisai a license fee
of $0.4 million upon execution of the Eisai Amendment, which was recognized as research and development expense in 2015. The Eisai Agreement, as amended, also provides for
additional payments of up to $22.3 million, payable upon the achievement of certain clinical and regulatory milestones. To date, the Company has paid Eisai approximately $1.0 million in
connection with the achievement of certain milestones.
Under the Eisai Agreement, as amended, should a product covered by the licensed technology be commercialized, we will be obligated to pay to Eisai royalties in a variable mid-
single digit range based on net sales of the product on a country-by-country basis. The royalty rate will be reduced, on a country-by-country basis, at such time as the last remaining valid
claim in the licensed patents expires, lapses or is invalidated and the product is not covered by data protection clauses. In addition, the royalty rate will be reduced, on a country-by-country
basis, if, in addition to the conditions specified in the previous sentence,
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sales of lawful generic versions of such product account for more than a specified minimum percentage of the total sales of all products that contain the licensed compound during a
calendar quarter. The latest licensed patent is expected to expire, barring any extension thereof, on August 18, 2026.
The Eisai Agreement, as amended, also grants us the right to grant sublicenses with prior written approval from Eisai. If we sublicense the licensed technology to a third party, we
will be obligated to pay Eisai, in addition to the milestones referenced above, a fixed low double digit percentage of certain fees received from such sublicensee and royalties in the low
single digit range based on net sales of the sublicensee. In connection with the Berlin-Chemie exclusive license, we granted to Berlin-Chemie to develop and commercialize products
containing elacestrant (RAD1901) worldwide and we are obligated to pay Eisai a fee of $3.0 million in accordance with the Eisai Agreement. The license agreement expires on a country-
by-country basis on the later of (1) the date the last remaining valid claim in the licensed patents expires, lapses or is invalidated in that country, the product is not covered by data
protection clauses, and the sales of lawful generic versions of the product account for more than a specified percentage of the total sales of all pharmaceutical products containing the
licensed compound in that country; or (2) a period of 10 years after the first commercial sale of the licensed products in such country, unless it is sooner terminated.
Elacestrant (Duke)
In December 2017, we and Duke University (“Duke”) entered into a License Agreement (the “Duke Agreement”) pursuant to which we acquired the exclusive worldwide license to
certain Duke patents associated with elacestrant (RAD1901) related to the use of elacestrant in the treatment of breast cancer as a monotherapy and in a combination therapy (collectively
“Duke Patents”).
In consideration for these rights, we incurred non-refundable, non-creditable obligations to pay Duke, totaling $1.3 million, which were expensed as research and development costs
during 2017. The Duke Agreement provides for further payments upon the achievement of certain future regulatory and commercial milestones totaling up to $3.8 million. The agreement
provides that we would pay Duke a fixed low single-digit royalty based on net sales, on a country-by-country basis, beginning in August 2029 and ending upon expiration of the last patent
rights to expire.
If we sublicense the Duke Patents to a third party, the agreement provides that we will pay Duke a percentage of certain payments we received from such sublicensee(s). The
applicable percentage is in the high single-digit range on certain payments received in excess of a pre-specified amount. The Duke Agreement may be terminated by either party upon an
uncured material breach of the agreement by the other party. We may terminate the agreement upon 60 days written notice to Duke, if we suspend our manufacture, use and sale of the
licensed products.
Net Operating Loss Carryforwards
As of December 31, 2020, we had federal and state net operating loss carryforwards of approximately $1,026.0 million and $702.1 million, respectively, the use of which may be
limited, as described below. If not utilized, the net operating loss carryforwards will expire at various dates through 2036.
Under Section 382 of the Internal Revenue Code of 1986, or Section 382, substantial changes in our ownership may limit the amount of net operating loss carryforwards that could
be used annually in the future to offset taxable income. We have completed studies through December 31, 2015, to determine whether any ownership change has occurred since our
formation and have determined that transactions have resulted in two ownership changes, as defined under Section 382. There could be additional ownership changes in the future that
could further limit the amount of net operating loss and tax credit carryforwards that we can utilize. A full valuation allowance has been recorded against our net operating loss
carryforwards and other deferred tax assets, as the realization of the deferred tax asset is uncertain.
As a result, we have not recorded any federal or state income tax benefit in our consolidated statements of operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any relationships with unconsolidated entities of financial partnerships, such as entities often referred to as structured finance
or special purpose entities.
Accounting Standards Updates
For a discussion of recent accounting standards updates, see Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements included
in Part II, Item 8 of this Annual Report on Form 10-K.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to market risk related to changes in the dollar/euro exchange rate because a portion of our development costs are denominated in euros. We do not hedge our foreign
currency exchange rate risk. However, an immediate 10 percent adverse change in the dollar/euro exchange rate would not have a material effect on financial results.
We are exposed to market risk related to changes in interest rates. As of December 31, 2020, we had cash, cash equivalents and short-term marketable securities of $114.7 million,
consisting of cash, money market funds, domestic corporate debt securities, and agency bonds. This exposure to market risk is interest rate sensitivity, which is affected by changes in the
general level of U.S. interest rates, particularly because our investments are in marketable securities. Due to the short-term duration of our investment portfolio and the low risk profile of
our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our portfolio. We generally have the ability to hold our investments
until maturity, and therefore we would not expect our operating results or cash flows to be affected to any significant degree by the effect of a change in market interest rates on our
investments. We carry our investments based on publicly available information. As of December 31, 2020, we do not have any hard to value investment securities or securities for which a
market is not readily available or active.
We are not subject to significant credit risk as this risk does not have the potential to materially impact the value of assets and liabilities.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
FINANCIAL STATEMENTS
Radius Health, Inc.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018
Consolidated Statement of Stockholders’ Equity (Deficit) for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
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72
73
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To the stockholders and the Board of Directors of Radius Health, Inc.
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheet of Radius Health, Inc. and subsidiaries (the "Company") as of December 31, 2020, the related consolidated statements of
operations and comprehensive loss, and stockholders' equity (deficit), for the year ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash
flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
We have also 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, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated February 25, 2021, expressed an unqualified opinion on the Company's internal control over financial reporting.
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 matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the
audit committee and that (1) relates 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 financial statements, taken as a whole, and we are not, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Reserves for variable consideration for Medicare Part D, Medicare Part D coverage gap, third-party payor rebates, and product returns - Refer to “Note 2 – Revenue
Recognition” and “Note 12 – Product Revenue Returns and Allowances” to the financial statements
Critical Audit Matter Description
Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established. Components of
variable consideration include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates, third-party payor rebates, and other incentives.
These reductions are offered within contracts between the Company and its customers, payors, and other indirect customers relating to the Company’s sale of its products. The reserves are
based on the amounts earned, or to be claimed on the related sales, and are classified as reductions of accounts receivable (if the amount is payable to the customer) or a current liability (if
the amount is payable to a party other than a customer). Chargebacks, discounts, fees, and returns are recorded as reductions of accounts receivables, net on the consolidated balance
sheets. Government and other rebates are recorded as a component of accrued expenses and other current liabilities on the consolidated balance sheets.
Certain of the reserves for variable consideration related to Medicare Part D, Medicare Part D coverage gap, third-party payor rebates, and product returns (the “Reserves”) involve the use
of significant assumptions and judgments in their calculation. These significant assumptions and judgments include consideration of (i) current contractual and statutory requirements, (ii)
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expected rebate or return rate, (iii) expected utilization of rebates by plan participants, and (iv) payor mix of the Company’s product sales.
Given the complexity and significant management judgment in determining the significant assumptions used in calculating the Reserves, auditing these estimates involved especially
subjective judgment in performing the audit procedures related to these estimates.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Reserves included the following, among others:
• We tested the effectiveness of internal controls over the Company’s estimate of the Reserves, including underlying assumptions and key inputs into the Company’s models used to
calculate the Reserves.
• We evaluated the appropriateness and consistency of the Company’s methods and assumptions used to calculate the Reserves.
• We tested significant assumptions and key inputs used to calculate the Reserves by
i.
performing sensitivity analyses addressing certain assumptions and subjective inputs utilized in the Reserves calculations to evaluate the impact on the estimated
Reserves
ii.
reviewing contracts and modifications thereto with certain of the Company’s customers
iii. developing an independent expectation of the estimated Reserves, including a comparison of rates used in management’s calculation to rates in the underlying contracts
iv. performing lookback analyses by comparing amounts invoiced to and paid by the Company to corresponding Reserves recorded by the Company
v.
performing testing, on a sample basis, of the activity within accounts receivable and current liabilities made throughout the year and evaluating whether such activity was
recorded in accordance with the contractual terms of the Company’s rebate programs and returns policy, and if applicable, statutory requirements.
• We tested the mathematical accuracy of the Reserve model
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 25, 2021
We have served as the Company’s auditors since 2020.
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To the Shareholders and the Board of Directors of Radius Health, Inc.
Opinion on the Financial Statements
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheet of Radius Health, Inc. (the “Company”) as of December 31, 2019, the related consolidated statements of operations and
comprehensive loss, stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2019, 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,
2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting
principles.
Adoption of ASU No. 2016-02
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of Accounting Standards Update
(ASU) No. 2016-02, Leases, and related amendments.
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.
/s/ Ernst & Young LLP
We served as the Company's auditor from 2005 until August 2020.
Boston, Massachusetts
February 27, 2020
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ASSETS
Current assets:
Cash and cash equivalents
Restricted cash
Marketable securities
Accounts receivable, net
Inventory
Prepaid expenses
Other current assets
Total current assets
Property and equipment, net
Intangible assets
Right of use assets - operating leases
Other assets
Total assets
Radius Health, Inc.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 31, 2020
December 31, 2019
$
$
$
$
$
91,436 $
567
23,280
20,310
9,174
13,279
22,502
180,548
796
5,785
3,933
520
191,582 $
9,925 $
59,758
1,000
2,490
73,173
213,645
24,905
3,518
315,241 $
69,886
567
91,015
23,289
5,323
12,131
846
203,057
2,293
6,583
6,704
514
219,151
6,030
53,030
—
2,198
61,258
195,591
—
4,581
261,430
5
1,222,137
21
(1,345,822)
(123,659)
191,582 $
5
1,194,327
3
(1,236,614)
(42,279)
219,151
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
Accrued expenses and other current liabilities
Deferred revenue
Operating lease liability, current
Total current liabilities
Convertible notes payable
Term loan
Operating lease liability, long term
Total liabilities
Commitments and contingencies
Stockholders’ equity (deficit):
Common stock, $0.0001 par value; 200,000,000 shares authorized, 46,779,479 shares and 46,189,870 shares issued and outstanding at
December 31, 2020 and 2019, respectively
Additional paid-in-capital
Accumulated other comprehensive income (loss)
Accumulated deficit
Total stockholders’ equity (deficit)
Total liabilities and stockholders’ equity (deficit)
See accompanying notes to consolidated financial statements.
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Radius Health, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share amounts)
REVENUES:
Product revenue, net
License revenue
Total revenue
OPERATING EXPENSES:
Cost of sales - product
Cost of sales - intangible amortization
Research and development, net of amounts reimbursable (a)
Selling, general and administrative
Other operating expense
Loss from operations
OTHER (EXPENSE) INCOME:
Other (expense) income, net
Interest income
Interest expense
NET LOSS
OTHER COMPREHENSIVE LOSS:
Unrealized gain (loss) from available-for-sale securities
COMPREHENSIVE LOSS
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS—BASIC AND DILUTED (Note 14)
LOSS PER SHARE:
Basic and diluted
WEIGHTED AVERAGE SHARES:
Basic and diluted
$
$
$
$
$
2020
December 31,
2019
2018
208,395 $
30,250
238,645
16,403
798
159,712
144,154
—
(82,422)
(212)
1,403
(27,977)
(109,208) $
18
(109,190) $
(109,208) $
173,317 $
—
173,317
15,287
798
116,757
152,704
—
(112,229)
242
3,929
(24,935)
(132,993) $
758
(132,235) $
(132,993) $
99,239
—
99,239
7,627
799
99,911
184,164
10,801
(204,063)
59
5,622
(22,955)
(221,337)
(441)
(221,778)
(221,337)
(2.35) $
(2.89) $
(4.88)
46,459,366
46,026,217
45,356,263
(a) Amounts reimbursable were $39.3 million, $0, and $0 for the years ended December 31, 2020, 2019, and 2018.
See accompanying notes to consolidated financial statements.
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Balance at December 31, 2017
Net loss
Unrealized loss from available-for-sale securities
Vesting of restricted shares
Exercise of options
Exercise of warrants
Share-based compensation expense related to share-based awards
for employee stock purchase plan
Issuance of common stock upon purchase by employee stock
purchase plan
Share-based compensation expense
Balance at December 31, 2018
Net loss
Unrealized gain from available-for-sale securities
Vesting of restricted shares
Exercise of options
Exercise of warrants
Share-based compensation expense related to share-based awards for
employee stock purchase plan
Issuance of common stock upon purchase by employee stock
purchase plan
Share-based compensation expense
Balance at December 31, 2019
Net loss
Unrealized gain from available-for-sale securities
Vesting of restricted shares
Share-based compensation expense related to share-based awards for
employee stock purchase plan
Exercise of options
Issuance of common stock upon purchase by employee stock
purchase plan
Share-based compensation expense
Balance at December 31, 2020
Radius Health, Inc.
Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands, except share and per share amounts)
Common Stock
Shares
Amount
Stockholders’ Equity
Additional Paid-In
Capital
Amount
Accumulated Other
Comprehensive
Income
(Loss)
Amount
Accumulated
Deficit
Amount
Total Stockholders’
Equity
(Deficit)
Amount
44,616,586 $
4 $
1,124,630 $
(314) $
(882,284) $
(221,337)
(441)
36,852
472,374
336,059
101,822
—
1
—
45,563,693 $
5 $
92,031
341,337
81,104
111,705
—
—
—
46,189,870 $
5 $
281,099
—
193,153
115,357
46,779,479
—
—
—
—
5
9,106
796
2,566
27,905
1,165,003 $
2,869
1,000
661
1,840
22,954
1,194,327 $
759
1,491
1,621
23,939
1,222,137
See accompanying notes to consolidated financial statements.
73
(755) $
758
(1,103,621) $
(132,993)
3 $
18
(1,236,614) $
(109,208)
21
(1,345,822)
242,036
(221,337)
(441)
—
9,107
—
796
2,566
27,905
60,632
(132,993)
758
—
2,869
1,000
661
1,840
22,954
(42,279)
(109,208)
18
—
759
1,491
1,621
23,939
(123,659)
Table of Contents
Radius Health, Inc.
Consolidated Statements of Cash Flows
(In thousands)
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Amortization of premium (accretion of discount) on marketable securities, net
Impairment loss on operating lease right of use assets
Share-based compensation expense
Amortization of debt discount and issuance costs
Loss on disposals of property and equipment
Changes in operating assets and liabilities:
Inventory
Accounts receivables, net
Prepaid expenses
Other current assets
Operating lease right of use assets
Other long-term assets
Accounts payable
Accrued expenses and other current liabilities
Lease liability, operating leases
Deferred revenue
Other non-current liabilities
Net cash used in operating activities
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of property and equipment
Purchases of marketable securities
Sales and maturities of marketable securities
Net cash provided by investing activities
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Proceeds from exercise of stock options and warrants
Proceeds from issuance of term loan
Deferred financing costs
Proceeds from employee stock purchase plan
Net cash provided by financing activities
NET INCREASE (DECREASE) 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
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
Property and equipment purchases in accrued expense
Cash paid for amounts included in the measurement of operating lease liabilities
Right of use assets obtained in exchange for operating lease liability
$
$
$
$
$
See accompanying notes to consolidated financial statements.
74
2020
Year Ended December 31,
2019
2018
$
(109,208) $
(132,993) $
(221,337)
1,693
268
2,410
24,698
18,058
602
(3,851)
2,979
(1,148)
(21,656)
1,752
(6)
3,895
6,728
(2,162)
1,000
—
(73,948)
—
(39,915)
107,400
67,485
1,491
25,000
(99)
1,621
28,013
21,550
70,453
92,003 $
9,854 $
— $
2,551 $
1,391 $
2,308
(394)
339
23,615
15,785
201
887
(6,531)
1,711
356
2,034
30
1,804
10,827
(2,298)
—
(95)
(82,414)
—
(119,502)
206,779
87,277
3,869
—
—
1,840
5,709
10,572
59,881
70,453 $
9,150 $
— $
2,720 $
9,077 $
2,867
(390)
—
28,701
13,800
—
(1,844)
(12,317)
(8,667)
989
—
255
311
(7,000)
—
—
(94)
(204,726)
(185)
(499)
135,000
134,316
9,106
—
—
2,566
11,672
(58,738)
118,619
59,881
9,582
309
—
—
Table of Contents
1. Nature of Business
Radius Health, Inc.
Notes to Consolidated Financial Statements
Radius Health, Inc. ("Radius" or the "Company") is a science-driven fully integrated biopharmaceutical company that is committed to developing and commercializing innovative
endocrine therapeutics. In April 2017, the Company’s first commercial product, TYMLOS (abaloparatide) injection, was approved by the U.S. Food and Drug Administration ("FDA") for
the treatment of postmenopausal women with osteoporosis at high risk for fracture defined as history of osteoporotic fracture, multiple risk factors for fracture, or patients who have failed
or are intolerant to other available osteoporosis therapy. In July 2017, the Company entered into a license and development agreement with Teijin Limited (“Teijin”) for abaloparatide for
subcutaneous injection (“abaloparatide-SC”) in Japan, under which the Company received an upfront payment and is entitled to receive milestone payments upon the achievement of
certain regulatory and sales milestones, and a fixed low double-digit royalty based on net sales of abaloparatide-SC in Japan during the royalty term. The Company is developing an
abaloparatide transdermal system, or abaloparatide-TD, for potential use in the treatment of postmenopausal women with osteoporosis. The Company divested its oncology assets in 2020
by licensing its investigational product candidate, elacestrant ("RAD1901"), to Berlin-Chemie AG, a company of the Menarini Group, and selling its internally discovered investigational
product candidate, RAD140, a non-steroidal selective androgen receptor modulator ("SARM"), to Ellipses Pharma. In December 2020, our wholly-owned subsidiary, Radius
Pharmaceuticals, Inc., acquired certain assets related to formulations of cannabidiol related to the oral administration of a solution of CBD for therapeutic use in humans or animals
(“RAD011”), for which the Company intends to seek FDA approval for a Phase 2/3 trial for treatment of hyperphagia behavior and weight loss in patients with Prader-Willi syndrome.
The Company is subject to risks common to companies in its industry including, but not limited to, the dependence on revenues from a single product, competition, uncertainty about
clinical trial outcomes and regulatory approvals, uncertainties relating to pharmaceutical pricing reimbursement, uncertain protection of proprietary technology, potential product liability
and the continued ability to obtain financing to fund the Company’s future operations. The Company has incurred losses and may incur additional losses in the future. As of December 31,
2020, the Company had an accumulated deficit of $1.3 billion, and total cash, cash equivalents, and marketable securities of $114.7 million.
Based upon its cash, cash equivalents, and marketable securities balance as of December 31, 2020, the Company believes that, prior to the consideration of revenue from the
potential future sales of any of its investigational products that may receive regulatory approval or proceeds from partnering and/or collaboration activities, it has sufficient capital to fund
its development plans, U.S. commercial scale-up and other operational activities, for at least one year from the date of this filing. The Company expects to finance the future development
costs of its clinical product portfolio with its existing cash and cash equivalents, marketable securities, or through strategic financing opportunities that could include, but are not limited to
collaboration agreements, cash provided by operations or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or
executed on favorable terms, and some could be dilutive to existing stockholders.
2. Summary of Significant Accounting Policies
Basis of Presentation—The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.
Use of Estimates—The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires the
Company’s management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ
from those estimates. The Company considers events or transactions that occur after the balance sheet date but before the consolidated financial statements are issued as additional
evidence for certain estimates or to identify matters that require additional disclosure. Subsequent events have been evaluated up to the date of issuance of these consolidated financial
statements.
Cash and Cash Equivalents—The Company considers all highly liquid investment instruments with an original maturity when purchased of three months or less to be cash
equivalents. Money market funds represents a majority of the cash equivalents balance at December 31, 2020 and 2019.
Restricted Cash—Restricted cash is reported as non‑current unless the restrictions are expected to be released in the next twelve months. As of December 31, 2020 and 2019, the
Company had restricted cash of $0.6 million, which represents cash held in a depository account at a financial institution to collateralize foreign VAT charges and virtual payables program.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash equivalents reported within the condensed consolidated balance sheets to the amounts shown in
the condensed consolidated statements of cash flows:
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Cash and cash equivalents
Restricted cash
Total cash, cash equivalents, and restricted cash shown in the
statement of cash flows
As of the year ended
December 31, 2020
December 31, 2019
$
$
91,436
567
$
92,003
$
69,886
567
70,453
Accounts Receivable—Accounts receivable relates to amounts due from customers. Accounts receivable are typically due within 31 days. The Company analyzes accounts that are
past due for collectability. Given the nature and historical collectability of the Company’s accounts receivable, an allowance for expected credit losses is not deemed necessary at
December 31, 2020 and 2019.
Significant Customers—Gross product revenues and accounts receivable from each of the Company’s customers who individually accounted for 10% or more of total gross product
revenues and/or 10% or more of total accounts receivable consisted of the following:
Percent of Total Gross Product Revenues
Year Ended December 31,
2019
2020
2018
Customer A
Customer B
Customer C
Customer D
Customer E
—
—
—
27
11
%
%
%
%
%
36
41
11
—
—
%
%
%
%
%
42
37
12
—
—
%
%
%
%
%
Percent of Accounts Receivable
As of December 31,
2020
2019
Customer A
Customer B
Customer C
Customer F
Customer G
Customer H
—
—
—
33
18
13
%
%
%
%
%
%
39
38
19
—
—
—
%
%
%
%
%
%
Marketable Securities—All investment instruments with an original maturity date, when purchased, in excess of three months have been classified as current marketable securities.
The Company classifies securities that are available to fund current operations as current assets. These marketable securities are classified as available-for-sale and are carried at fair value.
The Company records unrealized gains and losses on available-for-sale debt securities as a component of accumulated other comprehensive (loss), which is a separate component of
shareholders’ equity on its consolidated balance sheet, until such gains and losses are realized. The amortized cost of debt securities in this category is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses on available-for-sale securities are included in interest income.
The cost of securities sold is based on the specific identification method. The Company periodically reviews the portfolio of securities to determine whether an other-than-temporary
impairment has occurred. No such losses have occurred to date. There were no realized gains or losses on the sale of securities for the years ended December 31, 2020 and 2019.
Fair Value Measurements—Fair value is determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
market for the asset or liability in an orderly transaction between market participants. Authoritative guidance specifies a hierarchy of valuation techniques based upon whether the inputs to
those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (observable inputs) or reflect the
Company’s own assumptions of market participant valuation (unobservable inputs). The fair value hierarchy consists of three levels:
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Level 1 - Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or inputs that are observable
or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The authoritative guidance requires the use of observable market data if such data is available without undue cost and effort. When available, the Company uses unadjusted quoted
market prices to measure fair value and classify such items within Level 1. If quoted market prices are not available, fair value is based upon internally developed models that use, where
possible, current market-based or independently-sourced market parameters, such as interest and currency rates and comparable transactions. Items valued using internally generated
models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, items may be classified in Level 3 even though there may be inputs that
are readily observable. If quoted market prices are not available, the valuation model used generally depends on the specific asset or liability being valued.
Some assets and liabilities are required to be recorded at fair value on a recurring basis, while other assets and liabilities are recorded at fair value on a nonrecurring basis. The
Company records the fair value of long-lived assets and other intangible assets on a nonrecurring basis. The carrying amounts of current financial instruments, which include cash
equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses, approximate their fair values due to the short-term nature of these instruments. The fair
value of convertible notes payable and the term loan are determined based upon data from readily available pricing sources which utilize market observable inputs and other characteristics
for similar types of instruments.
The Company reviews the carrying value of long-lived assets and other intangible assets on an annual basis or whenever events or changes in circumstances indicate the fair value of
the asset is below its carrying amount. Fair value is determined using various valuation techniques, including discounted cash flows, market-related multiples, and recently reported
transactions for similar assets in the marketplace.
Concentrations of Credit Risk and Off-Balance-Sheet Risk—Financial instruments that potentially subject the Company to credit risk primarily consist of cash and cash equivalents
and available-for-sale marketable securities. The Company mitigates its risk with respect to cash and cash equivalents and marketable securities by maintaining its deposits and
investments at high-quality financial institutions. The Company invests any excess cash in money market funds and other securities, and the management of these investments is not
discretionary on the part of the financial institution. The Company has no significant off-balance-sheet risks such as foreign exchange contracts, option contracts, or other hedging
arrangements.
The Company is also subject to credit risk from its accounts receivable related to its product sales. As part of its credit management policy, the Company performs ongoing credit
evaluations of its customers, and the Company has not required collateral from any customer.
Property and Equipment—Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the respective assets.
Research and Development Costs—The Company accounts for research and development costs by expensing such costs to operations as incurred. Research and development costs
primarily consist of clinical testing costs, including payments made to contract research organizations, personnel costs, outsourced research activities, laboratory supplies, and license fees.
Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized
amounts are expensed as the related goods are delivered or the services are performed.
Sales and Marketing Cost—Sales and marketing expenses consist primarily of wages, commissions and benefits for sales and marketing personnel, consulting fees, conferences and
seminars, and marketing and advertising costs such as marketing literature, promotional activities, conferences and seminars and branding. Advertising costs are expensed as incurred and
included in selling, general and administrative costs in the accompanying consolidated statements of operations.
Licensing Agreements—Costs associated with licensing early-stage technologies are expensed as incurred and are included in research and development expenses.
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Impairment of Long-Lived Assets—The Company maintains definite-lived intangible assets related to certain capitalized milestones. These assets are amortized over their remaining
useful lives, which are estimated based on the shorter of the remaining patent life or the estimated useful life of the underlying product. Intangible assets are amortized using the economic
consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated.
The Company assesses its intangible assets for impairment if indicators are present or changes in circumstance suggest that impairment may exist. Events that could result in an
impairment, or trigger an interim impairment assessment, include the receipt of additional clinical or nonclinical data regarding one of the Company’s drug candidates or a potentially
competitive drug candidate, changes in the clinical development program for a drug candidate, or new information regarding potential sales for the drug. If impairment indicators are
present or changes in circumstance suggest that impairment may exist, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of each
intangible asset to its carrying value on the consolidated balance sheet. If the undiscounted cash flows used in the recoverability test are less than the carrying value, the Company would
determine the fair value of the intangible asset and recognize an impairment loss if the carrying value of the intangible asset exceeds its fair value. No impairment charges have been
recognized since the Company’s inception.
Other current assets—Research and development costs incurred by the Company that are reimbursable are recorded as other receivables or unbilled receivables and are included in
other current assets. As of December 31, 2020, total reimbursable research and development costs of $21.4 million was included in other current assets on the consolidated balance sheet.
Segment Information—Operating segments are defined as components of an enterprise engaged in business activities for which discrete financial information is available and
regularly reviewed by the chief decision maker in determining how to allocate resources and in assessing performance. The Company views its operations and manages its business as one
operating segment and operates in one geographic area.
Income Taxes—The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax basis, as well as operating loss and tax credit carryforwards. The Company measures deferred tax assets and liabilities
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences and carryforwards are expected to be recovered or settled. Deferred tax assets
are reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization. The effect on deferred tax assets and liabilities as a result of a change in tax rates is
recognized as income in the period that includes the enactment date.
The Company uses judgment to determine the recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. Any material interest and penalties related to unrecognized tax benefits are recognized in income tax expense.
Due to uncertainty surrounding the realization of the favorable tax attributes in future tax returns the Company has recorded a full valuation allowance against otherwise realizable
net deferred tax assets as of December 31, 2020 and 2019.
Share-Based Compensation-Options—The Company measures stock-based compensation cost at the accounting measurement date based on the fair value of the option and
recognizes the expense related to awards to employees on a straight-line basis over the requisite service period of the option, which is typically the vesting period. Forfeitures are
recognized as they occur.
The Company estimates the fair value of each option using the Black-Scholes option pricing model that considers the fair value of its common stock, the exercise price, the expected
life of the option, the expected volatility of its common stock, expected dividends on its common stock, and the risk-free interest rate over the expected life of the option. Due to the
limited trading history of the Company’s common stock since its initial public offering in June 2014, the Company uses the simplified method described in the SEC’s Staff Accounting
Bulletin No. 107, Share-Based Payment, to determine the expected life of the option grants. The estimate of expected volatility is based on a review of the historical volatility of similar
publicly held companies in the biotechnology field over a period commensurate with the option’s expected term. The Company has never declared or paid any cash dividends on its
common stock and does not expect to do so in the foreseeable future. Accordingly, it uses an expected dividend yield of zero. The risk-free rate is based on the U.S. Treasury yield curve in
effect at the time of grant valuation for a period commensurate with the option’s expected term. These assumptions are subjective and changes in them could significantly impact the value
of the option and hence the related compensation expense.
Stock-based compensation expense recognized for options granted to consultants is also based upon the grant date fair value of the options issued, as determined by the Black-
Scholes option pricing model.
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Revenue Recognition— In April 2017, the FDA approved TYMLOS. Subsequent to receiving FDA approval, the Company entered into a limited number of arrangements with
wholesalers in the U.S. to distribute TYMLOS. In the first quarter of 2020, the Company executed a transition of our external distribution model from full-line wholesalers to specialty
distributors and specialty pharmacies (collectively, its “Customers”). Additionally, in July 2017, the Company entered into a License and Development Agreement (the “Teijin
Agreement”) with Teijin Limited (“Teijin”) for abaloparatide-SC in Japan. These arrangements are the Company’s initial contracts with customers and, as such, were evaluated and
accounted for in compliance with Accounting Standards Codification (“ASC”) Topic 606 - Revenue from Contracts with Customers (“Topic 606”), which was adopted during the quarter
ended June 30, 2017. In connection therewith, there was no transition to Topic 606 because the Company had no historical revenue. This standard applies to all contracts with customers,
except for contracts that are within the scope of other standards. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an
amount that reflects the consideration which the entity expects to be entitled in exchange for those goods or services.
To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s)
with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the
contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a
contract under Topic 606, including when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At
contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract, determines those that
are performance obligations, and assesses whether each promised good or service is distinct. For a complete discussion of accounting for product revenue, see Product Revenue, Net
(below).
Product Revenue, Net— The Company sells TYMLOS to a limited number of Customers. In addition to distribution agreements with Customers, the Company enters into
arrangements with health care providers and payors that provide for government mandated and/or privately negotiated rebates, chargebacks, and discounts with respect to the purchase of
the Company’s products.
The Company recognizes revenue on product sales when the Customer obtains control of the Company’s product, which occurs at a point in time (upon delivery). Product revenues
are recorded net of applicable reserves for variable consideration, including discounts and allowances.
If taxes should be collected from Customers relating to product sales and remitted to governmental authorities, they will be excluded from revenue. The Company expenses
incremental costs of obtaining a contract when incurred, if the expected amortization period of the asset that the Company would have recognized is one year or less. However, no such
costs were incurred during the twelve months ended December 31, 2020 and 2019.
Reserves for Variable Consideration— Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for
which reserves are established. Components of variable consideration include trade discounts and allowances, product returns, provider chargebacks and discounts, government rebates,
third-party payor rebates, and other incentives, such as voluntary patient assistance, and other allowances that are offered within contracts between the Company and its Customers, payors,
and other indirect customers relating to the Company’s sale of its products. These reserves, as detailed below, are based on the amounts earned, or to be claimed on the related sales, and
are classified as reductions of accounts receivable (if the amount is payable to the Customer) or a current liability (if the amount is payable to a party other than a Customer). These
estimates take into consideration a range of possible outcomes which are probability-weighted in accordance with the expected value method in Topic 606 for relevant factors such as
current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. 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 respective underlying contracts.
The amount of variable consideration which is 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 under the contract will not occur in a future period. The Company’s analyses also contemplated application of the
constraint in accordance with the guidance, under which it determined a material reversal of revenue would not occur in a future period, for the estimates detailed below, as of
December 31, 2020 and, therefore, the transaction price was not reduced further during the twelve months ended December 31, 2020 and 2019. Actual amounts of consideration ultimately
received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net
product revenue and earnings in the period such variances become known.
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Trade Discounts and Allowances— The Company generally provides Customers with discounts which include incentive fees that are explicitly stated in the Company’s contracts and
are recorded as a reduction of revenue in the period the related product revenue is recognized.
Product Returns— Consistent with industry practice, the Company generally offers Customers a limited right of return for product that has been purchased from the Company based
on the product’s expiration date, which lapses upon shipment to a patient. The Company estimates the amount of its product sales that may be returned by its Customers and records this
estimate as a reduction of revenue in the period the related product revenue is recognized, as well as reductions to accounts receivables, net on the consolidated balance sheets. The
Company currently estimates product return liabilities using available industry data and its own sales information, including its visibility into the inventory remaining in the distribution
channel. The Company has received an immaterial amount of returns to date and believes that returns of product in future periods will be minimal.
The Company’s limited right of return policy allows for eligible returns of TYMLOS in the following circumstances:
•
•
•
•
•
•
Shipment errors that were the result of an error by us;
Quantity delivered that is greater than the quantity ordered;
Product distributed by us that is damaged in transit prior to receipt by the customer;
Expired product, previously purchased directly from us, that is returned during the period beginning six months prior to the product’s expiration date and ending twelve
months after the product’s expiration date;
Product subject to a recall; and
Product that we, at our sole discretion, have specified to be returned.
In addition, our limited right of return policy allows for eligible returns of TYMLOS from indirect purchasers in the following circumstances:
•
•
•
Expired product that is returned during the period beginning six months prior to the product’s expiration date and ending twelve months after the product’s expiration date;
Product subject to a recall; and
Product that we, at our sole discretion, have specified to be returned.
Provider Chargebacks and Discounts— Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products
to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the
difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are established in the same period that the related
revenue is recognized, resulting in a reduction of product revenue and accounts receivables, net. Chargeback amounts are generally determined at the time of resale to the qualified
healthcare provider by Customers, and the Company generally issues credits for such amounts within a few weeks of the Customer’s notification to the Company of the resale. Reserves
for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel inventories at each reporting period-end that the Company expects will
be sold to qualified healthcare providers, and chargebacks that Customers have claimed, but for which the Company has not yet issued a credit.
Government Rebates— The Company is subject to discount obligations under state Medicaid programs and Medicare. These reserves are recorded in the same period the related
revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the
consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional
liability under the Medicare Part D program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an
invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which
remains in the distribution channel inventories at the end of each reporting period.
Payor Rebates— The Company contracts with certain third-party payors, primarily health insurance companies and pharmacy benefit managers, for the payment of rebates with
respect to utilization of its products. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of
product revenue and the establishment of a current liability, which is included in accrued expenses and other current liabilities on the consolidated balance sheets.
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Other Incentives— Other incentives which the Company offers include voluntary patient assistance programs, such as the Company’s co-pay assistance program, which are intended
to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is
based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue but remains in the distribution
channel inventories at the end of each reporting period. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and
the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets.
Product Revenue Reserves and Allowances— Chargebacks, discounts, fees, and returns are recorded as reductions of accounts receivables, net on the consolidated balance sheets.
Government and other rebates are recorded as a component of accrued expenses and other current liabilities on the consolidated balance sheets.
Licenses of Intellectual Property— We enter into out-licensing agreements within the scope of Topic 606, under which we license certain rights to our product candidates to third
parties. Such agreements may include the transfer of intellectual property rights in the form of licenses, transfer of technological know-how, delivery of drug substances, research and
development services, and participation on certain committees with the counterparty. Payments made by the customers may include one or more of the following: non-refundable, up-front
license fees; payments upon the exercise of customer options; development, regulatory, and commercial milestone payments; payments for manufacturing supply services we provide
through our contract manufacturers; and royalties on net sales of licensed products if they are successfully approved and commercialized. Each of these payments may result in license,
collaboration, or other revenue, except revenue from royalties on net sales of licensed products, which would be classified as royalty revenue.
In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our out-licensing agreements, we perform the following steps: (i)
identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations including whether they are
distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the
performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance obligation. At contract inception, once the contract is determined to be within the scope
of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is
distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
If the license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenue from the transaction
price allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. We evaluate all other promised goods or services
in the agreement to determine if they are distinct. If they are not distinct, they are combined with other promised goods or services to create a bundle of promised goods or services that is
distinct. Optional future services where any additional consideration paid to us reflects their standalone selling prices do not provide the customer with a material right and, therefore, are
not considered performance obligations. If optional future services are priced in a manner which provides the customer with a significant or incremental discount, they are material rights,
and are accounted for as performance obligations.
We utilize judgment to determine the transaction price. In connection therewith, we evaluate contingent milestones at contract inception to estimate the amount which is not probable
of a material reversal to include in the transaction price using the most likely amount method. Milestone payments that are not within our control, such as regulatory approvals, are not
considered probable of being achieved until those approvals are received and, therefore, the variable consideration is constrained. At the end of each reporting period, we re-evaluate the
probability of achieving development, regulatory, or commercial milestone payments which may not be subject to a material reversal and, if necessary, adjust our estimate of the overall
transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license and other revenue, as well as earnings, in the period of adjustment.
The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance
obligations under the contract are satisfied.
We then determine whether the performance obligations or combined performance obligations are satisfied over time or at a point in time and, if over time, the appropriate method of
measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. We evaluate the measure of progress, as applicable, each reporting period and, if necessary,
adjust the measure of performance and related revenue recognition.
When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a
contract liability is recorded within deferred revenue. Contract liabilities within deferred revenue are recognized as revenue after control of the goods or services is transferred to the
customer and all revenue recognition criteria have been met.
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For arrangements that include sales-based royalties, including sales-based milestone payments, and the license is deemed to be the predominant item to which the royalties relate, the
Company recognizes revenue at the later of when the related sales occur or when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or
partially satisfied). To date, we have not recognized any royalty revenue resulting from our out-licensing arrangements.
Manufacturing Supply Services— Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply, at
the customer’s discretion, are generally considered as options. The Company assesses if these options provide a material right to the licensee and, if so, they are accounted for as separate
performance obligations. If the Company is entitled to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration, or
other revenue when the customer obtains control of the goods, which is upon delivery.
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 and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting
period, and it writes down any excess and obsolete inventories to their estimated realizable value in the period in which the impairment is first identified. Such impairment charges, should
they occur, are recorded within cost of product revenues. The determination of whether inventory costs will be realizable requires estimates by management. If actual market conditions are
less favorable than projected by management, additional write-downs of inventory may be required which would be recorded as a cost of product sales in the consolidated statements of
operations and comprehensive loss.
The Company capitalizes inventory costs associated with the Company’s products after regulatory approval when, based on management’s judgment, future commercialization is
considered probable and the future economic benefit is expected to be realized. Inventory acquired prior to receipt of marketing approval of a product candidate is expensed as research
and development expense as incurred. Inventory that can be used in either the production of clinical or commercial product is expensed as research and development expense when
selected for use in a clinical manufacturing campaign.
Shipping and handling costs for product shipments are recorded as incurred in cost of product revenues along with costs associated with manufacturing the product and any inventory
write-downs.
Intangible Assets—The Company maintains definite-lived intangible assets related to certain capitalized milestones. These assets are amortized over their remaining useful
lives, which are estimated based on the shorter of the remaining patent life or the estimated useful life of the underlying product. Intangible assets are amortized using the economic
consumption method if anticipated future revenues can be reasonably estimated. The straight-line method is used when future revenues cannot be reasonably estimated.
Accrued Clinical Expenses—The Company estimates its accrued clinical expenses, which involves reviewing open contracts and purchase orders, communicating with 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. Payments under some of the contracts the Company has with parties depend on factors such as successful enrollment of certain
numbers of patients, site initiation and the completion of clinical trial milestones. Examples of estimated accrued clinical expenses include:
•
•
•
fees paid to investigative sites and laboratories in connection with clinical studies;
fees paid to clinical research organizations (“CRO”) in connection with clinical studies, if CROs are used; and
fees paid to contract manufacturers in connection with the production of clinical trial materials.
When accruing clinical expenses, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If possible, the
Company obtains information regarding unbilled services directly from its service providers. However, the Company may be required to estimate the cost of these services based only on
internally developed estimates. If the Company underestimates or overestimates the cost associated with a trial or service at a given point in time, adjustments to research and development
expenses may be necessary in future periods. Historically, the Company’s estimated accrued clinical expenses have approximated actual expense incurred. Subsequent changes in estimates
may result in a material change in the Company’s accruals.
Convertible Note Payable— In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted for the liability and equity
components of the Company’s 3% Convertible Senior Notes due by 2024 (the “Convertible Notes”) by allocating the proceeds between the liability component and the embedded
conversion option (the “Equity Component”) due to the Company’s ability to settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at its option.
The carrying amount of the liability components was calculated by
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measuring the fair value of a similar liability that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible
debt borrowing rate for similar debt. The Equity Component of the Convertible Notes was recognized as a debt discount and represents the difference between the proceeds from the
issuance of the Convertible Notes and the fair value of the liability of the Convertible Notes on their respective dates of issuance. The excess of the principal amount of the liability
component over its carrying amount (the “Debt Discount”) is amortized to interest expense using the effective interest method over seven years. The Equity Component is not remeasured
as long as it continues to meet the conditions for equity classification. In connection with issuance of the Convertible Notes, the Company also incurred certain offering costs directly
attributable to the offering. Such costs are deferred and amortized over the term of the debt to interest expense using the effective interest method. A portion of the deferred financing costs
incurred in connection with the Convertible Notes was deemed to relate to the Equity Component and was allocated to additional paid-in capital.
Net Loss Per Common Share—Net loss per common share is calculated using an earnings allocation formula that determines net loss per share for the holders of the Company's
common shares. Net income available to common shareholders was allocated to each share on an as-converted basis as if all of the earnings for the period had been distributed.
Diluted net income per share is computed using the more dilutive of (a) the two-class method, or (b) the if-converted method. The weighted-average number of common shares
outstanding gives effect to all potentially dilutive common equivalent shares, including outstanding stock options, and warrants. Common equivalent shares are excluded from the
computation of diluted net income per share if their effect is anti-dilutive.
Comprehensive Income (Loss)—Comprehensive income (loss) refers to revenues, expenses, gains and losses that are excluded from net income (loss), as these amounts are recorded
directly as an adjustment to stockholders’ equity, net of tax. The Company’s other comprehensive (loss) income is comprised of unrealized gains (losses) on its available-for-sale
marketable securities.
Accounting Standards Updates—Recently Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). Certain
amendments thereto were also issued by the FASB. ASU 2016-13 and the related amendments require that credit losses be reported using an expected losses model, representing the
entity’s current estimate of credit losses expected to be incurred. The previous accounting guidance, as applied by the Company through December 31, 2019, was based on an incurred
losses model. The standard replaces the incurred loss impairment methodology under current U.S. GAAP with a methodology that reflects expected credit losses and requires the use of a
forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. For available-for-sale debt securities with unrealized losses, ASU 2016-13 and
the related amendments now requires allowances to be recorded instead of reducing the amortized cost of the investment. These amendments under ASU 2016-13 are effective for interim
and annual fiscal periods beginning after December 15, 2019. The Company adopted ASU 2016-13 on January 1, 2020 and it did not have a material impact on the Company’s
consolidated financial statements.
In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”) and ASU No. 2018-11, Target Improvements to Topic 842, Leases
(“ASU 2018-11”). The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of ASU 2016-02 and have the same effective and
transition requirements as ASU 2016-02. ASU 2018-11 gives entities the option to not provide comparative period financial statements and instead apply the transition requirements as of
the effective date of ASU 2016-02. ASU 2016-02, ASU 2018-10 and ASU 2018-11 are effective for fiscal years, and interim periods within those years, beginning after December 15,
2018. Early adoption is permitted. The Company adopted the standard effective January 1, 2019 using the optional method under ASU 2018-11 and therefore, prior period financial
information has not been retrospectively adjusted.
The Company applied the package of practical expedients to leases that commenced prior to the effective date whereby it elected to not reassess: (i) whether any expired or existing
contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. The Company also elected the short-term lease
recognition exemption for all leases that qualify, where a right-of-use asset or lease liability will not be recognized for short term leases. Furthermore, for all leases entered into or modified
after the effective date, the Company has made an accounting policy election, by class of underlying asset, to not separate non-lease components from lease components. The Company did
not elect the use-of-hindsight to estimate the lease term or to assess impairment of right-of-use assets for existing leases.
As summarized in the table below, the standard had a material impact on the Company’s consolidated balance sheet as of December 31, 2019, specifically through recognition of
right-of-use assets and lease liabilities for operating leases of $8.3 million on the effective date. However, the standard did not have a material impact on the Company’s consolidated
statement of operations and comprehensive loss, as expense for the Company’s existing operating leases continues to be recognized consistent with the recognition pattern before adoption.
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Consolidated Balance Sheet Data (in thousands)
Right of use assets - operating leases (1)
Operating lease liability, current (2)
Operating lease liability, long term (2)
$
$
$
(1) Represents capitalization of operating lease right of use assets.
(2) Represents recognition of operating lease liabilities.
January 1, 2019
Prior to ASC 842 Adoption
ASC 842 Adjustment
January 1, 2019
As Adjusted
—
—
—
$
$
$
8,289
2,245
6,044
$
$
$
8,289
2,245
6,044
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement - Disclosure Framework - Changes to the Disclosure Requirement for Fair Value Measurement, or (“ASU
2018-13”). The amendments in ASU 2018-13 modify the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, based on the concepts in the
Concepts Statement, including the consideration of costs and benefits. The amendments under ASU 2018-13 are effective for interim and annual fiscal periods beginning after December
15, 2019, with early adoption permitted. The Company adopted ASU 2018-13 on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial
statements.
In August 2018, the FASB issued ASU 2018-15, Intangible-Goodwill and Other Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). ASU 2018-15 updates guidance
regarding accounting for a cloud computing arrangement that is a service contract. The amendments under ASU 2018-15 are effective for interim and annual fiscal periods beginning after
December 15, 2019, with early adoption permitted. The Company adopted ASU 2018-15 on January 1, 2020 and it did not have a material impact on the Company’s consolidated financial
statements.
Other- In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law and provides an estimated $2.2 trillion to fight the COVID-
19 pandemic and stimulate the economy. The business tax provisions of the CARES Act include temporary changes to income and non-income-based tax laws. Some of the key income
tax provisions include eliminating the 80% of taxable income limitations by allowing corporate entities to fully utilize net operating loss (“NOL”) carryforwards to offset taxable income in
2018, 2019, or 2020 and reinstating it for tax years after 2020; allowing NOLs generated in 2018, 2019, or 2020 to be carried back five years; increasing the net interest expense deduction
limit to 50% of adjusted taxable income from 30% for the 2019 and 2020 tax years; allowing taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the
credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cut and Jobs Act; and allowing entities to deduct more of their charitable cash
contributions made during calendar year 2020 by increasing the taxable income limitation to 25% from 10%. Companies are required to account for these provisions in the period that
includes the March 2020 enactment date (i.e., the first quarter for calendar year-end entities). The Company has assessed the impact of these provisions and they are not material to the
Company’s consolidated financial statements or related disclosures. Measures of the CARES Act not related to income-based taxes include allowing an employer to pay its share of Social
Security payroll taxes that would otherwise be due from the date of enactment through December 31, 2020 over the following two years and allowing eligible employers subject to closure
due to the COVID-19 pandemic to receive a 50% credit on qualified wages against their employment taxes each quarter, with any excess credits eligible for refunds. These measures of the
CARES Act are also not material to the Company’s consolidated financial statements as the Company did not apply for any credit during the period.
Accounting Standards Updates—Recently Issued
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 eliminates certain exceptions related to the
approach for intraperiod tax allocation, the methodology for calculating income taxes in an interest period and the recognition of deferred tax liabilities for outside basis differences, and
also clarifies and simplifies other aspects of the accounting for income taxes. The amendments under ASU 2010-12 are effective for interim and annual fiscal periods beginning after
December 15, 2020. The Company is currently evaluating the effects the adoption of ASU 2019-12 will have on its consolidated financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The guidance simplifies the complexity associated with applying
U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and
derivative scope exception for contracts in an entity’s own equity. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those
fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently
in the process of determining the effect that the adoption will have on its consolidated financial statements and related disclosures.
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3. Marketable Securities
Available-for-sale marketable securities and cash and cash equivalents consist of the following (in thousands):
Cash and cash equivalents:
Cash
Money market
Total
Marketable securities:
Domestic corporate debt securities
Domestic corporate commercial paper
Total
Cash and cash equivalents:
Cash
Money market
Total
Marketable securities:
Domestic corporate debt securities
Domestic corporate commercial paper
Agency bonds
US treasury bonds
Total
Amortized
Cost Value
December 31, 2020
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$
$
$
$
$
$
$
$
44,616
46,820
91,436
18,266
4,993
23,259
Amortized
Cost Value
34,726
35,160
69,886
41,229
24,900
12,391
12,492
91,012
$
$
$
$
$
$
$
$
—
—
—
21
2
23
$
$
$
$
December 31, 2019
Gross
Unrealized
Gains
Gross
Unrealized
Losses
—
—
—
3
5
1
—
9
$
$
$
$
—
—
—
(2)
—
(2)
—
—
—
(3)
—
(3)
—
(6)
$
$
$
$
$
$
$
$
44,616
46,820
91,436
18,285
4,995
23,280
34,726
35,160
69,886
41,229
24,905
12,389
12,492
91,015
Fair
Value
There were no securities in a loss position for more than 12 months at December 31, 2020 and 2019. There was one debt security in an unrealized loss position for less than
12 months at December 31, 2020 and there were eight debt securities that had been in an unrealized loss position for less than 12 months at December 31, 2019. The aggregate unrealized
loss on these securities as of December 31, 2020 and 2019 was approximately $2.0 thousand and $6.0 thousand, respectively, and the fair value was $5.0 million and $42.5 million,
respectively. As it was not more likely than not that the Company would be required to sell these securities before the recovery of their amortized cost basis, which may be maturity, the
Company did not consider these investments to be other-than-temporarily impaired as of December 31, 2020 and 2019.
As of December 31, 2020, all marketable securities, which had an aggregate fair value of $23.3 million, are maturing within one year.
4. Fair Value Measurements
The Company determines the fair value of its financial instruments based upon the fair value hierarchy, which requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value. Below are the three levels of inputs that may be used to measure fair value:
•
•
•
Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
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Transfers into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers between any levels during the
twelve months ended December 31, 2020 and 2019.
The following table summarizes the financial instruments measured at fair value on a recurring basis in the accompanying consolidated balance sheets as of December 31, 2020 and
December 31, 2019 (in thousands):
Assets
Cash and cash equivalents:
Cash
Money market funds (1)
Total
Marketable Securities
Domestic corporate debt securities (2)
Domestic corporate commercial paper (2)
Total
Assets
Cash and cash equivalents:
Cash
Money market funds (1)
Total
Marketable securities:
Domestic corporate debt securities (2)
Domestic corporate commercial paper (2)
Agency bonds (2)
US treasury bonds (2)
Total
Level 1
Level 2
Level 3
Total
As of December 31, 2020
$
$
$
$
$
$
$
$
44,616
46,820
91,436
—
—
—
Level 1
34,726
35,160
69,886
—
—
—
—
—
$
$
$
$
$
$
$
$
—
—
—
18,285
4,995
23,280
$
$
$
$
As of December 31, 2019
Level 2
Level 3
—
—
—
41,229
24,905
12,389
12,492
91,015
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
Total
44,616
46,820
91,436
18,285
4,995
23,280
34,726
35,160
69,886
41,229
24,905
12,389
12,492
91,015
(1) Fair value is based upon quoted market prices.
(2) Fair value is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based
valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets.
Inputs are obtained from various sources, including market participants, dealers and brokers.
5. Inventory
Inventory consists of the following at December 31, 2020 and 2019 (in thousands):
Raw materials
Work in process
Finished goods
Total inventories
$
$
December 31, 2020
December 31, 2019
5,228 $
667
3,279
9,174 $
4,093
—
1,230
5,323
Finished goods manufactured by the Company have a 36-month shelf life from date of manufacture.
6. Property and Equipment
Property and equipment consists of the following (in thousands):
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Furniture and fixtures, lab and office equipment
Computer equipment and software
Manufacturing equipment
Leasehold improvements
Less: accumulated depreciation
Property and equipment, net
Estimated Useful
Life (In Years)
5
3
10
Shorter of useful life or remaining lease term
December 31,
2020
2019
299 $
2,697
1,616
183
4,795
(3,999)
796 $
1,262
2,726
1,616
1,915
7,519
(5,226)
2,293
$
$
The Company performed a qualitative impairment analysis to determine if any of the assets displayed indicators of impairment that would trigger the need for further analysis, and
concluded that there were indicators of impairment for property and equipment as of December 31, 2020. As a result of the abandonment of our leases (see Note 18), we disposed
leasehold improvements, computer equipment, lab and office equipment, and furniture and fixtures and recorded a $0.6 million loss on disposal for these assets during the year ended
December 31, 2020. Depreciation expense related to property and equipment was approximately $0.9 million, $1.5 million and $1.9 million for the years ended December 31, 2020, 2019,
and 2018, respectively.
7. Intangible Assets
The following table presents intangible assets as of December 31, 2020 and 2019 (in thousands):
Acquired and in-licensed rights
Less: accumulated amortization
Total intangible asset, net
$
$
8,712 $
(2,927)
5,785 $
8,712
(2,129)
6,583
December 31, 2020
December 31, 2019
Estimated useful life (years)
11
The acquired and in-licensed rights relate to the milestone of €8.0 million (approximately $8.7 million) paid to Ipsen, which was triggered by the FDA approval of TYMLOS on
April 28, 2017.
The Company recorded approximately $0.8 million, $0.8 million, and $0.8 million in amortization expense related to intangible assets, using the straight-line methodology which is
considered the best estimate of economic benefit, during each of the twelve months ended December 31, 2020, 2019, and 2018, respectively. Estimated future amortization expense for
intangible assets as of December 31, 2020 is approximately $0.8 million per year over the remaining life of 7.25 years.
8. Accrued Expenses and Other Current Liabilities
Accrued expenses as of December 31, 2020 and 2019 consist of the following (in thousands):
Commercial costs
Product revenue reserves
Royalty payable
Research costs
Payroll and employee benefits
Interest
Professional fees
Restructuring
Other current liabilities
Total accrued expenses and other current liabilities
9. Convertible Notes Payable
87
December 31,
2020
2019
$
3,901 $
14,650
2,999
20,061
10,999
3,153
3,235
665
95
3,514
17,280
2,797
13,049
11,551
3,050
1,439
255
95
$
59,758 $
53,030
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On August 14, 2017, in a registered underwritten public offering, the Company issued $300.0 million aggregate principal amount of 3% Convertible Senior Notes due September 1,
2024 (the “Convertible Notes”). In addition, on September 12, 2017, the Company issued an additional $5.0 million principal amount of Convertible Notes pursuant to the exercise of an
over-allotment option granted to the underwriters in the offering. In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted
for the Liability and Equity Components of the Convertible Notes by allocating the proceeds between the Liability Component and the Equity Component, due to the Company’s ability to
settle the Convertible Notes in cash, common stock or a combination of cash and common stock, at its option. In connection with the issuance of the Convertible Notes, the Company
incurred approximately $9.4 million of debt issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated these costs to the Liability and
Equity Components based on the allocation of the proceeds. Of the total $9.4 million of debt issuance costs, $4.3 million was allocated to the Equity Component and recorded as a
reduction to additional paid-in capital and $5.1 million was allocated to the liability component and is now recorded as a reduction of the Convertible Notes in the Company’s consolidated
balance sheet. The portion allocated to the liability component is amortized to interest expense using the effective interest method over seven years.
The Convertible Notes are senior unsecured obligations of the Company and bear interest at a rate of 3.00% per annum, payable semi-annually in arrears on March 1 and September
1, beginning on March 1, 2018. Upon conversion, the Convertible Notes will be convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the
Company’s common stock, at the Company’s election. Prior to December 31, 2017, the Convertible Notes were not convertible except in connection with a make whole fundamental
change, as defined in the respective indentures. The Convertible Notes will be subject to redemption at our option, on or after September 1, 2021, in whole or in part, if the conditions
described below are satisfied. The Convertible Notes will mature on September 1, 2024, unless earlier converted, redeemed or repurchased in accordance with their terms. Subject to
satisfaction of certain conditions and during the periods described below, the Convertible Notes may be converted at an initial conversion rate of 20.4891 shares of common stock per
$1,000 principal amount of the Convertible Notes (equivalent to an initial conversion price of approximately $48.81 per share of common stock and 6,249,176 shares). As of December 31,
2020, the Notes were not convertible.
Holders of the Convertible Notes may convert all or any portion of their notes, in multiples of $1,000 principal amount, at their option at any time prior to the close of business on
the business day immediately preceding June 1, 2024 only under the following circumstances:
(1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2017 (and only during such calendar quarter), if the last reported sale price of the
Company’s common stock for at least 20 trading days (whether consecutive or not) during a period of 30 consecutive trading days ending on the last trading day of the
immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
(2) during the five-business day period after any five-consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of the
Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the
conversion rate on each such trading day;
(3) if the Company calls the Convertible Notes for redemption, until the close of business on the business day immediately preceding the redemption date; or
(4) upon the occurrence of specified corporate events.
Prior to September 1, 2021, the Company may not redeem the Convertible Notes. On or after September 1, 2021, the Company may redeem for cash all or part of the Convertible
Notes if the last reported sale price of the Company’s common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive)
during any 30-consecutive trading day period ending within 5 trading days prior to the date on which the Company provides notice of the redemption. The redemption price will be the
principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, calling any Convertible Note for
redemption will constitute a make-whole fundamental change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible
Note, if it is converted in connection with the redemption, will be increased in certain circumstances.
In accordance with accounting guidance for debt with conversion and other options, the Company separately accounted for the liability and equity components of the Convertible
Notes by allocating the proceeds between the liability component and the embedded conversion option (the “Equity Component”) due to the Company’s ability to settle the Convertible
Notes in cash, common stock or a combination of cash and common stock, at its option. The carrying amount of the Liability Component of $166.3 million was calculated by measuring
the fair value of a similar liability that does not have an associated
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convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible debt borrowing rate for similar debt. The Equity Component of the
Convertible Notes of $138.7 million was recognized as a debt discount and represents the difference between the proceeds from the issuance of the Convertible Notes of $305.0 million
and the fair value of the liability of the Convertible Notes of approximately $166.3 million on their respective dates of issuance. The excess of the principal amount of the liability
component over its carrying amount (the “Debt Discount”) is amortized to interest expense using the effective interest method over seven years. The Equity Component is not remeasured
as long as it continues to meet the conditions for equity classification. In connection with issuance of the Convertible Notes, the Company also incurred certain offering costs directly
attributable to the offering. Such costs are deferred and amortized over the term of the debt to interest expense using the effective interest method. A portion of the deferred financing costs
incurred in connection with the Convertible Notes was deemed to relate to the Equity Component and was allocated to additional paid-in capital.
The outstanding balances of the Convertible Notes consisted of the following (in thousands):
Liability component:
Principal
Less: debt discount and issuance costs, net
Net carrying amount
Equity component:
December 31,
2020
December 31,
2019
$
$
$
305,000 $
(91,355)
213,645 $
134,450 $
305,000
(109,409)
195,591
134,450
The Company determined the expected life of the Convertible Notes was equal to its seven-year term. The effective interest rate on the Liability Components of the Convertible
Notes for the period from the date of issuance through December 31, 2020 was 13.04%. As of December 31, 2020, the “if-converted value” did not exceed the remaining principal amount
of the Convertible Notes. The fair values of the 3% Convertible Senior Notes due September 1, 2024 are based on data from readily available pricing sources which utilize market
observable inputs and other characteristics for similar types of instruments, and, therefore, these convertible senior notes are classified within Level 2 in the fair value hierarchy. The fair
value of the Convertible Notes, which differs from their carrying value, is influenced by interest rates, the Company’s stock price and stock price volatility. The estimated fair value of the
Convertible Notes as of December 31, 2020 was approximately $272.9 million.
The following table sets forth total interest expense recognized related to the Convertible Notes during the twelve months ended December 31, 2020, 2019, and 2018 (in thousands):
Contractual interest expense
Amortization of debt discount
Amortization of debt issuance
Total interest expense
$
$
2020
2019
2018
9,150 $
17,403
651
27,204 $
9,150 $
15,213
572
24,935 $
9,150
13,300
505
22,955
Twelve Months Ended
December 31,
Future minimum payments on our long-term debt as of December 31, 2020 are as follows (in thousands):
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Years ended December 31,
Future Minimum Payments
2021
2022
2023
2024 and thereafter
Total minimum payments
Less: interest
Less: unamortized discount
Less: current portion
Long Term Debt
$
$
$
9,150
9,150
9,150
314,150
341,600
(36,600)
(91,355)
—
213,645
10. Term Loan and Credit Facility
On January 10, 2020, the Company and Radius Pharmaceuticals, Inc., a wholly-owned subsidiary of the Company (collectively, the “Borrowers”), entered into a (i) Credit and
Security Agreement, as amended (Term Loan) (the “Term Credit Agreement”) with MidCap Financial Trust, in its capacity as administrative agent (the “Agent”) and as a lender, and the
financial institutions or other entities from time to time parties thereto and (ii) Credit and Security Agreement (Revolving Loan) (the “Revolving Credit Agreement,” together with the
Term Credit Agreement, the “Credit Agreements”), with the Agent, and the financial institutions or other entities from time to time parties thereto.
The Credit Agreements consist of a secured term loan facility (the “Term Facility”) in an aggregate amount of $55.0 million, which will be made available to the Borrowers under
the following four tranches: (i) Tranche 1 - $10.0 million, available at closing; (ii) Tranche 2 - $15.0 million, available no earlier than June 25, 2020, but no later than December 31, 2020;
(iii) Tranche 3 - $15.0 million, available no later than December 31, 2021, subject to the Company’s satisfaction of certain conditions described in the Term Credit Agreement; and (iv)
Tranche 4 - $15.0 million, available no later than December 31, 2021, subject to the Company’s satisfaction of certain conditions described in the Term Credit Agreement.
The Credit Agreements also consist of a secured revolving credit facility (the “Revolving Facility”, together with the Term Facility, the “Facilities”) under which the Borrowers may
borrow up to $20.0 million, the availability of which is determined based on a borrowing base as follows: (i) up to 85% of the net collectible value of the Borrowers’ domestic accounts
receivable due from eligible direct and third-party payors, plus (ii) up to 40% of the Borrowers’ domestic eligible inventory, provided that the availability from eligible inventory may not
exceed 20% of the total availability at any time. The Borrowers also have the right, subject to certain customary conditions, to increase the Revolving Facility by $20.0 million.
The Facilities have a maturity date of June 1, 2024. The Borrowers guarantee their obligations under the Credit Agreements. The obligations are secured by first priority liens on
substantially all of the assets of the Borrowers, including, with certain exceptions, all of the capital stock of the Borrowers’ subsidiaries. On July 23, 2020, the Company entered into a
Partial Release and Acknowledgement Agreement (the “Release Agreement”) with the Agent pursuant to which the Agent agreed to release the security interest on certain assets of the
Company that are licensed to Berlin-Chemie AG pursuant to the license agreement between the Company and Berlin-Chemie AG.
The proceeds of the Term Facility may be used for (i) transaction fees in connection with the transactions contemplated by the Credit Agreements, (ii) the payment in full on the
closing date of certain existing debt, and (iii) working capital needs and general corporate purposes of the Borrowers and their subsidiaries. The proceeds of the Revolving Facility may be
used for (i) transaction fees in connection with the transactions contemplated by the Credit Agreements and (ii) working capital needs and general corporate purposes of the Borrowers and
their subsidiaries.
Borrowings under the Term Facility will bear interest through maturity at a variable rate based upon the LIBOR rate plus 5.75%, subject to a LIBOR floor of 2.00%. Borrowings
under the Revolving Facility will bear interest through maturity at a variable rate based upon the LIBOR rate plus 3.50%, subject to a LIBOR floor of 2.00%.
Subject to the terms and conditions set forth in the Credit Agreements, the Borrowers may be required to make certain mandatory prepayments prior to maturity.
The Credit Agreements contain affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, will limit
or restrict the ability of the Borrowers, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of
assets, pay dividends or make other distributions, voluntarily prepay other indebtedness as noted above in Note 6, “Convertible
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Notes Payable,” enter into transactions with affiliated persons, make investments, and change the nature of their businesses. The Credit Agreements also contain customary events of
default, including subject to thresholds and grace periods, among others, payment default, covenant default, cross default to other material indebtedness, and judgment default. In addition,
the Credit Agreements require the Borrowers to maintain a minimum level of net revenue, or in the case where the Borrowers fail to maintain a minimum level of net revenue, certain
levels of market capitalization and unrestricted cash.
As of December 31, 2020, the Company had received net proceeds of approximately $24.9 million from the Term Loan, net of fees and expenses of $0.1 million. The estimated fair
value of the Term Facility as of December 31, 2020 was approximately $22.4 million. The outstanding balance of the Term Loan as of December 31, 2020 was (in thousands):
Principal
Less: debt issuance costs, net
Net carrying amount
$
$
$
Term loan
25,000
(95)
24,905
The following table sets forth total interest expense recognized related to the Term Facility during the twelve months ended December 31, 2020 (in thousands):
December 31,
2020
Contractual interest expense
Amortization of debt discount
Total interest expense
$
$
771
4
775
Future minimum payments on the Term Facility as of December 31, 2020 are as follows (in thousands):
Years ended December 31,
Future Minimum Payments
2021
2022
2023
2024
Total minimum payments
Less: interest
Less: unamortized issuance costs
Less: current portion
Long Term Debt
$
$
$
1,864
1,964
17,610
9,027
30,465
(5,465)
(95)
—
24,905
11. Employee Stock Benefit Plans
Employee Stock Purchase Plan
In September 2016, the Company initiated the first offering period under the Company’s 2016 Employee Stock Purchase Plan (the “ESPP”), pursuant to which eligible employees
may purchase shares of the Company’s common stock on the last day of each predetermined six-month offering period at 85% of the lower of the fair market value per share at the
beginning or end of the applicable offering period. The offering periods run from March 1 through August 31 and from September 1 through February 28 (or February 29, in a leap year)
of each year.
At December 31, 2020, there were 1,819,788 shares available for future sale to employees under this plan. As of December 31, 2020, the Company recorded a liability of $0.5
million related to employee withholdings under this plan.
Stock Options under Equity Incentive Plans
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The Company has granted awards to employees, directors and consultants under the following compensation plans. The Company’s 2018 Stock Option and Incentive Plan (the “2018
Plan”) is the current plan under which the Company grants awards.
2003 Long-Term Incentive Plan—The Company’s 2003 Long-Term Incentive Plan (the “2003 Plan) provided for the granting of incentive stock options and nonqualified options to
key employees, directors and consultants of the Company. The exercise price of the incentive stock options, as determined by the Company's board of directors, was required to be at least
100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company's common stock) of the common stock fair value as of the date of the
grant. The provisions of the 2003 Plan limited the exercise of incentive stock options, but in no case could the exercise period extend beyond ten years from the date of grant (five years in
the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company's common stock). Stock options granted under the 2003 Plan generally vest over a
four-year period.
2011 Equity Incentive Plan—The Company's 2011 Equity Incentive Plan (the “2011 Plan”) replaced the 2003 Plan when the Company's board of directors approved the 2011 Plan on
November 7, 2011 and the shares that remained available for issuance under the 2003 Plan were assumed as shares authorized under the 2011 Plan. The 2011 Plan provided for the
granting of incentive stock options and nonqualified options to key employees, directors and consultants of the Company. The exercise price of the incentive stock options, as determined
by the Company's board of directors, was required to be at least 100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company's
common stock) of the common stock fair value as of the date of the grant. The provisions of the 2011 Plan limited the exercise of incentive stock options, but in no case could the exercise
period extend beyond ten years from the date of grant (five years in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company's common stock).
Stock options granted under the 2011 Plan generally vest over a four-year period, subject to continued employment with, or services to, the Company.
2018 Stock Option and Incentive Plan—The 2018 Plan replaced the 2011 Plan when the Company’s stockholders approved the new plan on June 6, 2018 and the shares that
remained available for issuance under the 2011 Plan were assumed as shares authorized under the 2018 Plan. The 2018 Plan provides for the granting of equity awards, including incentive
and non-qualified stock options and restricted stock units, to employees, non-employee directors and consultants of the Company. The exercise price of the incentive stock options, as
determined by the Company’s Board of Directors, must be at least 100% (110% in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company’s
common stock) of the common stock fair value as of the date of the grant. The provisions of the 2018 Plan limit the exercise of incentive stock options, but in no case may the exercise
period extend beyond ten years from the date of grant (five years in the case of incentive stock options granted to a stockholder owning in excess of 10% of the Company’s common
stock). Stock options and restricted stock units granted under the 2018 plan generally vest over a four-year period, subject to continued employment with, or services to, the Company.
As of December 31, 2020, an aggregate of 4,833,162 common shares remained outstanding under all of the Company’s stock based compensation plans. The number of common
shares remaining available for granting of future awards under these plans was approximately 6,078,075 at December 31, 2020.
The Company uses the Black-Scholes option-pricing model to estimate the grant date fair value of its employee stock options. The weighted-average grant-date fair value per share
of options granted during 2020, 2019, and 2018 was $10.23, $12.97, and $18.69 respectively. The weighted-average assumptions used in the Black-Scholes option-pricing model were as
follows:
Expected term (years)
Volatility
Expected dividend yield
Risk-free interest rates
2020
6.17
67 %
0 %
0.65 %
Years Ended
December 31,
2019
6.13
72 %
0 %
2.35 %
2018
6.23
56 %
0 %
2.68 %
A summary of stock option activity for the year ended December 31, 2020 is as follows (in thousands, except for share, per share, and weighted-average contractual life amounts):
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Options outstanding at December 31, 2019
Granted
Exercised
Canceled
Expired
Options outstanding at December 31, 2020
Options exercisable at December 31, 2020
Weighted-Average
Exercise Price
(in dollars
per share)
Weighted-Average
Contractual Life
(In Years)
Aggregate
Intrinsic
Value
34.69
17.27
7.72
24.79
45.56
29.50
36.27
5.57 $
3.45 $
2,896
568
Shares
4,834,255
1,615,440
(193,153)
(1,089,195)
(909,185)
4,258,162
2,667,370
$
$
$
The aggregate intrinsic value of options exercised (i.e., the difference between the market price at exercise and the price paid by employees to exercise the option) during the years
ended December 31, 2020 and 2019 was $1.6 million and $4.2 million, respectively.
As of December 31, 2020, there was approximately $14.6 million of total unrecognized compensation expense related to unvested option-based compensation arrangements, which is
expected to be recognized over a weighted-average period of approximately 3.25 years.
Restricted Stock Units
A summary of RSU activity during the year ended December 31, 2020 is as follows:
RSUs Outstanding at December 31, 2019
Granted
Vested
Forfeited
RSUs Outstanding at December 31, 2020
RSUs
Weighted-Average Grant Date
Fair Value (in dollars per share)
614,273 $
569,975
(281,099)
(306,889)
596,260 $
22.83
19.38
22.36
21.34
20.52
As of December 31, 2020, there was approximately $8.1 million of total unrecognized compensation expense related to unvested RSUs, which is expected to be recognized over a
weighted-average period of approximately 1.99 years.
Performance Units
During the twelve months ended December 31, 2020, the Company awarded 70,000 performance restricted stock units (“PSUs”) to an employee. Each PSU entitles the holder to
receive one share of the Company’s common stock if and when the PSU vests. The PSUs vest upon achievement of certain performance targets within a pre-specified period from the grant
date. The vesting of any earned units is subject to the employee’s continued service relationship with the Company through each vesting date. As of December 31, 2020, there were no
performance restricted stock units outstanding.
A summary of PSU activity during the twelve months ended December 31, 2020 is as follows:
PSUs Outstanding at December 31, 2019
Granted
Vested
Forfeited
PSUs Outstanding at December 31, 2020
93
PSUs
Weighted-Average Grant Date
Fair Value (in dollars per share)
79,000 $
70,000
—
(149,000)
— $
19.20
19.96
—
19.56
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As the performance condition must be met for the awards to vest, compensation cost will be recognized over the implicit service period and only if the performance condition is
assessed as probable of achievement. As of December 31, 2020, the achievement of the performance condition was not probable and, therefore, no expense has been recognized to date.
Performance Options
During the twelve months ended December 31, 2020, the Company awarded 575,000 performance stock options (“PSOs”) to an employee. Each PSO entitles the holder to receive
one share of the Company’s common stock if and when the PSO vests. The PSOs vest upon achievement of certain performance targets within a pre-specified period from the grant date.
The vesting of any earned options is subject to the employee’s continued service relationship with the Company through each vesting date.
A summary of PSO activity during the twelve months ended December 31, 2020 is as follows:
PSOs Outstanding at December 31, 2019
Granted
Vested
Forfeited
PSOs Outstanding at December 31, 2020
PSUs
Weighted-Average Grant Date
Fair Value (in dollars per share)
— $
575,000
—
—
575,000 $
—
16.46
—
—
16.46
As the performance condition must be met for the awards to vest, compensation cost will be recognized over the requisite service period. As of December 31, 2020, approximately
$2.4 million of expense was recognized.
The following table summarizes stock-based compensation expense by financial statement line (in thousands):
Research and development
General and administrative
Share-based compensation expense included in operating expenses
12. Product Revenue Reserves and Allowances
Years Ended December 31,
2020
2019
2018
$
$
6,654 $
8,768 $
11,657
18,044
14,847
17,044
24,698 $
23,615 $
28,701
To date, the Company’s only source of product revenue has been from the U.S. sales of TYMLOS, which it began shipping to Customers in May 2017. The following table
summarizes activity in each of the product revenue allowance and reserve categories for the twelve months ended December 31, 2020 and 2019 (in thousands):
Ending balance at December 31, 2018
Provision related to sales in the current year
Adjustment related to prior periods sales
Credits and payments made
Ending balance at December 31, 2019
Provision related to sales in the current year
Adjustment related to prior periods sales
Credits and payments made
Ending balance at December 31, 2020
Chargebacks,
Discounts, and Fees
Government and
Other Rebates
Returns
Total
$
$
$
3,198
$
7,620
$
411
$
30,960
(81)
(28,338)
62,271
337
(52,948)
5,739
$
17,280
$
20,549
(107)
(24,290)
1,891
$
76,166
(1,551)
(77,251)
14,644
$
1,673
(10)
(491)
1,583
1,938
—
(949)
2,572
$
$
11,229
94,904
246
(81,777)
24,602
98,653
(1,658)
(102,490)
19,107
Chargebacks, discounts, fees, and returns are recorded as reductions of accounts receivables, net on the consolidated balance sheets. Government and other rebates are recorded as a
component of accrued expenses and other current liabilities on the consolidated balance sheets.
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13. License Revenue and Reimbursable Expenses
General
The Company has generated revenue from contracts with customers, which include upfront payments for licenses.
Berlin-Chemie
On July 23, 2020, the Company entered into a license agreement (“License Agreement”) with Berlin-Chemie under which the Company granted Berlin-Chemie an exclusive license
to develop and commercialize products containing elacestrant (RAD1901) worldwide.
The Company and Berlin-Chemie simultaneously entered into a Transition Services Agreement (the “TSA”), pursuant to which the Company agreed to perform certain services for
Berlin-Chemie related to the EMERALD Phase 3 monotherapy study until the earlier of the completion of the contemplated services or the filing with the FDA of a New Drug Application
for elacestrant. Pursuant to the TSA, Berlin-Chemie agreed to reimburse the Company for all out-of-pocket and full-time employee costs in performing the services, for total estimated
reimbursements of $111.5 million. The Company will continue to incur research and development expenses in support of scale up costs under the TSA.
Pursuant to the terms of the License Agreement, Berlin-Chemie made a nonrefundable initial license fee payment to the Company of $30.0 million in July 2020. The Company is
also eligible to receive up to $20.0 million in development and regulatory milestone payments and up to $300.0 million in sales milestone payments, with such payments contingent on the
achievement of specified milestones with respect to the licensed products. The Company is also eligible to receive tiered royalties on sales of licensed products at percentages ranging from
low to mid-teens, subject to certain reductions. Royalties on net sales will be payable on a product-by-product and country-by-country basis until the latest of the expiration date of the last
to expire of the relevant patent rights, the expiration of regulatory exclusivity, or ten years from such first commercial sale.
The License Agreement will continue on a licensed product-by-licensed product and country-by-country basis until the last to expire royalty term. Either party may terminate the
License Agreement for an uncured material breach by the other party or upon the bankruptcy or insolvency of the other party. The Company may terminate the License Agreement for
certain patent challenges or if no development, manufacture or commercialization activity occurs in any given 24-month period. Berlin-Chemie may terminate the License Agreement at its
discretion for any reason by delivering 180 days’ prior written notice to the Company; provided that such termination will not be effective prior to the third anniversary of the effective
date.
The Company determined that the License Agreement and TSA should be combined and evaluated as a single arrangement as they were executed on the same date and negotiated as
a package. The arrangement with Berlin-Chemie provides for the transfer of the following goods or services: (i) license, (ii) know-how, (iii) regulatory filings, (iv) inventory, (v) transition
services, including certain clinical, manufacturing, regulatory and other services associated with the Phase 3 EMERALD monotherapy study, and (vi) participation in various joint
committees.
Management applied the guidance in ASC 606 to identify all distinct goods and services within the arrangement to assess whether there is a unit of account that should be accounted
for under ASC 606. Management evaluated all of the promised goods or services within the contract and determined which of those were separate performance obligations. The Company
determined that the license granted, at arrangement inception, should be combined with the know-how and regulatory filings as they are not capable of being distinct (the “License”). The
Company also concluded that the license rights, know-how, and regulatory filings are capable of being distinct from the supply of inventory, as Berlin-Chemie would be able to benefit
from the inventory on its own or with other resources that are readily available, and capable of being distinct from the transition services and participation in joint committees as these are
research and development services that can typically be performed by other third parties.
The License is an element of the arrangement that is subject to the revenue recognition accounting guidance, as the performance obligation is an output of the Company’s ordinary
activities in exchange for consideration. Conversely, the transition services, the participation on joint committees, and transfer of inventory are elements of the arrangements that are
outside the scope of the revenue recognition guidance, as the Company is providing goods and services that are not an output of the Company’s ordinary activities.
The transaction price at inception is comprised of fixed consideration of $30.0 million. The $30.0 million upfront fee, which represents the fixed consideration in the transaction
price, was allocated to the License and the supply of inventory, on a relative standalone selling price basis. The Company estimated the standalone selling price for the license by applying
a risk adjusted, net present value, estimate of future potential cash flows approach and determined the standalone selling price for the inventory using a cost approach. Accordingly, the
Company has allocated $27.4 million to the license and $2.6 million to the inventory. The Company concluded that the reimbursements for the research and development transition
services and
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participation in the joint steering committees was commensurate with the standalone selling prices of the services, and as such, will be attributed to those services. The reimbursements for
these services will be recorded as a reduction of the related research and development expenses as the expenses are incurred.
Under the Berlin-Chemie agreements, the Company is eligible to receive various development and regulatory, and sales milestones. There is uncertainty that the events to obtain the
development and regulatory milestones will be achieved. The Company has thus determined that all such milestones will be constrained until it is deemed probable that a significant
revenue reversal will not occur. Additional transaction price recognized in future periods related to milestone payments and royalties will be allocated solely to the License.
Sales milestones and sales-based royalties were also excluded from the transaction price as the license is deemed to be the predominant item to which the sales milestones and sales-
based royalties relate. The Company will recognize such revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty
has been allocated has been satisfied (or partially satisfied).
During the twelve months ended December 31, 2020, the Company recognized $30.0 million of license revenue, as it had satisfied its promises under the performance obligation for
the license, including the transfer of know-how and regulatory filings, by transferring them at a point in time during the quarter. During the twelve months ended December 31, 2020, the
Company recorded $39.3 million as a reduction of research and development expenses for reimbursement of transition services performed under the TSA. As of December 31, 2020, we
had a receivable of $21.4 million related to reimbursable research and development expenses under this agreement, which is presented in other current assets on the consolidated balance
sheet.
14. Net Loss Per Share
Basic and diluted net loss per share is calculated as follows (in thousands, except share and per share amounts):
Numerator:
Net loss
Loss attributable to common stockholders—basic
Loss attributable to common stockholders—diluted
Denominator:
Weighted-average number of common shares used in loss per share— basic and diluted
Loss per share—basic and diluted
2020
Year Ended December 31,
2019
2018
$
$
$
(109,208) $
(109,208)
(109,208) $
(132,993) $
(132,993)
(132,993) $
(221,337)
(221,337)
(221,337)
46,459,366
46,026,217
45,356,263
(2.35) $
(2.89) $
(4.88)
The following potentially dilutive securities, prior to the use of the treasury stock method, have been excluded from the computation of diluted weighted-average shares outstanding,
as they would be anti-dilutive. For the years ended December 31, 2020, 2019, and 2018 all of the Company’s options to purchase common stock, warrants, stock units outstanding, and
performance options were assumed to be anti-dilutive as earnings attributable to common stockholders was in a loss position.
Options to purchase common stock
Warrants
Restricted stock units
Performance units
Performance options
15. License Agreements
Ipsen
2020
4,258,162
—
596,260
—
575,000
Year Ended December 31
2019
4,834,255
—
614,273
79,000
—
2018
5,462,787
120,532
227,088
—
—
In September 2005, the Company entered into a license agreement (the “License Agreement”), as amended, with an affiliate of Ipsen Pharma SAS (“Ipsen”) under which the
Company exclusively licensed certain Ipsen compound technology and related patents covering abaloparatide to research, develop, manufacture, and commercialize certain compounds
and related products in all countries, except Japan and France (where the Company’s commercialization rights were subject to certain co-
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marketing and co-promotion rights exercisable by Ipsen, provided that certain conditions included in the License Agreement were met). The Company believes that Ipsen’s co-marketing
and co-promotion rights in France have permanently expired. Ipsen also granted the Company an exclusive right and license under the Ipsen compound technology and related patents to
make, and have made, compounds or products in Japan. Ipsen further granted the Company an exclusive right and license under certain Ipsen formulation technology and related patents
solely for purposes of enabling the Company to develop, manufacture, and commercialize compounds and products covered by the compound technology license in all countries, except
Japan and France (as discussed above).
In consideration for these rights, the Company made nonrefundable, non-creditable payments in aggregate of $13.0 million to Ipsen, including payment in recognition of certain
milestones having been achieved through December 31, 2020. The License Agreement provides for further payments upon the achievement of certain future regulatory and commercial
milestones. Total additional milestone payments that could be payable under the agreement is €24.0 million (approximately $29.5 million). In connection with the FDA’s approval of
TYMLOS in April 2017, the Company paid Ipsen a milestone of €8.0 million (approximately $8.7 million) under the License Agreement, which the Company recorded as an intangible
asset within the consolidated balance sheet and will amortize over the remaining patent life or the estimated useful life of the underlying product. The agreement provides that the
Company would pay to Ipsen a fixed five percent royalty based on net sales of the product by the Company or its sublicensees on a country-by-country basis until the later of the last to
expire of the licensed patents or for a period of 10 years after the first commercial sale in such country. The royalty expense was $10.4 million and $8.7 million for the years ended
December 31, 2020 and 2019, respectively, which is recorded in cost of sales within the consolidated statement of operations and comprehensive loss. The date of the last to expire of the
abaloparatide patents licensed from or co-owned with Ipsen, barring any extension thereof, is expected to be March 26, 2028.
If the Company sublicenses abaloparatide to a third party, then the agreement provides that the Company would pay Ipsen a percentage of certain payments received from such
sublicensee (in lieu of milestone payments not achieved at the time of such sublicense). The applicable percentage is in the low double digit range. In addition, if the Company or its
sublicensees commercialize a product that includes a compound discovered by it based on or derived from confidential Ipsen know-how, then the agreement provides that the Company
would pay to Ipsen a fixed low single digit royalty on net sales of such product on a country-by-country basis until the later of the last to expire of licensed patents that cover such product
or for a period of 10 years after the first commercial sale of such product in such country.
The License Agreement expires on a country-by-country basis on the later of (1) the date the last remaining valid claim in the licensed patents expires in that country, or (2) a period
of 10 years after the first commercial sale of the licensed products in such country, unless it is sooner terminated in accordance with its terms.
Pursuant to a June 2018 final decision in arbitration proceedings with Ipsen in connection with the License Agreement, the Company paid Ipsen $10.0 million (and pre-award
interest of $0.8 million) and is obligated to pay Ipsen (i) $5.0 million if abaloparatide receives marketing approval in Japan, and (ii) a fixed mid single-digit royalty based on net sales of
abaloparatide in Japan. The Company recorded the $10.8 million payment to other operating expenses in the consolidated statement of operations and comprehensive loss in the second
quarter of 2018. The $5.0 million payment upon abaloparatide receiving marketing approval in Japan will be accrued in the period in which the approval is determined to be probable.
Royalties based on net sales of abaloparatide in Japan will be accrued during the period that revenue for such sales, which is subject to a royalty arrangement, is recognized and will be
presented as cost of sales within the consolidated statement of operations and comprehensive loss.
The arbitration decision does not impact the Company’s rights under the License Agreement or its license agreement with Teijin for abaloparatide-SC in Japan, under which the
Company previously received a $10.0 million upfront payment and is entitled to receive up to an aggregate of $40.0 million upon the achievement of certain regulatory and sales
milestones, and a fixed low double-digit royalty based on net sales of abaloparatide-SC in Japan.
Eisai Co. Ltd.
In June 2006, the Company entered into a license agreement (the “Eisai Agreement”), with Eisai Co. Ltd., (“Eisai”). Under the Eisai Agreement, Eisai granted to the Company an
exclusive right and license to research, develop, manufacture and commercialize elacestrant and related products from Eisai in all countries, except Japan. In consideration for the rights to
elacestrant, the Company paid Eisai an initial license fee of $0.5 million, which was expensed during 2006. In March 2015, the Company entered into an amendment to the Eisai
Agreement (the “Eisai Amendment”) in which Eisai granted to the Company the exclusive right and license to research, develop, manufacture and commercialize elacestrant in Japan. In
consideration for the rights to elacestrant in Japan, the Company paid Eisai a license fee of $0.4 million upon execution of the Eisai Amendment, which was recognized as research and
development expense in 2015. The Eisai Agreement, as amended, also provides for additional payments of up to $22.3 million, payable upon the achievement of certain clinical and
regulatory milestones. To date, the Company has paid Eisai approximately $1.0 million in connection with the achievement of certain milestones.
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Under the Eisai Agreement, as amended, should a product covered by the licensed technology be commercialized, the Company will be obligated to pay to Eisai royalties in a
variable mid-single digit range based on net sales of the product on a country-by-country basis. The royalty rate will be reduced, on a country-by-country basis, at such time as the last
remaining valid claim in the licensed patents expires, lapses or is invalidated and the product is not covered by data protection clauses. In addition, the royalty rate will be reduced, on a
country-by-country basis, if, in addition to the conditions specified in the previous sentence, sales of lawful generic versions of such product account for more than a specified minimum
percentage of the total sales of all products that contain the licensed compound during a calendar quarter. The latest licensed patent is expected to expire, barring any extension thereof, on
August 18, 2026.
The Eisai Agreement, as amended, also grants the Company the right to grant sublicenses with prior written approval from Eisai. If the Company sublicenses the licensed technology
to a third party, the Company will be obligated to pay Eisai, in addition to the milestones referenced above, a fixed low double digit percentage of certain fees received from such
sublicensee and royalties in the low single digit range based on net sales of the sublicensee. The license agreement expires on a country-by-country basis on the later of (1) the date the last
remaining valid claim in the licensed patents expires, lapses or is invalidated in that country, the product is not covered by data protection clauses, and the sales of lawful generic versions
of the product account for more than a specified percentage of the total sales of all pharmaceutical products containing the licensed compound in that country; or (2) a period of 10 years
after the first commercial sale of the licensed products in such country, unless it is sooner terminated.
Duke
In December 2017, the Company and Duke University (“Duke”) entered into a License Agreement with (the “Duke Agreement”) pursuant to which Radius acquired the exclusive
worldwide license to certain Duke patents associated with elacestrant (RAD1901) related to the use of elacestrant in the treatment of breast cancer as a monotherapy and in a combination
therapy (collectively “Duke Patents”).
In consideration for these rights, the Company incurred non-refundable, non-creditable obligations to pay Duke, totaling $1.3 million, which were expensed as research and
development during 2017. The Duke Agreement provides for further payments upon the achievement of certain future regulatory and commercial milestones totaling up to $3.8 million. To
date, the Company has paid Duke approximately $0.5 million in connection with the achievement of certain milestones. The agreement provides that the Company would pay Duke a fixed
low single-digit royalty based on net sales, on a country-by-country basis, beginning in August 2029 and ending upon expiration of the last patent rights to expire.
If the Company sublicenses the Duke Patents to a third party, the agreement provides that the Company will pay Duke a percentage of certain payments received by it from such
sublicensee(s). The applicable percentage is in the high single-digit range on certain payments received in excess a pre-specified amount. The License Agreement may be terminated by
Duke upon a material uncured breach of the License Agreement. The Company may terminate the License Agreement upon 60 days written notice.
Teijin Limited
In July 2017, the Company entered into a License and Development Agreement (the “Teijin Agreement”) with Teijin Limited (“Teijin”) for abaloparatide-SC in Japan.
Pursuant to the Teijin Agreement, the Company granted Teijin: (i) an exclusive payment-bearing license under certain of the Company’s intellectual property to develop and
commercialize abaloparatide-SC in Japan, (ii) a non-exclusive payment-bearing license under certain of the Company’s intellectual property to manufacture abaloparatide-SC for
commercial supply in Japan, (iii) a right of reference to certain of the Company’s regulatory data related to abaloparatide-SC for purposes of developing, manufacturing and
commercializing abaloparatide-SC in Japan, (iv) a manufacture transfer package, upon Teijin’s request, consisting of information and the Company’s know-how that is necessary for the
manufacture of active pharmaceutical ingredient and abaloparatide-SC, and (v) right, at Teijin’s request, to have the Company manufacture (or arrange for a third party to manufacture) and
supply (or arrange for a third party to supply) the active pharmaceutical ingredient for the clinical supply of abaloparatide-SC in sufficient quantities to enable Teijin to conduct its clinical
trials in Japan. In consideration for these rights, the Company received an upfront payment of $10.0 million, and may receive further payments upon the achievement of certain regulatory
and sales milestones, as well as a fixed low double-digit royalty based on net sales of abaloparatide-SC in Japan during the royalty term, as defined below.
Pursuant to the Teijin Agreement, the parties may further collaborate on new indications for abaloparatide-SC, and the Company also maintains full global rights to its development
program for abaloparatide-TD, which is not part of the Teijin Agreement.
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Unless earlier terminated, the Teijin Agreement expires on the later of the (i) date on which the use, sale or importation of abaloparatide-SC is no longer covered by a valid claim
under the Company’s patent rights licensed to Teijin in Japan, (ii) expiration of marketing or data exclusivity for abaloparatide-SC in Japan, or (iii) 10th anniversary of the first commercial
sale of abaloparatide-SC in Japan.
The Company assessed this arrangement in accordance with Topic 606 and concluded that the contract counterparty, Teijin, is a customer. The Company identified the following
material promises under the contract: the commercialization and manufacturing licenses under certain intellectual property rights relating to abaloparatide-SC in Japan, as well as the right
of reference to certain regulatory information. In addition, the Company identified the following customer option that would create an obligation for the Company if exercised by Teijin -
the transfer of manufacturing know-how. The customer option for the transfer of manufacturing know-how represents a material right. Finally, the Company also identified the following
customer option that would create a manufacturing obligation for the Company if exercised by Teijin - the supply of abaloparatide-SC for Teijin’s clinical trial needs. The customer option
for clinical supply of abaloparatide-SC does not represent a material right. Based on these assessments, the Company identified the (i) commercialization and manufacturing licenses, as
well as the right of reference to certain regulatory information, and (ii) transfer of manufacturing know-how as the only performance obligations at the inception of the arrangement, which
were both deemed to be distinct.
The Company further determined that the up-front payment of $10.0 million constituted the entirety of the consideration to be included in the transaction price, which was allocated
to the performance obligations based on the Company’s best estimate of its relative stand-alone selling prices. For the commercialization and manufacturing licenses, including the right of
reference to certain regulatory information, the stand-alone selling price was calculated using the expected cost approach by leveraging the direct costs incurred by the Company in its
ACTIVExtend Phase 3 clinical trial for abaloparatide-SC, plus an estimated inflation rate. The stand-alone selling price of the transfer of manufacturing know-how was computed using a
cost-plus margin approach reflecting the level of effort required, which can be reasonably estimated to be incurred over the performance period, multiplied by a fully-burdened internal
labor rate plus an expected margin. Based on the estimates of the stand-alone selling prices for each of the performance obligations, as referenced above, the Company determined that
substantially all of the $10.0 million transaction price should be allocated to the performance obligation for the commercialization and manufacturing licenses, including the right of
reference to certain regulatory information. The consideration allocated to the performance obligation for the transfer of manufacturing know-how was immaterial. The Company believes
that a change in the assumptions used to determine its best estimate of the selling price for the commercialization and manufacturing licenses, including the right of reference to certain
regulatory information, would not have a significant effect on the allocation of the underlying consideration to the performance obligations.
Upon execution of the Teijin Agreement, the transaction price included only the $10.0 million up-front payment owed to the Company. As referenced above, the Company may
receive further payments upon the achievement of certain regulatory and sales milestones, totaling up to $40.0 million, as well as a fixed low double-digit royalty based on net sales of
abaloparatide-SC in Japan during the royalty term. The Company notes that these milestone and royalty payments represent variable consideration and amounts subject to the sales and
usage-based royalty exception under ASC 606, respectively. The regulatory milestone payments representing variable consideration were fully constrained through December 31, 2020,
and no amount will be recognized until the applicable regulatory milestones are achieved. The sales-based milestones and royalty payments subject to the sales and usage-based royalty
exception will not be included in the transaction price until the underlying sales or sales-based milestones have been achieved.
16. Income Taxes
For the year ended December 31, 2020, 2019, and 2018 no income tax expense was recorded due to the Company’s net operating losses (NOLs) and full valuation allowance.
The components of loss before provision for (benefit from) income taxes during the three years ended December 31, 2020 consisted of the following:
United States
Foreign
$
2020
Year Ended December 31,
2019
$
(109,208)
—
(109,208)
$
(116,749)
(16,244)
(132,993)
2018
(208,735)
(12,602)
(221,337)
A reconciliation of income taxes computed using the U.S. federal statutory rate to that reflected in operations follows (in thousands):
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Income tax benefit using U.S. federal statutory rate
State income taxes, net of federal benefit
Stock-based compensation
Research and development tax credits
Change in the valuation allowance
Convertible note
Permanent items
Uncertain Tax Positions
Foreign rate differential
Capitalized R&D expenses
Other
Income tax expense
The principal components of the Company’s deferred tax assets are as follows (in thousands):
Deferred tax assets:
NOL carryforwards
Capitalized research and development
Research and development credits
Interest Expense
Accrued expenses
Stock-based compensation
UNICAP
Allowance for bad debt
Operating lease liability
Other
Gross non-current deferred tax assets
Valuation allowance
Net non-current deferred tax assets
Deferred tax liabilities:
Depreciation
Right-of-Use asset
Convertible debt
Gross non-current deferred tax liabilities
Net non-current deferred tax assets (liabilities)
2020
Year Ended December 31,
2019
2018
(22,934) $
(2,108)
6,315
(5,222)
28,443
(128)
287
12
—
(5,641)
976
— $
(27,918) $
(5,486)
4,379
(2,491)
26,918
(128)
457
—
3,414
—
855
— $
(46,464)
(6,694)
(12)
(3,743)
49,550
(128)
883
—
2,649
—
3,959
—
$
$
December 31,
2020
2019
255,052 $
13,615
13,773
4,614
4,253
11,696
168
1,059
1,431
98
305,759
(283,684)
22,075 $
(146) $
(937)
(20,992)
(22,075)
— $
243,063
4,099
9,608
2,729
5,342
14,952
103
1,832
1,696
119
283,543
(255,242)
28,301
(216)
(1,677)
(26,408)
(28,301)
—
$
$
$
$
FASB ASC 740-Income Taxes requires that a valuation allowance be established to reduce a deferred tax asset to its realizable value when it is more likely than not that all or a
portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence needs to be considered, including the utilization of past tax credits and length of
carry-back and carry-forward periods, reversal of temporary differences, tax planning strategies, our current and past performance, the market environment in which we operate, and the
evaluation of tax planning strategies to generate future taxable income.
The Company has recorded a valuation allowance against its net deferred tax assets in each of the years ended December 31, 2020, 2019, and 2018, because the Company’s
management believes that it is more likely than not that these assets will not be realized. The increase in the valuation allowance of $28.4 million in 2020 primarily relates to the net loss
incurred by the Company.
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As of December 31, 2020, the Company had federal and state net operating loss (“NOL”) carryforwards of approximately $1,026.0 million and $702.1 million, respectively, which
may be used to offset future taxable income. Of the federal NOL amount, approximately $754.2 million will expire at various dates through 2037 and $271.8 million will carryforward
indefinitely. The state NOLs will expire at various dates through 2040.
As of December 31, 2020, the Company also had federal and state tax credits of $11.9 million and $2.3 million, respectively, to offset future tax liabilities. The federal general
business credits will expire at various dates through 2040 and the state research and development tax credits will expire at various dates through 2035.
In 2016, the Company completed an evaluation of our tax attributes through December 31, 2015 as outlined under Section 382 of the Internal Revenue Code, which resulted in a
reduction of its NOL and credit carryforwards. The Company has adjusted its NOL and credit carryforwards, and the related valuation allowance, according to the results of this
evaluation. As no additional evaluations have been completed since 2016, the NOLs could be subject to further limitations.
The Company applies the accounting guidance in ASC 740 related to accounting for uncertainty in income taxes. The Company’s reserves related to taxes are based on a
determination of whether, and how much of, a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential
contingencies present related to the tax benefit. As of December 31, 2020, the unrecognized tax benefit was $3.6 million which, if recognized, will not affect the annual effective tax rate as
these unrecognized tax benefits would increase deferred tax assets which would be subject to a full valuation allowance. A reconciliation of the beginning and ending amount of
unrecognized tax benefit is as follows (in thousands):
Balance at December 31, 2019
Decreases related to prior year tax positions
Increases related to prior year tax positions
Decreases related to current year tax positions
Increases related to current year tax positions
Balance at December 31, 2020
Uncertain Tax Position
$
$
2,563
(1)
—
—
1,030
3,592
The Company and its subsidiaries file income tax returns in the United States, as well as various state and foreign jurisdictions. Generally, the tax years 2017 through 2019 remain
open to examination by the major taxing jurisdictions to which the Company is subject. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was
generated may still be adjusted upon examination by the Internal Revenue Service, or state or foreign tax authorities, to the extent utilized in a future period.
No material interest or penalties have been recorded for the years ended December 31, 2020, 2019, or 2018. The Company does not expect any significant change in its uncertain tax
positions in the next 12 months.
17. Commitments and Contingencies
Litigation
From time to time, the Company may become subject to legal proceedings and claims which arise in the ordinary course of its business. The Company records a liability in its
consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each
accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be
reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not misleading. If the
loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements.
As of December 31, 2020, the Company was not party to any significant litigation.
Kindeva
In February 2018, the Company entered into a Scale-Up and Commercial Supply Agreement (the “Supply Agreement”) with 3M Company and 3M Innovative Properties Company
(collectively with 3M Company, “3M”), pursuant to which 3M has agreed to exclusively manufacture Phase 3 and global commercial supplies of abaloparatide-coated transdermal system
product (“Product”) and associated applicator devices (“Applicator”). In May 2020, 3M announced that it completed its sale of its drug delivery business, which manufactures clinical trial
supplies of abaloparatide-TD, to Kindeva Drug Delivery (“Kindeva”), an
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affiliate of Altaris Capital Partners, LLC (“Altaris”). Under the Supply Agreement, Kindeva will manufacture Product and Applicator for the Company according to agreed-upon
specifications in sufficient quantities to meet the Company’s projected supply requirements. Kindeva will manufacture commercial supplies of Product at unit prices that decrease with an
increase in the quantity the Company orders. The Company will pay Kindeva a mid-to-low single-digit royalty on worldwide net sales of Product and reimburse Kindeva for certain capital
expenditures incurred to establish commercial supply of Product. The Company is responsible for providing, at its expense, supplies of abaloparatide drug substance to be used in
manufacturing Product. During the term of the Supply Agreement, Kindeva and the Company have agreed to work exclusively with each other with respect to the delivery of
abaloparatide, parathyroid hormone (“PTH”), and/or PTH related proteins via active transdermal, intradermal, or microneedle technology.
The initial term of the Supply Agreement began on its effective date, February 27, 2018, and will continue for five years after the first commercial sale of Product. The Supply
Agreement then automatically renews for successive three-year terms, unless earlier terminated pursuant to its terms or upon either party’s notice of termination to the other 24 months
prior to the end of the then-current term. The Supply Agreement may be terminated by either party upon an uncured material breach of its terms by the other party, or due to the other
party’s bankruptcy, insolvency, or dissolution. The Company may terminate the Supply Agreement upon the occurrence of certain events, including for certain clinical, technical, or
commercial reasons impacting Product, if it is unable to obtain U.S. regulatory approval for Product within a certain time period, or if it ceases development or commercialization of
Product. Kindeva may terminate the Supply Agreement upon the occurrence of certain events, including if there are certain safety issues related to Product, if the Company is unable to
obtain U.S. regulatory approval for Product within a certain time period, or if the Company fails to order Product for a certain period of time after commercial launch of the Product in the
U.S. Upon certain events of termination, Kindeva is required to transfer the manufacturing processes for Product and Applicator to the Company or a mutually agreeable third party and
continue supplying Product and Applicator for a period of time pursuant to the Company’s projected supply requirements.
In partnership with 3M, prior to 3M’s sale of its drug delivery business to Kindeva, the Company selected Thermo Fisher to conduct the abaloparatide-TD coating process and
packaging operations. In October 2018, the Company committed to fund 3M’s purchase of capital equipment totaling approximately $9.6 million in preparation for manufacturing Phase 3
and potential commercial supplies of Product. Milestone payments for the equipment commenced in the fourth quarter of 2018 and are expected to be paid in full in the second quarter of
2021. In addition, there are cancelable purchase commitments in place to fund the facility build out and future purchases of capital equipment. The Company has paid 3M and Kindeva
approximately $30.0 million, in the aggregate, through December 31, 2020 with respect to performance under the Supply Agreement.
In June 2009, the Company entered into a Development and Clinical Supplies Agreement with 3M, as amended (the “Development Agreement”), under which Product and
Applicator development activities occur and 3M has manufactured phase 1 and 2 clinical trial supplies on an exclusive basis. The initial term of the Development Agreement remained in
effect until June 2019, after which it automatically renews for successive one-year terms, unless earlier terminated, until the earliest of (i) the expiration or termination of the Supply
Agreement, (ii) the mutual written agreement of the parties, or (iii) prior written notice by either party to the other party at least ninety days prior to the end of the then-current term of the
Development Agreement that such party declines to extend the term. Either party may terminate the agreement in the event of an uncured material breach by the other party. The Company
pays 3M for services delivered pursuant to the agreement on a fee-for-service or a fee-for-deliverable basis as specified in the agreement. The Company has paid 3M
approximately $30.2 million, in the aggregate, through December 31, 2020 with respect to services and deliverables delivered pursuant to the Development Agreement.
Manufacturing Agreements
In June 2016, the Company entered into a Supply Agreement with Ypsomed AG, pursuant to which Ypsomed agreed to supply commercial and clinical supplies of a disposable pen
injection device customized for subcutaneous injection of abaloparatide. The Company has agreed to purchase a minimum number of devices at prices per device that decrease with an
increase in quantity supplied. In addition, the Company has agreed to make milestone payments for Ypsomed’s capital developments in connection with the initiation of the commercial
supply of the device and to pay a one-time capacity fee. All costs and payments under the agreement are delineated in Swiss Francs. The agreement has an initial term of three years which
began on June 1, 2017, after which, it automatically renews for two-year terms unless either party terminates the agreement upon 18 months’ notice prior to the end of the then-current
term. The Company will purchase the device subject to minimum annual quantity requirements over the initial three-year term of the agreement. The Company is required to purchase a
minimum number of batches for CHF 1.9 million ($2.2 million) through the year ended December 31, 2022.
In June 2016, the Company entered into a Commercial Supply Agreement with Vetter Pharma International GmbH, pursuant to which Vetter has agreed to formulate the finished
abaloparatide-SC drug product containing the active pharmaceutical ingredient of abaloparatide, to fill cartridges with the drug product, to assemble the pen delivery device, and to
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package the pen for commercial distribution. The Company has agreed to purchase the cartridges and pens in specified batch sizes at a price per unit. For labeling and packaging services,
the Company has agreed to pay a per unit price dependent upon the number of pens loaded with cartridges that are labeled and packaged. These prices are subject to an annual price
adjustment. The agreement had an initial term of five years, which began on January 1, 2016, after which it automatically renewed for a two-year term and will automatically renew for
additional two-year terms thereafter unless either party notifies the other party two years before the end of the then-current term that it does not intend to renew.
In July 2016, the Company entered into a Manufacturing Services Agreement with Polypeptide Laboratories Holding AB, as successor-in-interest to Lonza Group Ltd., pursuant to
which PPL has agreed to manufacture the commercial and clinical supplies of the API for abaloparatide. The Company has agreed to purchase the API in batches at a price per gram in
euros, subject to an annual increase by PPL. The Company is also required to purchase a minimum number of batches annually, equal to €2.9 million ($3.6 million) per year and $17.2
million in total through the year ended December 31, 2022. The agreement has an initial term of a six years, after which, it automatically renews for three-year terms unless either party
provides notice of non-renewal 24 months before the end of the then-current term.
Asset Purchase Agreement
In December 2020, the Company entered into an Asset Purchase Agreement with Fresh Cut Development, LLC and Benuvia Therapeutics Inc. for the acquisition of certain assets
related to formulations of CBD related to the oral administration of a solution of CBD for therapeutic use in humans or animals. Under the terms of the agreement, the Company may be
obligated to make additional payments of up to $60.0 million in future periods, which would become due and payable only upon the achievement of certain development milestones. In
addition, the Company may be obligated to pay up to $30.0 million in sales milestones contingent upon the realization of sales revenues and sublicense revenue. As of December 31, 2020,
the Company recognized a liability of $2.5 million, which is recorded as accrued expenses and other current liabilities within the consolidated balance sheet for certain development
milestones that were deemed probable of achievement.
Related Party Transactions
Beginning in December 2019, a member of our Board of Directors had a familial relationship with an executive officer of one of our customers, AmerisourceBergen Corporation
(“ABC”). The activities with ABC and its affiliates are in the ordinary course of business and are primarily for commercial distribution of TYMLOS and service fees. As of December 31,
2020, the Company recognized net revenues of approximately $23.7 million from ABC in connection with product sales of TYMLOS and paid ABC and its affiliates approximately $2.7
million for services under various commercial and services agreements.
18. Leases
The Company determines if an arrangement is a lease at inception. For operating leases, amounts recorded in connection therewith are included in right-of-use assets and lease
liabilities in the consolidated balance sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the leases and are recognized on the lease commencement date based on the present value of lease payments over the lease term. As the
Company’s leases have not historically provided an implicit rate, the Company’s incremental borrowing rate based on information available at the commencement date is used in
determining the present value of lease payments. However, the implicit rate is used when readily determinable. The operating lease right-of-use assets also include any lease payments
made and reduced by lease incentives. Options to extend the lease term or terminate the leases are incorporated into the determination of the lease term if it is reasonably certain that the
Company will exercise such options based on assessment of economic factors, such as contractual terms, market rates and locations, and costs associated with negotiation of new leases or
termination of leases. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.
In addition, as a practical expedient, for all leases entered into or modified after the effective date of ASC 842, the Company, as the lessee, has made an accounting policy election,
by class of underlying asset, to not separate non-lease components from lease components. The Company will account for each separate lease component and the non-lease components
associated with that lease component as a single lease component.
The Company has operating leases for corporate offices in Waltham, MA, Seaport, MA, Wayne, PA and for research laboratories in Cambridge, MA. These leases have remaining
lease terms of less than one year to three years, some of which include options to extend the leases for additional years, and of which includes the option to terminate the lease upon default
by the Company. The options to extend and terminate the leases were not incorporated into the determination of the lease term as the exercise of such options was not reasonably certain at
the lease commencement date based on assessment of economic factors.
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In addition to the operating leases, the Supply Agreement with Kindeva is a multiple-element arrangement covering Phase 3 clinical materials and related services, potential
commercial materials, and potential future royalty payments, as well as the construction of certain equipment, an isolator, to be used in the manufacture of the Phase 3 and potential
commercial supplies of Product. The contractually stated cost of the isolator, as well as the costs of the other elements, represent the estimated standalone selling price and, therefore, no
initial allocation was required to separate the cost of the isolator from the other elements. Under ASC 840, Leases, which was the standard under which the Company accounted for leases
through December 31, 2019, the Company was considered the accounting owner of the isolator equipment during construction and costs were recognized to research and development
expense as incurred through December 31, 2019, since the equipment was assessed to not have alternative future use to the Company. Upon transition to ASC 842 on January 1, 2019, the
Company continues to control the isolator during construction and costs will be recognized to research and development expense as incurred, which is expected to be completed in 2021,
since the equipment was again assessed to not have alternative future use to the Company and/or 3M.
On March 27, 2018, the Company announced organizational changes which included the closure of its Parsippany, NJ office and, on January 4, 2019, the Company ceased use of the
office, triggering an impairment assessment. In connection with this assessment, the Company recorded an impairment loss of $0.3 million during the twelve months ended December 31,
2019.
On January 28, 2020, the Company amended the Waltham, MA operating lease, extending the lease expiration. In connection with the amendment, the Company remeasured the net
present value of the remaining lease payments of the right-of-use assets and lease liabilities to a total of $2.1 million as of January 28, 2020. The Company recorded a total adjustment of
$1.1 million to increase both the right-of-use assets and lease liabilities.
On August 10, 2020, the Company announced a shift to a hybrid work model and the plan to vacate its current corporate offices, which triggered the Company to assess the
recoverability of its long lived assets, including right-of-use assets. In connection with this assessment, the Company recorded an impairment loss on right-of-use assets of $1.5 million and
$0.9 million related to the Waltham, MA and Wayne, PA offices, respectively, during the twelve months ended December 31, 2020.
The Company’s operating leases also include such costs as real estate taxes and common area maintenance charges. Such amounts have been recorded as variable lease costs within
the consolidated statement of operations. During the twelve months ended December 31, 2020, the components of lease expense were as follows (in thousands):
Operating lease cost
Variable lease cost
Total lease cost
Year ended December 31,
2020
2019
$
$
2,555
370
2,925
$
$
2,742
124
2,866
As of December 31, 2020, the weighted average remaining lease term for the Company’s operating leases was 3.70 years.
As a discount rate was not directly observable for the operating leases, the discount rate used to calculate the net present value of future payments was the Company’s incremental
borrowing rate calculated at transition based on the remaining lease term for each operating lease. The incremental borrowing rate is the rate of interest that the Company would have to
pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. In determining the incremental borrowing rate, the
Company considered the following: (i) the Company’s public credit rating, (ii) observable debt yields of the Company, as well as other bonds in the market issued by other companies with
similar credit ratings as the Company, and (iii) adjustments necessary for collateral, lease term and inflation. As of December 31, 2020, the weighted average discount rate for the
Company’s operating leases was 5.75%.
Future payments of operating lease liabilities as of December 31, 2020 are as follows (in thousands):
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Year ending December 31,
2021
2022
2023
2024
Thereafter
Total Lease payments
Less: effect of discounted cash flows during the period
Total
$
$
2,780
1,131
980
1,005
857
6,753
(745)
6,008
Rent expense for the years ended December 31, 2020, 2019, and 2018 was $2.9 million, and $2.9 million, and $3.5 million, respectively.
As of December 31, 2020, the Company had no operating or finance leases that have not yet commenced. In addition, upon adoption, and as of December 31, 2020, the Company
had no short-term leases.
19. Subsequent Events
The Company has evaluated the subsequent events that have occurred through the date of the report and determined that there are no material subsequent events that require
disclosure.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
ITEM 9A. CONTROLS AND PROCEDURES.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and
internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible
controls and procedures relative to their costs.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated as of the end of the period covered by this Annual Report on Form 10-
K, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as
of December 31, 2020.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange
Act. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of
December 31, 2020, based on the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework). Based on that assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte & Touche LLP, an independent registered public accounting
firm, as stated in their report which is contained in Item 9A of this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
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To the stockholders and the Board of Directors of Radius Health, Inc.
Opinion on Internal Control over Financial Reporting
Report of Independent Registered Public Accounting Firm
We have audited the internal control over financial reporting of Radius Health, Inc. and subsidiaries (the “Company”) as of December 31, 2020, based on criteria established in Internal
Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by
COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for
the year ended December 31, 2020, of the Company and our report dated February 25, 2021, expressed an unqualified opinion on those financial statements.
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 Annual 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/ Deloitte & Touche LLP
Boston, Massachusetts
February 25, 2021
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ITEM 9B. OTHER INFORMATION.
On February 22, 2021, our Board of Directors adopted Amended and Restated By-Laws to add a new forum selection provision as new ARTICLE X thereto.
The provision provides that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and
exclusive forum for any state law claims for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed
by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the
Delaware General Corporation Law or the Company’s Restated Certificate of Incorporation or Amended and Restated By-Laws, or (iv) any action asserting a claim governed by the
internal affairs doctrine. The provision further provides that unless the Company consents in writing to the selection of an alternative forum, the United States District Court for the District
of Massachusetts shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, and that any person or
entity purchasing or otherwise acquiring any interest in shares of capital stock of the Company shall be deemed to have notice of and consented to the foregoing.
The foregoing description is qualified in its entirety by reference to the full text of the Company’s Amended and Restated By-Laws, a copy of which are attached hereto as Exhibit
3.2 and incorporated herein by reference.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
PART III
The information required with respect to this item will be set forth in our definitive Proxy Statement to be delivered to our stockholders in connection with our Annual Meeting of
Stockholders, which currently is expected to be held on June 9, 2021. Such information is incorporated herein by reference.
Our Board of Directors adopted a Code of Conduct and Ethics applicable to the Board of Directors, our Chief Executive Officer, Chief Financial Officer, other officers of Radius and
all other employees of Radius. The Code of Conduct and Ethics is available on our website, http://radiuspharm.com.
We intend to disclose on our website any amendments to, or waivers from, our Code of Conduct and Ethics that are required to be disclosed pursuant to SEC rules.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The
code of business conduct and ethics is available on our website at http://radiuspharm.com. Any amendments to the code, or any waivers from its requirements, will be disclosed on our
website. Information contained on or accessible through our website is not incorporated by reference into this report, and you should not consider information contained on or accessible
through our website to be part of this report.
The remainder of the response to this item will be set forth in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required to be disclosed by this item will be set forth in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required to be disclosed by this item will be set forth in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders and is incorporated herein by
reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required to be disclosed by this item will be set forth in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders and is incorporated herein by
reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required to be disclosed by this item will be set forth in our definitive Proxy Statement for our 2021 Annual Meeting of Stockholders and is incorporated herein by
reference.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
PART IV
(a)
Financial Statements
The following consolidated financial statements and supplementary data are included in Part II of Item 8 filed of this Annual Report on Form 10-K:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2020, 2019 and 2018
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
(b)
Financial Statement Schedules
68
71
72
73
74
75
All financial statement schedules have been omitted because they are not applicable or are not required, or because the information required to be set forth therein is included in the
consolidated financial statements or notes thereto.
(c)
Exhibits
The Exhibit Index follows Item 16 and is incorporated herein by reference.
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ITEM 16. FORM 10-K SUMMARY.
Not applicable.
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Unless otherwise indicated, all references to previously filed Exhibits refer to the Company’s filings with the Securities and Exchange Commission, or SEC, under File No. 001-35726.
EXHIBIT INDEX
Exhibit
Number
Exhibit Description
3.1 Restated Certificate of Incorporation
3.2 Amended and Restated By-Laws
4.1
Fifth Amended and Restated Stockholders’ Agreement,
dated April 24, 2014, between the Company and the
stockholders party thereto
4.2 Base Indenture, dated as of August 14, 2017, between the
4.3
Company and Wilmington Trust, National Association
First Supplemental Indenture, dated as of August 14,
2017, between the Company and Wilmington Trust,
National Association
Form of 3.00% Convertible Senior Note due 2024
(included in Exhibit 4.2)
4.5 Description of Securities
4.4
Management Contracts and Compensatory Plans
10.1 Radius Health, Inc. 2003 Long-Term Incentive Plan (as
amended)
10.1(a) Radius Health, Inc. 2003 Long-Term Incentive Plan Form
of Stock Option Agreement
10.2 Radius Health, Inc. 2011 Equity Incentive Plan (as
10.2(a)
10.2(b)
10.2(c)
amended and restated)
Form of Radius Health, Inc. 2011 Equity Incentive Plan
Stock Option Agreement for Incentive Stock Options
Form of Radius Health, Inc. 2011 Equity Incentive Plan
Stock Option Agreement for Non-Incentive Stock Options
Form of Radius Health, Inc. 2011 Equity Incentive Plan
Restricted Stock Unit Grant Notice and Restricted Stock
Unit Agreement, attached as Exhibit A thereto
10.3 Radius Health, Inc. 2018 Stock Option and Incentive Plan,
together with forms of Incentive Stock Option Agreement,
Non-Qualified Stock Option Agreement for Employees,
Non-Qualified Stock Option Agreement for Non-
Employee Directors, Restricted Stock Unit Agreement for
Employees, and Restricted Stock Unit Agreement for
Non-Employee Directors.
Form of Restricted Stock Unit Agreement for Employees
under Radius Health, Inc. 2018 Stock Option and
Incentive Plan
10.3(a)
Filed/
Furnished
Herewith
*
File No.
Exhibit
3.1
333-194150
000-53173
4.2
4.1
4.2
4.3
4.5
10.20
10.32
10.1
Filing
Date
6/13/2014
4/25/2014
8/14/2017
8/14/2017
8/14/2017
2/27/2020
3/10/2015
5/23/2011
5/27/2016
10.2(a)
2/24/2017
10.2(b)
2/24/2017
10.2(c)
2/24/2017
10.5
8/7/2018
10.3(a)
2/27/2020
Form
8-K
S-1/A
8-K
8-K
8-K
10-K
10-K
8-K
8-K
10-K
10-K
10-K
10-Q
10-K
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10.4 Radius Health, Inc. 2016 Employee Stock Purchase Plan
10.5 Radius Health, Inc. Amended and Restated Non-Employee
10.6
10.7
10.8
10.9
10.9(a)
10.10
10.10(a)
10.10(b)
10.11
10.11(a)
10.12
10.12(a)
10.13
10.14
Director Compensation Program
Form of Executive Severance Agreement between the
Company and Jose Carmona
Form of Executive Severance Agreement between the
Company and Joseph Kelly and Charles Morris
Form of Executive Severance Agreement
Employment Letter Agreement, dated May 9, 2017,
between the Company and Jose Carmona
Employment Inducement Stock Option Agreement, dated
May 15, 2017, between the Company and Jose Carmona
Employment Agreement, dated June 23, 2017, between the
Company and Jesper Hoeiland
First Amendment to Employment Agreement between the
Company and Jesper Hoeiland
Employment Inducement Stock Option Agreement, dated
July 17, 2017, between the Company and Jesper Hoeiland
Employment Letter Agreement, dated November 10, 2017,
between the Company and Joseph Kelly
Employment Inducement Stock Option Agreement, dated
November 27, 2017, between the Company and Joseph
Kelly
Employment Letter Agreement, dated June 28, 2018,
between the Company and Charles Morris
Employment Inducement Stock Option Agreement, dated
September 4, 2018, between the Company and Charles
Morris
Form of Indemnification Agreement between the
Company and its Directors
Form of Indemnification Agreement between the
Company and its Officers
10.15 Radius Health, Inc. Form of Employment Inducement
10.16
Stock Option Agreement
Employment Agreement, dated April 24, 2020, between
the Company and G. Kelly Martin
10.17 Non-Qualified Stock Option Agreement, Inducement
Stock Option Grant (Time-Based), dated April 28, 2020,
between the Company and G. Kelly Martin
*
10.2
10.5
10.13
5/27/2016
02/28/2019
2/24/2017
10.12(a)
3/1/2018
10.1
10.2
10.1
10.1
10.2
5/15/2017
5/15/2017
7/17/2017
11/16/2017
7/17/2017
10.15
3/1/2018
10.15(a)
3/1/2018
10.17
2/28/2019
10.17(a)
2/28/2019
10.18
10.19
10.4
10.1
10.2
2/28/2019
2/28/2019
8/7/2018
4/28/2020
4/28/2020
8-K
10-K
10-K
10-K
8-K
8-K
8-K
8-K
8-K
10-K
10-K
10-K
10-K
10-K
10-K
10-Q
8-K
8-K
112
*
*
Table of Contents
10.18 Non-Qualified Stock Option Agreement, Inducement
10.19
Stock Option Grant (Performance-Based), dated April 28,
2020, between the Company and G. Kelly Martin
Senior Advisor Agreement, dated April 28, 2020, between
the Company and
Jesper Hoeiland.
8-K
8-K
10.3
4/28/2020
10.4
4/28/2020
10.20 General Release of Claims, dated September 22, 2020,
10-Q
10.3
11/5/2020
between the Company and Jose Carmona
10.21 General Release of Claims, dated December 15, 2020,
10.23^
10.24^
between the Company and Charles Morris
10.22 Consulting Agreement, dated December 15, 2020,
between the Company and Charles Morris
Other Agreements
License Agreement, dated September 27, 2005, between
the Company, as successor to Nuvios, Inc., and Ipsen
Pharma SAS (f/k/a SCRAS S.A.S.) on behalf of itself and
its affiliates, as amended on September 12, 2007 and
May 11, 2011
Scale-Up and Commercial Supply Agreement, dated
February 27, 2018, between the Company, 3M Company
and 3M Innovative Properties Company
License Agreement, dated June 29, 2006, between the
Company and Eisai Co., Ltd.
License Agreement Amendment No. 1, dated March 9,
2015, between the Company and Eisai Co., Ltd.
License and Development Agreement, dated July 13,
2017, between the Company and Teijin Limited
Supply Agreement, dated June 23, 2016, between the
Company and Ypsomed AG
10.26^
10.27^
10.25^
10.25(a)
10.27(a) Amendment No. 1, dated February 7, 2017, to Supply
Agreement, dated June 23, 2016, between the Company
and Ypsomed AG
110.27(b) Amendment No. 2, dated June 18, 2019, to Supply
Agreement, dated June 23, 2016, between the Company
and Ypsomed AG
10.28^ Commercial Supply Agreement, dated June 28, 2016,
between the Company and Vetter Pharma International
GmbH
10.28(a)^^ Amendment No. 1, dated December 1, 2019, to
Commercial Supply Agreement, dated June 28, 2016,
between the Company and Vetter Pharma International
GmbH
10-K
10-Q
10.15
3/10/2015
10.1
5/10/2018
8-K/A
000-53173
10.25
10/24/2011
10.3
10.1
10.1
5/6/2015
11/2/2017
8/4/2016
10.11
8/7/2019
10.2
10.2
8/7/2019
8/4/2016
10.20(a)
2/27/2020
10-Q
10-Q
10-Q
10-Q
10-Q
10-Q
10-K
113
Table of Contents
10.29^ Manufacturing Services Agreement, dated July 13, 2016,
between the Company and Polypeptide Laboratories
Holding (PPL) AB, as successor to Lonza Sales Ltd
10.29(a)^ Amendment No. 1, dated December 1, 2018, to
Manufacturing Services Agreement, dated July 13, 2016,
between the Company and Polypeptide Laboratories
Holding (PPL) AB, as successor to Lonza Sales Ltd
10.29(b) Amendment No. 2, dated June 10, 2019, to Manufacturing
Services Agreement, dated July 13, 2016, between the
Company and Polypeptide Laboratories Holding (PPL)
AB, as successor to Lonza Sales Ltd
Indenture of Lease, dated May 14, 2014, between the
Company and BP Bay Colony LLC
First Amendment, dated September 9, 2015, to Lease,
dated May 14, 2014, between the Company and BP Bay
Colony LLC
Second Amendment, dated April 22, 2016, to Lease, dated
May 14, 2014, between the Company and BP Bay Colony
LLC
Third Amendment, dated May 23, 2018, to Lease, dated
May 14, 2014, between the Company and BP Bay Colony
LLC
Fourth Amendment, dated January 28, 2020, to Lease,
dated May 14, 2014, between the Company and BP Bay
Colony LLC
Lease, dated June 28, 2017, between the Company and
KBSIII Crosspoint at Valley Forge Trust
Sublease, dated March 11, 2016, between the Company
and Rovi Corporation
First Amendment to Sublease, dated July 7, 2017, between
the Company and Rovi Corporation
10.30
10.30(a)
10.30(b)
10.30(c)
10.30(d)
10.31
10.32
10.32(a)
10.32(b) Amended and Restated First Amendment to Sublease,
dated August 1, 2017, between the Company and Rovi
Corporation
10.33 Credit and Security Agreement (Term Loan), dated as of
January 10, 2020, by and among the Company, Radius
Pharmaceuticals, Inc., and any additional borrower from
time to time, MidCap Financial Trust, as a lender and the
administrative agent, and the financial institutions or other
entities from time to time parties thereto
10.1
10.1
11/3/2016
5/8/2019
10.3
8/7/2019
10.1
10.6
10.2
10.1
5/20/2014
11/5/2015
5/10/2018
8/7/2018
10.22(d)
2/27/2020
10.1
10.2
10.3
10.4
10.1
8/4/2017
8/4/2017
8/4/2017
11/2/2017
1/13/2020
10-Q
10-Q
10-Q
8-K
10-Q
10-Q
10-Q
10-K
10-Q
10-Q
10-Q
10-Q
8-K
114
Table of Contents
10.34 Credit and Security Agreement (Revolving Loan), dated as
of January 10, 2020, by and among the Company, Radius
Pharmaceuticals, Inc., and any additional borrower from
time to time, MidCap Financial Trust, as a lender and the
administrative agent, and the financial institutions or other
entities from time to time parties thereto
Partial Release and Acknowledgement, dated July 22,
2020, between
the Company, Radius Pharmaceuticals, Inc., MidCap
Financial Trust and MidCap Funding IV Trust
License Agreement, dated July 23, 2020, between Radius
Pharmaceuticals, Inc. and Berlin-Chemie AG – Menarini
Group
10.35
10.36
10.37^^ Asset Purchase Agreement, dated December 30, 2020,
between Radius Pharmaceuticals, Inc. Benuvia
Therapeutics Inc. and Fresh Cut Development LLC
Subsidiaries of the Company
21.1
23.1 Consent of Deloitte LLP, Independent Registered Public
Accounting Firm
23.2 Consent of Ernst & Young LLP, Independent Registered
Public Accounting Firm
31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive
Officer
31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial
Officer
Section 1350 Certification of Chief Executive Officer
Section 1350 Certification of Chief Financial Officer
32.1
32.2
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase
Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase
101.PRE
101. DEF
Document
Inline XBRL Taxonomy Extension Presentation Linkbase
Document
Inline XBRL Taxonomy Extension Definition Linkbase
Document
8-K
10-Q
10-Q
10.2
1/13/2020
10.2
11/5/2020
10.1
11/5/2020
*
*
*
*
*
*
**
**
104 Cover Page Interactive Data File (formatted as inline
XBRL with applicable taxonomy extension information
contained in Exhibits 101.*)
_______________________________________________________________________________
^ Confidential treatment has been granted with respect to redacted portions of this exhibit. Redacted portions of this exhibit have been filed separately with the SEC.
^^ Certain confidential information contained in this exhibit, marked by brackets in the exhibit, has been omitted, because it is both not material and would likely cause competitive harm
if publicly disclosed.
* Filed herewith.
115
Table of Contents
** Furnished herewith.
116
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGNATURES
RADIUS HEALTH, INC.
By:
/s/ G. Kelly Martin
G. Kelly Martin
President and Chief Executive Officer
Date: February 25, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature
/s/ G. KELLY MARTIN
G. Kelly Martin
/s/ JAMES G. CHOPAS
James G. Chopas
/s/ WILLARD H. DERE
Willard H. Dere
/s/ CATHERINE FRIEDMAN
Catherine Friedman
/s/ JEAN-PIERRE GARNIER
Jean-Pierre Garnier
/s/ OWEN HUGHES
Owen Hughes
/s/ SEAN MURPHY
Sean Murphy
/s/ MACHELLE SANDERS
Machelle Sanders
/s/ ANDREW VON ESCHENBACH
Andrew von Eschenbach
Title
Chief Executive Officer and Director (Principal Executive Officer)
Chief Financial Officer (Principal Accounting and Financial Officer)
Director
Director
Director
Director
Director
Director
Director
117
Date
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
February 25, 2021
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
RADIUS HEALTH, INC.
(a Delaware corporation)
TABLE OF CONTENTS
Page
–
–
CORPORATE OFFICES 1
REGISTERED OFFICE 1
OTHER OFFICES 1
MEETINGS OF STOCKHOLDERS 1
PLACE OF MEETINGS 1
ANNUAL MEETING 1
SPECIAL MEETING 1
ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING 1
ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS 5
NOTICE OF STOCKHOLDERS’ MEETINGS 7
MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE 8
QUORUM 8
ADJOURNED MEETING; NOTICE 8
CONDUCT OF BUSINESS 8
VOTING 9
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING 9
RECORD DATE FOR STOCKHOLDER NOTICE; VOTING 9
PROXIES 10
LIST OF STOCKHOLDERS ENTITLED TO VOTE 10
POSTPONEMENT AND CANCELLATION OF MEETING 10
INSPECTORS OF ELECTION 11
–
DIRECTORS 11
POWERS 11
NUMBER OF DIRECTORS 11
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS 11
RESIGNATION AND VACANCIES 11
PLACE OF MEETINGS; MEETINGS BY TELEPHONE 12
REGULAR MEETINGS 12
SPECIAL MEETINGS; NOTICE 12
QUORUM 12
BOARD ACTION BY CONSENT WITHOUT A MEETING 13
FEES AND COMPENSATION OF DIRECTORS 13
i
REMOVAL OF DIRECTORS 13
–
COMMITTEES 13
COMMITTEES OF DIRECTORS 13
COMMITTEE MINUTES 13
MEETINGS AND ACTION OF COMMITTEES 13
–
OFFICERS 14
OFFICERS 14
APPOINTMENT OF OFFICERS 14
SUBORDINATE OFFICERS 14
REMOVAL AND RESIGNATION OF OFFICERS 14
VACANCIES IN OFFICES 14
REPRESENTATION OF SHARES OF OTHER CORPORATIONS 15
AUTHORITY AND DUTIES OF OFFICERS 15
–
–
RECORDS AND REPORTS 15
MAINTENANCE OF RECORDS 15
GENERAL MATTERS 15
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS 15
STOCK CERTIFICATES; PARTLY PAID SHARES 15
SPECIAL DESIGNATION ON CERTIFICATES 16
LOST CERTIFICATES 16
CONSTRUCTION; DEFINITIONS 16
DIVIDENDS 16
FISCAL YEAR 16
SEAL 16
TRANSFER OF STOCK 16
STOCK TRANSFER AGREEMENTS 17
REGISTERED STOCKHOLDERS 17
WAIVER OF NOTICE 17
- NOTICE BY ELECTRONIC TRANSMISSION 17
NOTICE BY ELECTRONIC TRANSMISSION 17
DEFINITION OF ELECTRONIC TRANSMISSION 18
–
INDEMNIFICATION AND ADVANCEMENT 18
ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION 18
ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION 18
INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY 19
NOTIFICATION AND DEFENSE OF CLAIM 19
i
ADVANCE OF EXPENSES 20
PROCEDURE FOR INDEMNIFICATION AND ADVANCEMENT OF EXPENSES 20
REMEDIES 20
LIMITATIONS 21
SUBSEQUENT AMENDMENT 21
OTHER RIGHTS 21
PARTIAL INDEMNIFICATION 21
INSURANCE 21
SAVINGS CLAUSE 22
DEFINITIONS 22
–
FORUM SELECTION 22
ARTICLE XI - AMENDMENTS 22
i
AMENDED AND RESTATED BYLAWS OF
RADIUS HEALTH, INC.
- CORPORATE OFFICES
REGISTERED OFFICE
The registered office of Radius Health, Inc. (the “Corporation”) shall be fixed in the Corporation’s certificate of incorporation, as the same may be amended from time to
time (the “certificate of incorporation”).
OTHER OFFICES
The Corporation’s board of directors (the “Board”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.
- MEETINGS OF STOCKHOLDERS
PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a
meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the General
Corporation Law of the State of Delaware (the “DGCL”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal
executive office.
ANNUAL MEETING
The Board shall designate the date and time of the annual meeting. At the annual meeting, directors shall be elected and other proper business properly brought before the
meeting in accordance with Section 2.4 of these bylaws may be transacted.
SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the Board, chairperson of the Board, chief executive officer or president (in the absence of a chief
executive officer), but such special meetings may not be called by any other person or persons.
No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section
2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.
ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING
At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought
brought before the meeting by the Corporation and specified in the notice of meeting given by or at the direction of the Board, (ii) brought before the meeting by or at the
before an annual meeting, business must be
(i)
direction of the Board or (iii) otherwise properly brought before the meeting by a stockholder who (A) was a stockholder of record of the Corporation (and, with respect to any
beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of
giving the notice provided for in this Section 2.4 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.4 as to such business.
Except for proposals properly made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (as
so amended and inclusive of
such rules and regulations, the “Exchange Act”), and included in the notice of meeting given by or at the direction of the Board, the foregoing clause (iii) shall be the exclusive means
for a stockholder to propose business to be brought before an annual meeting of the stockholders. Stockholders shall not be permitted to propose business to be brought before a special
meeting of the stockholders, and the only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the
person calling the meeting pursuant to Section 2.3 of these bylaws. Stockholders seeking to nominate persons for election to the Board must comply with Section 2.5 of these bylaws,
and this Section 2.4 shall not be applicable to nominations except as expressly provided in Section 2.5 of these bylaws.
Without qualification, for business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined
below) thereof in writing and in proper form to the secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this
Section 2.4. To be timely, a stockholder’s notice must be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than ninety (90) days nor
more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that (x) if the date of the annual meeting is more than
thirty (30) days before or more than sixty (60) days after such anniversary date or (y) with respect to the first annual meeting held after April 1, 2014, notice by the stockholder to be
timely must be so delivered, or mailed and received, not earlier than the one hundred twentieth (120th) day prior to such annual meeting and not later than the ninetieth (90th) day prior
to such annual meeting or, if later, the tenth (10th) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time
periods, “Timely Notice”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely
Notice as described above.
To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the secretary of the Corporation shall set forth:
As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, without limitation, if applicable, the
name and address that appear on the Corporation’s books and records) and (B) the class or series and number of shares of the Corporation that are, directly or
indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing
Person shall in all events be deemed to beneficially own any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire
beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses
1. and (B) are referred to as “Stockholder Information”);
As to each Proposing Person, (A) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such Proposing
Person, the purpose or effect of which is to give such Proposing Person economic risk similar to ownership of shares of any class or series of the Corporation,
including, without limitation, due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of
any shares of any class or series of the Corporation, or which derivative, swap or other transactions provide, directly or indirectly, the opportunity to profit from any
increase in the price or value of shares of any class or series of the Corporation (“Synthetic Equity Interests”), which Synthetic Equity Interests shall be disclosed
without regard to whether (x) the derivative, swap or other transactions convey any voting rights in such shares to such Proposing Person, (y) the derivative, swap or
other transactions are required to be, or are capable of being, settled through delivery of such shares or (z) such Proposing Person may have entered into other
transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions, (B) any proxy (other than a revocable proxy or consent given in
response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A),
agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to vote any shares of any class or series of the
Corporation,
2
(C) any agreement, arrangement, understanding or relationship, including, without limitation, any repurchase or similar so-called “stock borrowing” agreement or
arrangement,
3
engaged in, directly or indirectly, by such Proposing Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or
otherwise) of shares of any class or series of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such
Proposing Person with respect to the shares of any class or series of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any
decrease in the price or value of the shares of any class or series of the Corporation (“Short Interests”),
(D) any rights to dividends on the shares of any class or series of the Corporation owned beneficially by such Proposing Person that are separated or separable from
the underlying shares of the Corporation, (E) any performance related fees (other than an asset based fee) that such Proposing Person is entitled to based on any
increase or decrease in the price or value of shares of any class or series of the Corporation, or any Synthetic Equity Interests or Short Interests, if any, (F)(x) if such
Proposing Person is not a natural person, the identity of the natural person or persons associated with such Proposing Person responsible for the formulation of and
decision to propose the business to be brought before the meeting (such person or persons, the “Responsible Person”), the manner in which such Responsible Person
was selected, any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Person, the qualifications and
background of such Responsible Person and any material interests or relationships of such Responsible Person that are not shared generally by any other record or
beneficial holder of the shares of any class or series of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose
such business to be brought before the meeting, and (y) if such Proposing Person is a natural person, the qualifications and background of such natural person and
any material interests or relationships of such natural person that are not shared generally by any other record or beneficial holder of the shares of any class or series
of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, (G)
any significant equity interests or any Synthetic Equity Interests or Short Interests in any principal competitor of the Corporation held by such Proposing Persons,
(H) any direct or indirect interest of such Proposing Person in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the
Corporation (including, without limitation, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (I) any pending
or threatened litigation in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate
of the Corporation,
(J) any material transaction occurring during the prior twelve months between such Proposing Person, on the one hand, and the Corporation, any affiliate of the
Corporation or any principal competitor of the Corporation, on the other hand, (K) a summary of any material discussions regarding the business proposed to be
brought before the meeting (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial
holder of the shares of any class or series of the Corporation (including, without limitation, their names) and (L) any other information relating to such Proposing
Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such
Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made
pursuant to the foregoing clauses (A) through (L) are referred to as “Disclosable Interests”); provided, however, that Disclosable Interests shall not include any such
disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person
solely as a result of being the stockholder directed to prepare and submit the notice required by these bylaws on behalf of a beneficial owner; and
As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a reasonably brief description of the business desired to
be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing
Person, (B) the text of the proposal or business (including, without limitation, the text of any resolutions proposed for consideration and in the event that such
business includes a proposal to amend the bylaws of the Corporation, the language of the proposed amendment), (C) a reasonably detailed description of all
agreements,
4
5
arrangements and understandings between or among any of the Proposing Persons or between or among any Proposing Person and any other person or entity
(including, without limitation, their names) in connection with the proposal of such business by such stockholder, (D) a representation that the stockholder is a holder
of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business, (E) a
representation whether the Proposing Person intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the
percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (2) otherwise to solicit proxies or votes from stockholders
in support of such proposal and (F) any other information relating to such item of business that would be required to be disclosed in a proxy statement or other filing
required to be made in connection with solicitations of proxies in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the
Exchange Act; provided, however, that the disclosures required by this paragraph (c) shall not include any disclosures with respect to any broker, dealer, commercial
bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by
these bylaws on behalf of a beneficial owner.
For purposes of this Section 2.4, the term “Proposing Person” shall mean (i) the stockholder providing the notice of business proposed to be brought before an
annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (iii)
any affiliate or associate (each within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these bylaws) of such stockholder or beneficial owner and (iv) any other
person with whom such stockholder or beneficial owner (or any of their respective affiliates or associates) is Acting in Concert (as defined below).
A person shall be deemed to be “Acting in Concert” with another person for purposes of these bylaws if such person knowingly acts (whether or not pursuant to an
express agreement, arrangement or understanding) in concert with, or towards a common goal relating to the management, governance or control of the Corporation in parallel with,
such other person where (i) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making processes and (ii) at least one
additional factor suggests that such persons intend to act in concert or in parallel, which such additional factors may include, without limitation, exchanging information (whether
publicly or privately), attending meetings, conducting discussions, or making or soliciting invitations to act in concert or in parallel; provided, that a person shall not be deemed to be
Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies or consents from such other person in response to a solicitation made
pursuant to, and in accordance with, the Section 14(a) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A. A person Acting in Concert with
another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person.
A stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that
the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for determining stockholders entitled to
notice of the annual meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be
delivered to, or mailed and received by, the secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date
for determining stockholders entitled to notice of the annual meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight (8)
business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to
which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any
adjournment or postponement thereof).
6
presiding officer of the meeting shall, if the facts warrant, determine that the business was not properly brought before an annual meeting in accordance with this
Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with this Section 2.4. The
7
Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
The foregoing notice requirements of this Section 2.4 shall be deemed satisfied by a stockholder with respect to business other than a nomination if the
stockholder has notified the Corporation of his, her or its intention to present a proposal at an annual meeting in compliance with applicable rules and regulations promulgated under the
Exchange Act and such stockholder’s proposal has been included in a proxy statement that has been prepared by the Corporation to solicit proxies for such annual meeting. Nothing in
this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange
Act.
Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.
For purposes of these bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the
Notwithstanding the foregoing provisions of this Section 2.4, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder)
does not appear at the annual meeting to present proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been
received by the Corporation. For purposes of this Section 2.4, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or
partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as
proxy at the annual meeting and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the annual
meeting.
ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS
Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the
notice of meeting given by or at the direction of the person calling such special meeting) may be made at such meeting only (i) by or at the direction of the Board, including, without
limitation, by any committee or persons appointed by the Board, or (ii) by a stockholder who
(A)
beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting,
(B)
make any nomination of a person or persons for election to the Board to be considered by the stockholders at an annual meeting or special meeting.
is entitled to vote at the meeting and (C) has complied with this Section 2.5 as to such nomination. The foregoing clause (ii) shall be the exclusive means for a stockholder to
was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such
Without qualification, for a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (i)
provide Timely Notice (as defined in Section 2.4(b) of these bylaws) thereof in writing and in proper form to the secretary of the Corporation and (ii) provide any updates or
supplements to such notice at the times and in the forms required by this Section 2.5. Without qualification, if the election of directors is a matter specified in the notice of meeting
given by or at the direction of the person calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special
meeting, the stockholder must (i) provide timely notice thereof in writing and in proper form to the secretary of the Corporation at the principal executive offices of the Corporation and
(ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a
special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120th) day prior to such
special meeting and not later than the ninetieth (90th) day prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (as defined in
Section 2.4(i) of these bylaws) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or
8
special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.
To be in proper form for purposes of this Section 2.5, a stockholder’s notice to the secretary of the Corporation shall set forth:
9
As to each Nominating Person (as defined below), the Stockholder Information (as defined in Section 2.4(c)(i) of these bylaws) except that for purposes
of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(i);
As to each Nominating Person, any Disclosable Interests (as defined in Section 2.4(c)(ii), except that for purposes of this Section 2.5 the term
“Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii) and the disclosure in clause (L) of Section
2.4(c)(ii) shall be made with respect to the election of directors at the meeting);
As to each person whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such proposed
nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such proposed nominee were a Nominating Person, (B) all
information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with
solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including, without limitation, such proposed
nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of all direct and indirect
compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships,
between or among any Nominating Person, on the one hand, and each proposed nominee, his or her respective affiliates and associates and any other persons with
whom such proposed nominee (or any of his or her respective affiliates and associates) is Acting in Concert (as defined in Section 2.4(e) of these bylaws), on the
other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating
Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant (the disclosures to be made
pursuant to the foregoing clauses (A) through (C) are referred to as “Nominee Information”), (D) a representation that the Nominating Person is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such nomination, (E) a representation
whether the Nominating Person intends or is part of a group which intends (1) to deliver a proxy statement and/or form of proxy to holders of at least the percentage
of the Corporation’s outstanding capital stock required to elect the nominee and/or
(2) otherwise to solicit proxies or votes from stockholders in support of such nomination and (F) a completed and signed questionnaire, representation and agreement
as provided in Section 2.5(g); and
The Corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the Corporation to
determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with the Corporation’s Corporate
Governance Guidelines or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed
nominee.
For purposes of this Section 2.5, the term “Nominating Person” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the
meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (iii) any affiliate or
associate of such stockholder or beneficial owner and (iv) any other person with whom such stockholder or such beneficial owner (or any of their respective affiliates or associates) is
Acting in Concert.
information provided or required to be provided
A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the
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in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for determining stockholders entitled to notice of the meeting and as of the date that is ten (10)
business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received
11
by, the secretary of the Corporation at the principal executive offices of the Corporation not later than five
(5) business days after the record date for determining stockholders entitled to notice of the meeting (in the case of the update and supplement required to be made as of the record
date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first
practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days
prior to the meeting or any adjournment or postponement thereof).
Notwithstanding anything in these bylaws to the contrary, no person shall be eligible for election as a director of the Corporation unless nominated in accordance
with this Section 2.5. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or
she should so determine, he or she shall so declare such determination to the meeting and the defective nomination shall be disregarded.
To be eligible to be a nominee for election as a director of the Corporation, the proposed nominee must deliver (in accordance with the time periods prescribed for
delivery of notice under this Section 2.5) to the secretary of the Corporation at the principal executive offices of the Corporation a written questionnaire with respect to the background
and qualification of such proposed nominee (which questionnaire shall be provided by the secretary upon written request) and a written representation and agreement (in form provided
by the secretary upon written request) that such proposed nominee (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given
any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting
Commitment”) that has not been disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a
director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (ii) is not, and will not become a party to, any agreement, arrangement or
understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or
action as a director that has not been disclosed to the Corporation and (iii) in such proposed nominee’s individual capacity and on behalf of the stockholder (or the beneficial owner, if
different) on whose behalf the nomination is made, would be in compliance, if elected as a director of the Corporation, and will comply with applicable publicly disclosed corporate
governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.
applicable requirements of the Exchange Act with respect to any such nominations.
In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Nominating Person shall comply with all
Notwithstanding the foregoing provisions of this Section 2.5, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder)
does not appear at the meeting to present the proposed nomination, such proposed nomination shall not be considered, notwithstanding that proxies in respect of such vote may have
been received by the Corporation. For purposes of this Section 2.5, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager
or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder
as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the
meeting.
NOTICE OF STOCKHOLDERS’ MEETINGS
Unless otherwise provided by law, the certificate of incorporation or these bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance
with either Section 2.7 or Section 8.1 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such
meeting as of the record date for determining the stockholders entitled to notice of the
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meeting. The notice shall specify the place, if any, date and hour of the meeting, the record date for determining the stockholders entitled to vote at the meeting (if such date is different
from the record date for stockholders entitled to notice of the meeting), the means of remote communication, if any, by which stockholders and proxy holders may
13
be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Notice of any meeting of stockholders shall be deemed given:
Corporation’s records; or
if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the
if electronically transmitted, as provided in Section 8.1 of these bylaws.
An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or
by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
QUORUM
Unless otherwise provided by law, the certificate of incorporation or these bylaws, the holders of a majority in voting power of the capital stock issued and outstanding and
entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the
stockholders. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, a quorum is not present or
represented at any meeting of the stockholders, then either (a) the chairperson of the meeting or (b) a majority in voting power of the stockholders entitled to vote thereon, present in
person, or by remote communication, if applicable, or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these
bylaws until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been
transacted at the meeting as originally noticed.
ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any,
thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are
announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original
meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date for determining the stockholders entitled to vote is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting as of the record date for determining the stockholders
entitled to notice of the adjourned meeting.
CONDUCT OF BUSINESS
The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting by the
person presiding over the meeting. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to
the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and
(for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures (which need not be in writing) and to do all such acts as, in the judgment
of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding
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person of the meeting, may include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining
order at the meeting and the safety of those present (including, without limitation, rules and procedures for removal of disruptive persons from the meeting);
(c) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their
15
duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine;
a.
restrictions on entry to the meeting after the time fixed for the commencement thereof; and (e) limitations on the time allotted to questions or comments by participants. The
presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting (including, without limitation,
determinations with respect to the administration and/or interpretation of any of the rules, regulations or procedures of the meeting, whether adopted by the Board or prescribed by the
person presiding over the meeting), shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such
presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be
transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in
accordance with the rules of parliamentary procedure.
VOTING
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.13 of these bylaws, subject to Section 217
(relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.
Except as may be otherwise provided in the certificate of incorporation or these bylaws, each stockholder shall be entitled to one (1) vote for each share of capital stock held
by such stockholder.
At all duly called or convened meetings of stockholders, at which a quorum is present, for the election of directors, a nominee for director shall be elected to the Board if the
number of votes cast for such nominee’s election exceeds the number of votes cast against such nominee’s election; provided, however, that in a contested election a nominee shall be
elected by a plurality of the votes cast by the stockholders entitled to vote on such election of directors. An election shall be considered contested if, as of the last date on which
nominees for director may be submitted in accordance with these bylaws, the nominees for election to the Board exceeds the number of positions on the Board to be filled by election at
that meeting. If an incumbent director is not re-elected, the director shall tender his or her resignation to the Board. The Nominating and Corporate Governance Committee of the Board
(or any future committee the equivalent thereof) will make a recommendation to the Board on whether to accept or reject the resignation, or whether other action should be taken. The
Board will act on the recommendation of such committee and will publicly disclose its decision within ninety (90) days from the date of the certification of the election results. An
incumbent director who tenders his or her resignation may not participate in such decisions of the committee or the Board.
Except as otherwise provided by the certificate of incorporation, these bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law
or pursuant to any regulation applicable to the Corporation or its securities, all other elections and questions presented to the stockholders at a duly called or convened meeting, at
which a quorum is present, shall be decided by the affirmative vote of the holders of a majority in voting power of the votes cast affirmatively or negatively (excluding abstentions) at
the meeting by the holders entitled to vote thereon.
STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the
Corporation and may not be effected by any consent in writing by such stockholders.
RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date,
which record date shall not precede the
16
date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than
ten (10) days before the date of such meeting. If
17
the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such
record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the
adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for
determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.
In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise
any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix a record date, which shall not be more than sixty
(60) days prior to such other action. If no such record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on
which the Board adopts the resolution relating thereto.
PROXIES
Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in
writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of
the DGCL. A proxy may be in the form of a telegram, cablegram or other means of electronic transmission which sets forth or is submitted with information from which it can be
determined that the telegram, cablegram or other means of electronic transmission was authorized by the stockholder.
LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten
(10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting (provided, however, if the record date for determining the
stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth day before the date of the
meeting), arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not
be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting for a period of at least ten (10) days prior to the meeting:
(a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary
business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may
take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept
at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote
communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the
information required to access such list shall be provided with the notice of the meeting. Except as otherwise provided by law, the stock ledger shall be the only evidence as to the
identity of the stockholders entitled to vote in person or by proxy and the number of shares held by each of them, and as to the stockholders entitled to examine the list of stockholders.
POSTPONEMENT AND CANCELLATION OF MEETING
18
19
Any previously scheduled annual or special meeting of the stockholders may be postponed, and any previously scheduled annual or special meeting of the stockholders
may be canceled, by resolution of the Board upon public notice given prior to the time previously scheduled for such meeting.
INSPECTORS OF ELECTION
Before any meeting of stockholders, the Board shall appoint an inspector or inspectors of election to act at the meeting or its adjournment or postponement and make a written
report thereof. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the
meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy. Unless otherwise required by law, inspectors may be officers,
employees or agents of the Corporation. Such inspectors shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a
certificate of the result of the vote taken and of such other facts as may be required by law. The inspectors of election shall perform their duties impartially, in good faith, to the best of
their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or
certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
POWERS
- DIRECTORS
Subject to the provisions of the DGCL and any limitations in the certificate of incorporation relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.
NUMBER OF DIRECTORS
The authorized number of directors shall be determined from time to time by resolution of the Board, provided the Board shall consist of at least one (1) member. No
reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.
ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, each director, including, without limitation, a director elected to fill a vacancy, shall hold office until the expiration of the
term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless
so required by the certificate of incorporation or these bylaws. The certificate of incorporation or these bylaws may prescribe other qualifications for directors.
If so provided in the certificate of incorporation, the directors of the Corporation shall be divided into three
(3) classes.
RESIGNATION AND VACANCIES
Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation at its principal office or to the chairperson of the Board, the
chief executive officer, the president or the secretary. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office,
including, without limitation, those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.
20
Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number
of directors shall, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by a
21
majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for
the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the
Board shall be deemed to exist under these bylaws in the case of the death, removal or resignation of any director.
PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The Board may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a
meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting pursuant to this bylaw shall constitute presence in person at the meeting.
REGULAR MEETINGS
Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board; provided that any director
who is absent when such determination is made shall be given notice of the determination. A regular meeting of the Board may be held without notice immediately after and at the
same place as the annual meeting of stockholders.
SPECIAL MEETINGS; NOTICE
Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary
or a majority of the authorized number of directors.
Notice of the time and place of special meetings shall be:
delivered personally by hand, by courier or by telephone;
sent by United States first-class mail, postage prepaid;
sent by
facsimile; or
sent by electronic mail,
directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.
If the notice is (a) delivered personally by hand, by courier or by telephone, (b) sent by facsimile or (c) sent by electronic mail, it shall be delivered or sent at least twenty-four
(24) hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four
1.
to be held at the Corporation’s principal executive office) nor the purpose of the meeting.
days before the time of the holding of the meeting. Any oral notice may be communicated to the director. The notice need not specify the place of the meeting (if the meeting is
QUORUM
22
The greater of (a) a majority of the directors at any time in office and (b) one-third of the number of directors established by the Board pursuant to Section 3.2 of these bylaws
shall constitute a quorum of the Board for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the
Board, except as may be otherwise specifically provided by statute, the certificate of
23
incorporation or these bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present.
BOARD ACTION BY CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee
thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or
writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are
maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.
REMOVAL OF DIRECTORS
Subject to the rights of the holders of the shares of any series of Preferred Stock, the Board or any individual director may be removed from office only for cause and only by
the affirmative vote of the holders of at least two-thirds in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon.
COMMITTEES OF DIRECTORS
- COMMITTEES
The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or
more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may
unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the
resolution of the Board or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (a) approve or adopt, or recommend
to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (b) adopt,
amend or repeal any bylaw of the Corporation.
COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the same to the Board when required.
MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:
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Section 3.5 of these bylaws (place of meetings and meetings by telephone);
Section 3.6 of these bylaws (regular meetings);
Section 3.7 of these bylaws (special meetings and notice);
25
Section 3.8 of these bylaws (quorum);
Section 7.12 of these bylaws (waiver of notice); and Section 3.9 of these bylaws (action without a meeting),
with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members. However:
the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;
special meetings of committees may also be called by resolution of the Board;
and
notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The
Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.
OFFICERS
- OFFICERS
The officers of the Corporation shall be a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice
chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more
assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws. Any number of offices may
be held by the same person.
APPOINTMENT OF OFFICERS
The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws, subject
to the rights, if any, of an officer under any contract of employment.
SUBORDINATE OFFICERS
The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the
business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these
bylaws or as the Board may from time to time determine.
REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by the Board at any regular or special
meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.
Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time
specified in that notice. Unless otherwise specified
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in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Corporation
under any contract to which the officer is a party.
VACANCIES IN OFFICES
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Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.3 of these bylaws.
REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of this Corporation, or any other person authorized by the
Board or the president or a vice president, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all securities of any other entity or
entities standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or
power of attorney duly executed by such person having the authority.
AUTHORITY AND DUTIES OF OFFICERS
All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated
from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.
- RECORDS AND REPORTS
MAINTENANCE OF RECORDS
The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and
addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records.
EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
- GENERAL MATTERS
The Board, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of
an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any
purpose or for any amount.
STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of the Corporation shall be represented by certificates or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent
with the certificate of incorporation and applicable law. Every holder of stock represented by a certificate shall be entitled to have a certificate signed by, or in the name of the
Corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant
secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or
back of each stock certificate issued to
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represent any such partly paid shares, or upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid
therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon
29
partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
SPECIAL DESIGNATION ON CERTIFICATES
If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative,
participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise
provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent
such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the
relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
LOST CERTIFICATES
Except as provided in this Section 7.4, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation
and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been
lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond
sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate
or uncertificated shares.
CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these bylaws. Without limiting
the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.
DIVIDENDS
The Board, subject to any restrictions contained in either (a) the DGCL or (b) the certificate of incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.
The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such
purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the
Board.
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SEAL
The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
TRANSFER OF STOCK
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Shares of the Corporation shall be transferable in the manner prescribed by law and in these bylaws.
Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing,
upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions
with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may
reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been
entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.
STOCK TRANSFER AGREEMENTS
The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to
restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.
REGISTERED STOCKHOLDERS
The Corporation:
shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;
shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and
or other notice thereof, except as otherwise provided by the laws of Delaware.
shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express
WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or these bylaws, a written waiver, signed by the person entitled to
notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent
to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the
beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of
incorporation or these bylaws.
- NOTICE BY ELECTRONIC TRANSMISSION
NOTICE BY ELECTRONIC TRANSMISSION
Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any
notice to stockholders given by the Corporation under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic
transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such
consent shall be deemed revoked if:
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the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and
33
notice.
such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of
However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.
Any notice given pursuant to the preceding paragraph shall be deemed given:
if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;
if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;
giving of such separate notice; and
if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (i) such posting and (ii) the
if by any other form of electronic transmission, when directed to the stockholder.
An affidavit of the secretary or an assistant secretary of the Corporation or of the transfer agent or other agent of the Corporation that the notice has been given by a form of
electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
DEFINITION OF ELECTRONIC TRANSMISSION
For the purposes of these bylaws, an “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a
record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
- INDEMNIFICATION AND ADVANCEMENT
CORPORATION
ACTIONS, SUITS AND PROCEEDINGS OTHER THAN BY OR IN THE RIGHT OF THE
The Corporation shall indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was, or has agreed to become,
a director or officer of the Corporation, or, while a director or officer of the Corporation, is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer,
partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee
benefit plan) (all such persons being referred to hereafter as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses
(including, without limitation, attorneys’ fees), liabilities, losses, judgments, fines (including, without limitation, excise taxes and penalties arising under the Employee Retirement
Income Security Act of 1974), and amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with such action, suit or proceeding and
any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not opposed to, the best interests of the Corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which
Indemnitee
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reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
ACTIONS OR SUITS BY OR IN THE RIGHT OF THE CORPORATION
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The Corporation shall indemnify any Indemnitee who was or is a party to or threatened to be made a party to any threatened, pending or completed action or suit by or in the
right of the Corporation to procure a judgment in its favor by reason of the fact that Indemnitee is or was, or has agreed to become, a director or officer of the Corporation, or, while a
director or officer of the Corporation, is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer, partner, employee or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including, without limitation, attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in
connection with such action, suit or proceeding and any appeal therefrom, if Indemnitee acted in good faith and in a manner which Indemnitee reasonably believed to be in, or not
opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section 9.2 in respect of any claim, issue or matter as to which Indemnitee
shall have been adjudged to be liable to the Corporation, unless, and only to the extent, that the Court of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity
for such expenses (including, without limitation, attorneys’ fees) which the Court of Chancery of Delaware or such other court shall deem proper.
INDEMNIFICATION FOR EXPENSES OF SUCCESSFUL PARTY
Notwithstanding any other provisions of this Article IX, to the extent that an Indemnitee has been successful, on the merits or otherwise, in defense of any action, suit or
proceeding referred to in Sections 9.1 and 9.2 of these bylaws, or in defense of any claim, issue or matter therein, or on appeal from any such action, suit or proceeding, Indemnitee
shall be indemnified against all expenses (including, without limitation, attorneys’ fees) actually and reasonably incurred by or on behalf of Indemnitee in connection therewith.
Without limiting the foregoing, if any action, suit or proceeding is disposed of, on the merits or otherwise (including, without limitation, a disposition without prejudice), without (a) the
disposition being adverse to Indemnitee, (b) an adjudication that Indemnitee was liable to the Corporation, (c) a plea of guilty or nolo contendere by Indemnitee, (d) an adjudication that
Indemnitee did not act in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation and (e) with respect to any criminal
proceeding, an adjudication that Indemnitee had reasonable cause to believe his or her conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been
wholly successful with respect thereto.
NOTIFICATION AND DEFENSE OF CLAIM
As a condition precedent to an Indemnitee’s right to be indemnified, such Indemnitee must notify the Corporation in writing as soon as practicable of any action, suit,
proceeding or investigation involving such Indemnitee for which indemnity will or could be sought. With respect to any action, suit, proceeding or investigation of which the
Corporation is so notified, the Corporation will be entitled to participate therein at its own expense and/or to assume the defense thereof at its own expense, with legal counsel
reasonably acceptable to Indemnitee. After notice from the Corporation to Indemnitee of its election so to assume such defense, the Corporation shall not be liable to Indemnitee for
any legal or other expenses subsequently incurred by Indemnitee in connection with such action, suit, proceeding or investigation, other than as provided below in this Section 9.4.
Indemnitee shall have the right to employ his or her own counsel in connection with such action, suit, proceeding or investigation, but the fees and expenses of such counsel incurred
after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Indemnitee unless (a) the employment of counsel by Indemnitee has been
authorized by the Corporation, (b) counsel to Indemnitee shall have reasonably concluded that there may be a conflict of interest or position on any significant issue between the
Corporation and Indemnitee in the conduct of the defense of such action, suit, proceeding or investigation or (c) the Corporation shall not in fact have employed counsel to assume the
defense of such action, suit, proceeding or investigation, in each of which cases the fees and expenses of counsel for Indemnitee shall be at the expense of the Corporation, except as
otherwise expressly provided by this Article IX. The Corporation shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right
of the Corporation or as to which counsel for Indemnitee shall have reasonably made the conclusion provided for in clause (b) above. The Corporation shall not be required to
indemnify Indemnitee under this Article IX for any amounts paid in settlement of any action, suit, proceeding or
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investigation effected without its written consent. The Corporation shall not settle any action, suit, proceeding or investigation in any manner which would impose any penalty or
limitation on Indemnitee without Indemnitee’s
37
written consent. Neither the Corporation nor Indemnitee will unreasonably withhold or delay its consent to any proposed settlement.
ADVANCE OF EXPENSES
Subject to the provisions of Sections 9.4 and 9.6 of these bylaws, in the event of any threatened or pending action, suit, proceeding or investigation of which the Corporation
receives notice under this Article IX, any expenses (including, without limitation, attorneys’ fees) incurred by or on behalf of Indemnitee in defending an action, suit, proceeding or
investigation or any appeal therefrom shall be paid by the Corporation in advance of the final disposition of such matter; provided, however, that the payment of such expenses incurred
by or on behalf of Indemnitee in advance of the final disposition of such matter shall be made only upon receipt of an undertaking by or on behalf of Indemnitee to repay all amounts so
advanced in the event that it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Indemnitee is not entitled to be indemnified by
the Corporation as authorized in this Article IX; and provided further that no such advancement of expenses shall be made under this Article IX if it is determined (in the manner
described in Section 9.6 of these bylaws) that
a.
criminal action or proceeding, Indemnitee had reasonable cause to believe his or her conduct was unlawful. Such undertaking shall be accepted without reference to the financial
ability of Indemnitee to make such repayment.
Indemnitee did not act in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, or (b) with respect to any
PROCEDURE FOR INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
In order to obtain indemnification or advancement of expenses pursuant to Section 9.1, 9.2, 9.3 or 9.5 of these bylaws, an Indemnitee shall submit to the Corporation a written
request. Any such advancement of expenses shall be made promptly, and in any event within 60 days after receipt by the Corporation of the written request of Indemnitee, unless (a) the
Corporation has assumed the defense pursuant to Section 9.4 of these bylaws (and none of the circumstances described in Section 9.4 of these bylaws that would nonetheless entitle the
Indemnitee to indemnification for the fees and expenses of separate counsel have occurred) or (b) the Corporation determines within such 60-day period that Indemnitee did not meet
the applicable standard of conduct set forth in Section 9.1,
9.2 or 9.5 of these bylaws, as the case may be. Any such indemnification, unless ordered by a court, shall be made with respect to requests under Section 9.1 or 9.2 of these bylaws
only as authorized in the specific case upon a determination by the Corporation that the indemnification of Indemnitee is proper because Indemnitee has met the applicable standard of
conduct set forth in Section 9.1 or 9.2 of these bylaws, as the case may be. Such determination shall be made in each instance (a) by a majority vote of the directors of the Corporation
consisting of persons who are not at that time parties to the action, suit or proceeding in question (“disinterested directors”), whether or not a quorum, (b) by a committee of
disinterested directors designated by majority vote of disinterested directors, whether or not a quorum, (c) if there are no disinterested directors, or if the disinterested directors so
direct, by independent legal counsel (who may, to the extent permitted by law, be regular legal counsel to the Corporation) in a written opinion or (d) by the stockholders of the
Corporation.
REMEDIES
The right to indemnification or advancement of expenses as granted by this Article IX shall be enforceable by Indemnitee in any court of competent jurisdiction. Neither the
failure of the Corporation to have made a determination prior to the commencement of such action that indemnification is proper in the circumstances because Indemnitee has met the
applicable standard of conduct, nor an actual determination by the Corporation pursuant to Section 9.6 of these bylaws that Indemnitee has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. In any suit brought by Indemnitee to enforce a right to
indemnification or advancement, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall have the burden
of proving that Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article
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IX. Indemnitee’s expenses (including, without limitation, attorneys’ fees) reasonably incurred in connection with successfully establishing Indemnitee’s right to indemnification or
advancement, in whole or in part, in any such proceeding shall also be indemnified by the Corporation to the fullest extent permitted by law. Notwithstanding the foregoing, in any suit
brought by Indemnitee to enforce a right to indemnification hereunder it shall be a defense that the Indemnitee has not met any applicable standard for indemnification set forth in the
DGCL.
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LIMITATIONS
Notwithstanding anything to the contrary in this Article IX, except as set forth in Section 9.7 of these bylaws, the Corporation shall not indemnify an Indemnitee pursuant to
this Article IX in connection with a proceeding (or part thereof) initiated by such Indemnitee unless the initiation thereof was approved by the Board. Notwithstanding anything to the
contrary in this Article IX, the Corporation shall not indemnify (or advance expenses to) an Indemnitee to the extent such Indemnitee is reimbursed (or advanced expenses) from the
proceeds of insurance, and in the event the Corporation makes any indemnification (or advancement) payments to an Indemnitee and such Indemnitee is subsequently reimbursed from
the proceeds of insurance, such Indemnitee shall promptly refund indemnification (or advancement) payments to the Corporation to the extent of such insurance reimbursement.
SUBSEQUENT AMENDMENT
No amendment, termination or repeal of this Article IX or of the relevant provisions of the DGCL or any other applicable laws shall adversely affect or diminish in any way
the rights of any Indemnitee to indemnification or advancement of expenses under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or
relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
OTHER RIGHTS
The indemnification and advancement of expenses provided by this Article IX shall not be deemed exclusive of any other rights to which an Indemnitee seeking
indemnification or advancement of expenses may be entitled under any law (common or statutory), agreement or vote of stockholders or disinterested directors or otherwise, both as to
action in Indemnitee’s official capacity and as to action in any other capacity while holding office for the Corporation, and shall continue as to an Indemnitee who has ceased to be a
director or officer, and shall inure to the benefit of the estate, heirs, executors and administrators of Indemnitee. Nothing contained in this Article IX shall be deemed to prohibit, and
the Corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification and advancement rights and procedures different from those
set forth in this Article IX. In addition, the Corporation may, to the extent authorized from time to time by the Board, grant indemnification and advancement rights to other employees
or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Article IX.
PARTIAL INDEMNIFICATION
If an Indemnitee is entitled under any provision of this Article IX to indemnification by the Corporation for some or a portion of the expenses (including, without limitation,
attorneys’ fees), liabilities, losses, judgments, fines (including, without limitation, excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974) or
amounts paid in settlement actually and reasonably incurred by or on behalf of Indemnitee in connection with any action, suit, proceeding or investigation and any appeal therefrom but
not, however, for the total amount thereof, the Corporation shall nevertheless indemnify Indemnitee for the portion of such expenses (including, without limitation, attorneys’ fees),
liabilities, losses, judgments, fines (including, without limitation, excise taxes and penalties arising under the Employee Retirement Income Security Act of 1974) or amounts paid in
settlement to which Indemnitee is entitled.
INSURANCE
The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise (including, without limitation, any employee benefit plan) against any expense, liability or loss incurred
40
by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.
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SAVINGS CLAUSE
If this Article IX or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each
Indemnitee as to any expenses (including, without limitation, attorneys’ fees), liabilities, losses, judgments, fines (including, without limitation, excise taxes and penalties arising under
the Employee Retirement Income Security Act of 1974) and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or
administrative, including, without limitation, an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article IX that shall not have
been invalidated and to the fullest extent permitted by applicable law.
DEFINITIONS
Terms used in this Article IX and defined in Section 145(h) and Section 145(i) of the DGCL shall have the respective meanings assigned to such terms in such Section 145(h)
and Section 145(i).
ARTICLE X - FORUM SELECTION
Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any
state law claims for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer
or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or the
certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine. Unless the Corporation consents in writing to the selection of an
alternative forum, the United States District Court for the District of Massachusetts shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising
under the Securities Act of 1933, as amended. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have
notice of and consented to the provisions of this ARTICLE X.
Subject to the limitations set forth in Section 9.9 of these bylaws or the provisions of the certificate of incorporation, the Board is expressly empowered to adopt, amend or
repeal the bylaws of the Corporation. The stockholders also shall have power to adopt, amend or repeal the bylaws of the Corporation; provided, however, that, in addition to any vote
of the holders of any class or series of stock of the Corporation required by law or by the certificate of incorporation, such action by stockholders shall require the affirmative vote of
the holders of at least two-thirds in voting power of the outstanding shares of capital stock of the Corporation entitled to vote thereon.
ARTICLE XI - AMENDMENTS
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Exhibit 10.8
EXECUTIVE SEVERANCE AGREEMENT
This Executive Severance Agreement (“Agreement”) is made effective as of ________________________ (“Effective Date”), by and between
Radius Health, Inc. (the “Company”) and _____________________ (“Executive”).
WHEREAS, Executive is a key employee of the Company and the Company and Executive desire to set forth herein the terms and conditions of
Executive’s compensation in the event of a termination of Executive’s employment under certain circumstances.
NOW, THEREFORE, the parties agree as follows:
1.
Definitions
. For purposes of this Agreement, the following terms shall have the following meanings:
a.
“Affiliate” means with respect to any person or entity, any other person or entity that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with, such person or entity. For purposes of this definition, “control”, when used
with respect to any person or entity, means the power to direct the management and policies of such person or entity, directly or indirectly, whether through
ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
b.
“Base Salary” means Executive’s base salary at the rate in effect on the date of Executive’s Qualifying Termination before any salary
reduction contributions to any plan or arrangement under Sections 125, 132(f) or 401(k) of the Code, excluding overtime, bonuses or other incentive
compensation, commissions, awards, imputed income or extraordinary payments (disregarding any decrease in such base salary that constitutes a Good
Reason event).
c.
“Board” shall mean the Board of Directors of the Company.
d.
“Cause” shall mean any of the following: (i) Executive’s commission of an act of fraud, embezzlement or theft against the Company
or its subsidiaries; (ii) Executive’s conviction of, or plea of no contest to, a felony or crime involving moral turpitude; (iii) Executive’s willful non-
performance of material duties as an employee of the Company, which to the extent such failure can be fully cured, remains uncured for 30 days following
Executive’s receipt of written notice thereof; (iv) Executive’s material breach of any material agreement with the Company or any of its subsidiaries,
including the Confidentiality and Non-Compete Agreement; (v) Executive’s gross negligence, willful misconduct or any other act of willful disregard for
the Company’s or any of its subsidiaries’ best interests; or (iv) Executive’s unlawful use (including being under the influence) or possession of illegal drugs
on the Company’s (or any of its Affiliate’s) premises.
e.
“Change of Control” shall mean a “Change of Control” as defined in the Company’s 2018 Stock Option and Incentive Plan or any
successor plan.
thereunder.
f.
g.
“Code” shall mean the Internal Revenue Code of 1986, as amended, and the Treasury Regulations and other interpretive guidance
“Confidentiality and Non-Compete Agreement” shall mean that certain agreement between the Company and Executive dated
«CDA_date» governing confidentiality and non-competition.
h.
“Good Reason” shall mean the occurrence of any of the following events or conditions without Executive’s written consent: (i) a
material diminution in Executive’s base salary or target annual bonus level; (ii) a material diminution in Executive’s authority, duties or responsibilities,
other than as a result of a Change of Control immediately after which Executive holds a position with the Company or its successor (or any other entity that
owns substantially all of the Company’s business after such sale) that is substantially equivalent with respect to the Company’s business as Executive held
immediately prior to such Change of Control; (iii) a change in the geographic location of Executive’s principal place of employment to any location that is
more than 75 miles from the location immediately prior to such change; or (iv) the failure of the Company to obtain an agreement from any successor to all
or substantially all of the business or assets of the Company to assume this Agreement as contemplated in Section 6(a) of this Agreement; provided that
Executive must provide written notice to the Company of the occurrence of any of the foregoing events or conditions within 60 days of the occurrence of
such event and such event or condition must remain uncured for 30 days following the Company’s receipt of such written notice. Any voluntary termination
for “Good Reason” following such 30 day cure period must occur no later than the date that is 30 days following the expiration of the Company’s cure
period.
i.
“Qualifying Termination” means (i) a termination by Executive of Executive’s employment with the Company for Good Reason or
(ii) a termination by the Company of Executive’s employment with the Company without Cause.
j.
“Separation from Service” means a “separation from service” with the Company as such term is defined in Treasury Regulation
Section 1.409A-1(h) and any successor provision thereto.
k.
“Target Bonus Amount” means Executive’s target annual bonus amount in effect at the time of Executive’s Qualifying Termination
(disregarding any decrease in such target annual bonus amount that constitutes a Good Reason event).
2.
Severance
a.
Severance Upon Qualifying Termination. If Executive has a Qualifying Termination that does not occur on the date of or within 12
months following a Change of Control, then subject to (x) the requirements of this Section 2, (y) the Executive’s continued compliance with the
Confidentiality and Non-Compete Agreement and (z) the terms of Section 6, Executive shall be entitled to receive the following payments and benefits:
i. The Company shall pay in a lump sum to Executive (A) his or her fully earned but unpaid base salary through the date of Executive’s
Qualifying Termination, (B) any accrued but unpaid paid time off and (C) any other amounts or benefits, if any,
2
under the Company’s employee benefit plans, programs or arrangements to which Executive may be entitled pursuant to the terms of such plans,
programs or arrangements or applicable law, payable in accordance with the terms of such plans, programs or arrangements or as otherwise required
by applicable law, but no later than 30 days after the date of the Executive’s Qualifying Termination (collectively, the “Accrued Rights”);
ii. Executive shall be entitled to receive a fully taxable lump sum cash payment equal to the Executive’s Base Salary in effect on the
date of the Executive’s Qualifying Termination for a period of 9 months (the “Salary Severance Payment”), subject to applicable tax withholding;
iii. The amount of any earned but unpaid annual bonus for the year immediately prior to the year in which Executive’s Qualifying
Termination occurs, as determined by the Board (or an authorized committee) in its good faith discretion, payable in a lump sum at the same time
annual bonuses are paid to other Company executives generally but in no event later than March 15 of the year in which Executive’s Qualifying
Termination occurs; and
iv. Executive shall be entitled to a fully taxable lump sum cash payment equal to the COBRA premiums necessary to continue
Executive’s and his or her dependents’ health insurance coverage in effect on the date of the Executive’s Qualifying Termination for a period of 9
months, without regard to whether the Executive elects continuation coverage under COBRA, subject to applicable tax withholding (the “COBRA
Severance Payment”).
b.
Severance Upon Qualifying Termination Occurring Within 12 Months Following a Change of Control. If Executive has a Qualifying
Termination that occurs on the date of or within 12 months following a Change of Control, then subject to (x) the requirements of this Section 2, (y) the
Executive’s continued compliance with the Confidentiality and Non-Compete Agreement and (z) the terms of Section 6, Executive shall be entitled to
receive the payments and benefits described in Section 2(a) above; provided that: (i) the Salary Severance Payment shall be increased to Base Salary in
effect on the date of the Executive’s Qualifying Termination for a period of 12 months; (ii) the COBRA Severance Payment shall be increased to COBRA
premiums necessary to continue Executive’s and his or her dependents’ health insurance coverage in effect on the date of the Executive’s Qualifying
Termination for a period of 12 months; (iii) the Company shall pay Executive an additional amount equal to the Target Bonus Amount; and (iv) all unvested
equity or equity-based awards under any Company equity compensation plans that vest solely based upon the passage of time shall immediately become
100% vested (for the avoidance of doubt, with any such awards that vest in whole or in part based upon the attainment of performance vesting conditions
being governed by the terms of the applicable award agreement).
c.
Other Terminations. Upon Executive’s termination of employment for any reason other than as set forth in Section 2(a) and
Section 2(b), the Company shall pay to Executive the Accrued Rights and shall have no other or further obligations to Executive under this Agreement. The
foregoing shall be in addition to, and not in lieu of, any and all other rights
3
and remedies which may be available to the Company under the circumstances, whether at law or in equity.
d.
Release. As a condition to Executive’s receipt of any amounts set forth in Section 2(a) or Section 2(b) other than the Accrued Rights,
Executive shall execute and not revoke a general release of all claims in favor of the Company (the “Release”) in the form substantially similar to the form
attached hereto as Exhibit A (and any statutorily prescribed revocation period applicable to such Release shall have expired) within the 30 day period
following the date of Executive’s Qualifying Termination, or in the event that such Qualifying Termination is “in connection with an exit incentive or other
employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967, as amended), the date that is 60 days
following the date of Executive’s Qualifying Termination.
e.
Payment Timing. The payments set forth in Section 2(a) and Section 2(b) other than the Accrued Rights, shall be paid in a lump sum
on the Company’s first payroll date following the receipt of the Executive’s executed and irrevocable Release by the Company within the time period
specified in Section 2(d).
f.
Exclusive Remedy; Other Arrangements. Except as otherwise expressly required by law (e.g., COBRA) or as specifically provided
herein, all of Executive’s rights to salary, severance, benefits, bonuses and other amounts (if any) accruing after the termination of Executive’s employment
for any reason shall cease upon such termination. In addition, the severance payments provided for in Section 2(a) and Section 2(b) above are intended to be
paid in lieu of any severance payments Executive may otherwise be entitled to receive under any other plan, program, policy, contract or agreement with the
Company or any of its affiliates, including for the avoidance of doubt, any employment agreement or offer letter (collectively, “Other Arrangements”).
Therefore, in the event Executive becomes entitled to receive the severance payments and benefits provided under Section 2(a) or Section 2(b), Executive
shall receive the amounts provided under that Section of this Agreement and shall not be entitled to receive any severance payments or severance benefits
pursuant to any Other Arrangements. In addition, to the extent any Other Arrangement that was entered into prior to the date of this Agreement provides for
Executive to receive any payments or benefits upon a termination or a resignation of employment for any reason (such agreement a “Prior Agreement”),
the Executive hereby agrees that such termination pay and benefit provisions of such Prior Agreement shall be and hereby are superseded by this
Agreement and from and after the date of this Agreement, such termination pay and benefit provisions of the Prior Agreement shall be and are null and void
and of no further force or effect. For the avoidance of doubt, except as may otherwise be agreed in writing between Executive and the Company or one of
its affiliates after the date of this Agreement, it is intended that the other terms and conditions of any Prior Agreement that do not provide for termination
pay or benefits, including any non-competition, non-solicitation, non-disparagement, confidentiality, assignment of inventions covenants and other similar
covenants contained therein, shall remain in effect in accordance with their terms for the periods set forth in the Prior Agreement.
g.
Parachute Payments.
4
i. Notwithstanding anything in this Agreement or any other agreement between Executive and the Company (or any of its subsidiaries
or affiliates) to the contrary, in the event that the provisions of Section 280G of the Code relating to “parachute payments” (as defined in the Code)
shall be applicable to any payment or benefit received or to be received by Executive from the Company or its affiliates in connection with a change
in the ownership or effective control of the Company within the meaning of Section 280G of the Code (a “Change of Control Transaction”)
(collectively, “Payments”), then any such Payments shall be equal to the Reduced Amount; where the “Reduced Amount” is (1) the largest portion
of the Payments that will result in no portion of such Payments being subject to the excise tax imposed by Section 4999 of the Code, or (2) the entire
amount of the Payments otherwise scheduled to be paid (without reduction), whichever of the forgoing amounts after taking into account all
applicable federal, state and local employment taxes, income taxes and the excise tax of Section 4999 of the Code (all computed at the highest
applicable merged rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of all state and local taxes),
results in Executive’s receipt, on an after-tax basis, of the greatest amount of Payments. If subsection (1) above applies and a reduced amount of the
Payments is payable, then any reduction of Payments required by such provision shall occur in the following order: (i) first, a reduction of any
Payments that are exempt from Section 409A in a manner the Company reasonably determines will provide Executive with the greatest post-
reduction economic benefit and (ii) second, a reduction of any Payments that are subject to Section 409A on a pro-rata basis or such other manner
that complies with Section 409A, as reasonably determined by the Company.
ii. In connection with a Change of Control Transaction, the Company shall engage a certified public accounting firm (“Accountants”)
to perform the calculations to determine if the Payments to Executive would reasonably be subject to Section 280G of the Code, and the Company
shall use commercially reasonable efforts to (1) cause the Accountants to finalize such calculations and (2) deliver such calculations and supporting
documentation to Executive, by no later than five (5) days before the closing of the Change of Control Transaction.
iii. The Accountants' determinations shall be final and binding on the Company, its Affiliates, and the Executive. The Company shall be
responsible for all fees and expenses incurred by the Accountants in connection with the calculations required by this Section 2(g).
h.
Withholding. All compensation and benefits to Executive hereunder shall be reduced by all federal, state, local and other
withholdings and similar taxes and payments required by applicable law. To the extent taxes owed by the Executive with respect to amounts paid hereunder
are not withheld for any reason, Executive shall continue to be responsible for such taxes and the Company nor any Affiliate will have no responsibility or
liability to the Executive for any failure to comply with any applicable tax withholding requirements.
3.
Condition to Severance Obligations and Clawbacks
5
. The Company shall be entitled to clawback all severance payments and benefits made to Executive in the event of Executive’s breach any of the
provisions of the Confidentiality and Non-Compete Agreement or of any other non-competition, non-solicitation, non-disparagement, confidentiality, or
assignment of inventions covenants contained in any other agreement between Executive and the Company, which other covenants are hereby incorporated
by reference into this Agreement. Pursuant to this clawback provision, the Company may (i) cancel, reduce, or require Executive to forfeit any outstanding
payments or benefits under this Agreement, or (ii) require Executive to reimburse or disgorge to the Company any amounts received pursuant to this
Agreement, in each case, to the extent not prohibited by applicable law, or regulation in effect on or after the effective date of this Agreement.
4.
Agreement to Arbitrate
. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by binding arbitration in
Boston, Massachusetts. Such arbitration shall be conducted in accordance with the then prevailing JAMS Streamlined Arbitration Rules & Procedures, with
the following exceptions if in conflict: (a) one arbitrator shall be chosen by JAMS; (b) each party to the arbitration will pay its pro rata share of the expenses
and fees of the arbitrator, unless otherwise required to enforce this Section 4; and (c) arbitration may proceed in the absence of any party if written notice
(pursuant to the JAMS’ rules and regulations) of the proceedings has been given to such party. Each party shall bear its own attorneys’ fees and expenses.
The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and
conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing
in this subsection shall be construed as precluding the bringing an action in a court of competent jurisdiction to enforce the Confidentiality and Non-
Compete Agreement or any other non-competition, non-solicitation, non-disparagement, confidentiality, assignment of invention or other intellectual
property related covenants contained in any other agreement between Executive and the Company.
5.
At-Will Employment Relationship
. Executive’s employment with the Company is at-will and not for any specified period and may be terminated at any time, with or without Cause or
advance notice, by either Executive or the Company. Any change to the at-will employment relationship must be by specific, written agreement signed by
Executive and an authorized representative of the Company. Nothing in this Agreement is intended to or should be construed to contradict, modify or alter
this at-will relationship.
6.
General Provisions.
a.
Successors and Assigns. The rights of the Company under this Agreement may, without the consent of Executive, be assigned by the
Company to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly,
acquires all or substantially all of the assets or business of the Company or to any of its Affiliates. The Company will require any successor (whether direct
or
6
indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company to assume this Agreement. Executive shall not
be entitled to assign any of Executive’s rights or obligations under this Agreement. This Agreement shall inure to the benefit of and be enforceable by
Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
b.
Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent
jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the
parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of
such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be
affected thereby.
c.
Interpretation; Construction. The headings set forth in this Agreement are for convenience only and shall not be used in interpreting
this Agreement. This Agreement has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms.
Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Agreement and, therefore, the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement.
Either party’s failure to enforce any provision of this Agreement shall not in any way be construed as a waiver of any such provision, or prevent that party
thereafter from enforcing each and every other provision of this Agreement.
d.
Governing Law and Venue. This Agreement will be governed by and construed in accordance with the laws of the United States and
the Commonwealth of Massachusetts applicable to contracts made and to be performed wholly within such Commonwealth, and without regard to the
conflicts of laws principles that would result in the applicable of the laws of another jurisdiction. Any suit brought hereon shall be brought in the state or
federal courts sitting in Boston, Massachusetts, the parties hereby waiving any claim or defense that such forum is not convenient or proper. Each party
hereby agrees that any such court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by Massachusetts
law.
e.
Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed
given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification of receipt; (iii) by telecopy or
facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified or registered mail, return receipt requested, upon
verification of receipt. Notice shall be sent to Executive at the most recent address for Executive set forth in the Company’s personnel files and to the
Company addressed as follows: Radius Health, Inc., 950 Winter Street, Waltham, MA 02451, Attention: SVP, Human Resources.
f.
Survival. Sections 2 (“Severance”), 3 (“Condition to Severance Obligations”), 4 (“Agreement to Arbitrate”) and 6 (“General
Provisions”) of this Agreement shall survive termination of Executive’s employment with the Company.
7
g.
Entire Agreement. This Agreement and any covenants and agreements incorporated herein by reference as set forth in Section 3
together constitute the entire agreement between the parties in respect of the subject matter contained herein and therein and supersede all prior or
simultaneous representations, discussions, negotiations, and agreements, whether written or oral, provided, however, that for the avoidance of doubt, all
Other Arrangements (as such Other Arrangements may be amended, modified or terminated from time to time) shall remain in effect in accordance with
their terms, subject to Section 2(f) hereof. This Agreement may be amended or modified only with the written consent of Executive and an authorized
representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
h.
Code Section 409A.
i. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A of the
Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted to comply with this intent.
ii. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement upon
Executive’s termination of employment shall be payable only upon Executive’s Separation from Service with the Company and, except as provided
below, any such compensation or benefits payable under this Agreement that constitute nonqualified deferred compensation subject to Section 409A
and where the expiration of the Release consideration and revocation periods could occur in either of two calendar years, shall be paid, or, in the
case of installments, commence payment, in the later year (the “Delayed Payment Date”). Any installment payments that would have been made to
Executive prior to the Delayed Payment Date but for the preceding sentence shall be paid to Executive on the Delayed Payment Date and the
remaining payments shall be made as provided in this Agreement.
iii. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s
Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the
benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion
of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of
Executive’s Separation from Service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of
the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or
Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
iv. Executive’s right to receive any installment payments under this Agreement shall be treated as a right to receive a series of separate
payments and, accordingly, each such installment payment shall at all times be considered a separate and
8
distinct payment as permitted under Section 409A. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or
deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.
v. To the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation”
under Section 409A, (a) all expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the
taxable year in which such expenses were incurred by the Employee, (b) any right to reimbursement or in-kind benefits shall not be subject to
liquidation or exchange for another benefit, and (c) no such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any
taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.
vi. Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that
constitutes “nonqualified deferred compensation” under Section 409A be subject to offset by any other amount unless otherwise permitted by
Section 409A.
vii. In no event whatsoever shall the Company or any Affiliate be liable for any additional tax, interest or penalty that may be imposed
on the Executive by Section 409A or damages for failing to comply with Section 409A.
i.
Consultation with Legal and Financial Advisors. By executing this Agreement, Executive acknowledges that this Agreement confers
significant legal rights, and may also involve the waiver of rights under other agreements; that the Company has encouraged Executive to consult with
Executive’s personal legal and financial advisors; and that Executive has had adequate time to consult with Executive’s advisors before executing this
Agreement.
j.
Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
[signature page follows]
9
THE PARTIES TO THIS AGREEMENT HAVE READ THE FOREGOING AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY
PROVISION CONTAINED HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS AGREEMENT ON THE DATES SHOWN BELOW.
RADIUS HEALTH, INC.
By:
Name:
Title:
Dated: ______________________________
EXECUTIVE
Name:
Dated: ______________________________
10
exhibit A.
1.
GENERAL RELEASE OF CLAIMS
[The language in this Release may change based on legal developments and evolving best practices; this form is provided as an example of what
will be included in the final Release document.]
This General Release of Claims (“Release”) is entered into as of this _____ day of ________, ____, between [Name] (“Executive”), and Radius
Health, Inc., (the “Company”) (collectively referred to herein as the “Parties”).
WHEREAS, Executive and the Company are parties to that certain Executive Severance Agreement dated as of __________, ____ (the “Severance
Agreement”);
WHEREAS, the Parties agree that Executive is entitled to certain severance benefits under the Severance Agreement, subject to Executive’s
execution of this Release; and
WHEREAS, the Company and Executive now wish to fully and finally to resolve all matters between them.
NOW, THEREFORE, in consideration of, and subject to, the severance benefits payable to Executive pursuant to the Severance Agreement, the
adequacy of which is hereby acknowledged by Executive, and which Executive acknowledges that he or she would not otherwise be entitled to receive,
Executive and the Company hereby agree as follows:
1.
General Release of Claims by Executive.
a.
Executive, on behalf of himself or herself and his or her executors, heirs, administrators, representatives and assigns, hereby agrees to
release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or subsidiary
entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, creditors, agents and
representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his or her employment with or service to the
Company (collectively, the “Company Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief,
damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every
kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or
unsuspected (collectively, “Claims”), which Executive has, had or may have had against such entities based on any events or circumstances arising or
occurring on or prior to the date hereof, including without limitation arising directly or indirectly out of, relating to, or in any other way involving in any
manner whatsoever Executive’s employment by or service to the Company or the termination thereof, including without limitation any and all claims
arising under federal, state, or local laws relating to employment, including without limitation claims of wrongful discharge, breach of express or
A-1
implied contract, fraud, misrepresentation, defamation, or liability in tort, of retaliation or discrimination under federal, state or local law, claims under the
Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq., or the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., claims for wages,
bonuses, incentive compensation, commissions, vacation pay or any other compensation or benefits, either under the Massachusetts Wage Act, M.G.L. c.
149, §§148-150C, or otherwise, claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages,
injunctive relief and attorney’s fees, and claims of any kind that may be brought in any court or administrative agency including, without limitation, claims
under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C.
§ 12101 et seq.; the Rehabilitation Act of 1973, as amended, 29 U.S.C. § 701 et seq.; the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42
U.S.C. Section 1981, et seq.; the Age Discrimination in Employment Act, as amended, 29 U.S.C. Section 621, et seq. (the “ADEA”); the Equal Pay Act, as
amended, 29 U.S.C. Section 206(d); regulations of the Office of Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave
Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income
Security Act, as amended, 29 U.S.C. § 1001 et seq.; and any similar state or local law. Executive agrees not to accept damages of any nature, other equitable
or legal remedies for Executive’s own benefit or attorney’s fees or costs from any of the Company Releasees with respect to any Claim released by this
Release.
Notwithstanding the generality of the foregoing, Executive does not release the following:
i.
ii.
iii.
Company;
Claims that may arise after Executive signs this Release;
Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;
Claims for workers’ compensation insurance benefits under the terms of any worker’s compensation insurance policy or fund of the
Claims pursuant to the terms and conditions of the federal law known as COBRA;
Claims for indemnity under the bylaws of the Company or its affiliates, as provided for by law or under any applicable
insurance policy with respect to Executive’s liability as an employee, director or officer of the Company pursuant to which Executive is covered as of the
effective date of Executive’s termination of employment with the Company and its subsidiaries;
iv.
v.
vi.
vii.
Claims for payment under Section 2(a) or Section 2(b), as applicable, of the Severance Agreement; and
Any rights that cannot be released as a matter of applicable law, but only to the extent such rights may not be released under
such applicable law.
b. Executive acknowledges that this Release was presented to him or her on [Insert Release Presentation Date] in connection with his or
her termination of employment on [Insert Separation Date] (“Separation Date”) and that Executive is entitled to have [twenty-one (21)/forty-five (45)] days’
time from the Separation Date in which to consider it. Executive
A-2
further acknowledges that the Company has advised him or her that he or she is waiving his or her rights under the ADEA, and that Executive should
consult with an attorney of his or her choice before signing this Release, and Executive has had sufficient time to consider the terms of this Release.
Executive represents and acknowledges that if Executive executes this Release before [twenty-one (21)/forty-five (45)] days have elapsed, Executive does
so knowingly, voluntarily, and upon the advice and with the approval of Executive’s legal counsel (if any), and that Executive voluntarily waives any
remaining consideration period.
c. Executive understands that after executing this Release, Executive has the right to revoke it within seven (7) days after his or her
execution of it. Executive understands that this Release will not become effective and enforceable unless the seven (7) day revocation period passes and
Executive does not revoke the Release in writing. Executive understands that this Release may not be revoked after the seven (7) day revocation period has
passed. Executive also understands that any revocation of this Release must be made in writing and delivered to the Company at its principal place of
business within the seven (7) day period.
d. Executive understands that this Release shall become effective, irrevocable, and binding upon Executive on the eighth (8th) day after his
or her execution of it, so long as Executive has not revoked it within the time period and in the manner specified in clause (c) above. Executive further
understands that Executive will not be given any severance benefits under the Severance Agreement unless this Release is effective on or before the date
that is [30/60] days following the date of Executive’s termination of employment.
2.
Continuing Obligations. Executive acknowledges that Executive’s obligations under the Confidentiality and Non-Competition Agreement
between the Executive and the Company dated [Insert Date] (the “Confidentiality and Non-Compete Agreement”) shall continue in effect. The terms of the
Confidentiality and Non-Compete Agreement are hereby incorporated by reference as material terms of this Release. For the avoidance of doubt, however,
pursuant to the federal Defend Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law
for the disclosure of a trade secret that (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an
attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a
lawsuit or other proceeding, if such filing is made under seal.
3.
Protected Disclosures and Other Protected Actions. Nothing contained in this Release, the Severance Agreement, or the Confidentiality and
Non-Compete Agreement limits Executive’s ability to file a charge or complaint with any federal, state or local governmental agency or commission (a
“Government Agency”). In addition, nothing contained in this Release, the Severance Agreement, or the Confidentiality and Non-Compete Agreement
limits Executive’s ability to communicate with any Government Agency or otherwise participate in any investigation or proceeding that may be conducted
by any Government Agency, including Executive’s ability to provide documents or other information, without notice to the Company, nor does anything
contained in this Release, the Severance Agreement, or the Confidentiality and Non-Compete Agreement apply to truthful testimony in litigation. If
Executive files any charge
A-3
or complaint with any Government Agency and if the Government Agency pursues any claim on Executive’s behalf, or if any other third party pursues any
claim on Executive’s behalf, Executive waives any right to monetary or other individualized relief (either individually, or as part of any collective or class
action); provided that nothing in this Release limits any right Executive may have to receive a whistleblower award or bounty for information provided to
the Securities and Exchange Commission.
4.
No Assignment. Executive represents and warrants to the Company Releasees that there has been no assignment or other transfer of any
interest in any Claim that Executive may have against the Company Releasees. Executive agrees to indemnify and hold harmless the Company Releasees
from any liability, claims, demands, damages, costs, expenses and attorneys’ fees incurred as a result of any such assignment or transfer from Executive.
5.
Severability. In the event any provision of this Release is found to be unenforceable by an arbitrator or court of competent jurisdiction, such
provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the Parties shall
receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator
or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
6.
Interpretation; Construction. The headings set forth in this Release are for convenience only and shall not be used in interpreting this
Release. This Release has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms.
Furthermore, Executive acknowledges that Executive has had an opportunity to review and revise the Release and have it reviewed by legal counsel, if
desired, and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be employed
in the interpretation of this Release. Either Party’s failure to enforce any provision of this Release shall not in any way be construed as a waiver of any such
provision, or prevent that party thereafter from enforcing each and every other provision of this Release.
7.
Governing Law and Venue. This Release will be governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts applicable to contracts made and to be performed wholly within such Commonwealth, and without regard to the conflicts of laws principles
that would result in the applicable of the laws of another jurisdiction. Any suit brought hereon shall be brought in the state or federal courts sitting in
Boston, Massachusetts, the parties hereby waiving any claim or defense that such forum is not convenient or proper. Each Party hereby agrees that any such
court shall have in personam jurisdiction over it and consents to service of process in any manner authorized by Massachusetts law.
8.
Entire Agreement. This Release, the Severance Agreement, the Confidentiality and Non-Compete Agreement, the Radius Health, Inc. 2018
Stock Option and Incentive Plan, any predecessor plan, the applicable stock option or other equity award agreements between the Executive and the
Company constitute the entire agreement of the Parties in respect of the subject matter contained herein and therein and supersede all prior or simultaneous
A-4
representations, discussions, negotiations and agreements, whether written or oral. This Release may be amended or modified only with the written consent
of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances
whatsoever.
9.
Counterparts. This Release may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(Signature Page Follows)
A-5
IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed the foregoing Release as of the later of the dates set forth
below.
RADIUS HEALTH, INC.
Dated: By:
Name:
Title:
EXECUTIVE
Dated:
Exhibit 10.21
GENERAL RELEASE OF CLAIMS
This General Release of Claims (“Release”) is entered into as of this 15 day of December, 2020, between Charles Morris (“Executive”), and Radius Health, Inc. (the
“Company”) (collectively referred to herein as the “Parties”).
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WHEREAS, Executive and the Company are parties to that certain Executive Severance Agreement dated as of June 18, 2020 (the “Severance Agreement”)
WHEREAS, the Parties agree that Executive is entitled to certain severance benefits under the Severance Agreement, subject to Executive’s execution of this Release; and
WHEREAS. the Company and Executive now wish to fully and finally to resolve all matters between them.
NOW THEREFORE, in consideration of, and subject to, (i) the severance benefits payable to Executive pursuant to the Severance Agreement and as set forth in
paragraph 1 below, and (ii) the Accelerated Vesting (as defined below), each of which shall only be provided to Executive if this Release becomes effective in the time
period set forth herein, the adequacy of which is hereby acknowledged by Executive, and which Executive acknowledges that he or she would not otherwise be entitled to
receive, Executive and the Company hereby agree as follows:
1.
Severance Benefits and Accelerated Vesting. If Executive executes and does not revoke this Release, then subject to the terms of this Release and the
Severance Agreement, (a) the Executive will receive the severance benefits under Section 2(a) of the Severance Agreement, (b) the Executive will receive a taxable lump
sum cash payment equal $128,000.00 in lieu of Executive's regular base salary rate as in effect on the Separation Date for the time period of December 15, 2020 through
March 15, 2021, less applicable tax deductions and withholdings and (c) the Company will accelerate the vesting of 17,361 restricted stock units (“RSUs”) previously
awarded to Executive, with such vesting to occur as of the later of the Separation Date or the Effective Date, as such terms are defined herein (the “Accelerated
Vesting”), provided that any forfeiture of the 17,361 RSUs to be vested pursuant to this Release that would otherwise occur on the Separation Date in the absence of this
Release will be delayed to the extent necessary to effectuate the terms of this Release and will only occur if the Accelerated Vesting does not occur due to the absence of
this Release becoming fully effective within the time period set forth herein. Notwithstanding the foregoing, no additional vesting of the RSUs shall occur during the
period between the Separation Date and the date that the Accelerated Vesting occurs.
2.
General Release of Claims by Executive. (a) Executive, on behalf of himself or herself and his or her executors, heirs, administrators, representatives and
assigns, hereby agrees to release and forever discharge the Company and all predecessors, successors and their respective parent corporations, affiliates, related, and/or
subsidiary entities, and all of their past and present investors, directors, shareholders, officers, general or limited partners, employees, attorneys, creditors, agents and
representatives, and the employee benefit plans in which Executive is or has been a participant by virtue of his or her employment with or service to the Company
(collectively, the “Company Releasees”), from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges,
complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including
attorneys' fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected (collectively, “Claims”), which Executive has,
had or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date hereof, including without
limitation arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever Executive 's employment by or service to the Company
or the termination thereof, including without limitation any and all claims arising under federal, state, or local laws relating to employment, including without limitation
claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, or liability in tort, of retaliation or discrimination under federal,
state or local law, claims under the Worker Adjustment and Retraining Notification Act, 29 U.S.C.§ 2101 et seq., or the Fair Labor Standards Act, 29 U.S.C. § 201 et seq.,
claims for wages, bonuses, incentive compensation, commissions, vacation pay or any other compensation or benefits, either under the Massachusetts Wage Act, M.G.L.
c. 149, §§148-150C, or otherwise, claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive
relief and attorney's fees, and claims of any kind that may be brought in any court or administrative agency including, without limitation, claims under Title VII of the
Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000, et seq.; the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act
of 1973, as amended, 29 U.S.C. § 701 et seq., the Civil Rights Act of 1866, and the Civil Rights Act of 1991; 42 U.S.C. Section 1981, et seq.; the Age Discrimination in
Employment Act, as amended, 29 U.S.C. Section 621, et seq. (the “ADEA”); the Equal Pay Act, as amended, 29 U.S.C. Section 206(d); regulations of the Office of
Federal Contract Compliance, 41 C.F.R. Section 60, et seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601 et seq.; the Fair Labor Standards Act of
1938, as amended, 29 U.S.C. § 201 et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001 et seq.; and any similar state or local law.
Executive agrees not to accept damages of any nature, other equitable or legal remedies for Executive's own benefit or attorney's fees or costs from any of the Company
Releasees with respect to any Claim released by this Release.
Notwithstanding the generality of the foregoing, Executive does not release the following:
(i) Claims that may arise after Executive signs this Release;
(ii) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law;
(iii) Claims for workers' compensation insurance benefits under the terms of any worker's compensation insurance policy or fund of the Company;
(iv) Claims pursuant to the terms and conditions of the federal law known as COBRA;
(v) Claims for indemnity under the bylaws of the Company or its affiliates, as provided for by law or under any applicable insurance policy with respect
to Executive's liability as an employee, director or officer of the Company pursuant to which Executives covered as of the effective date of Executive's
termination of employment with the Company and its subsidiaries;
(vi) Claims for payment under Section 2(a) or Section 2(b), as applicable, of the Severance Agreement; and
(vii) Any rights that cannot be released as a matter of applicable law, but only to the extent such rights may not be released under such applicable law.
(b)
Executive acknowledges that this Release was presented to him or her on December 15, 2020 in connection with his or her termination of employment on
December 15, 2020 (“Separation Date”) and that Executive is entitled to have twenty one (21) days' time from the Separation Date in which to consider it. Executive
further acknowledges that the Company has advised him or her that he or she is waiving his or her rights under the ADEA, and that Executive should consult with an
attorney of his or her choice before signing this Release, and Executive has had sufficient time to consider the terms of this Release. Executive represents and
acknowledges that if Executive executes this Release before twenty-one (21) days have elapsed, Executive does so knowingly, voluntarily, and upon the advice and with
the approval of Executive 's legal counsel (if any), and that Executive voluntarily waives any remaining consideration period.
(c)
Executive understands that after executing this Release, Executive has the right to revoke it within seven (7) days after his or her execution of it.
Executive understands that this Release will not become effective and enforceable unless the seven (7) day revocation period passes and Executive does not revoke the
Release in writing. Executive understands that this Release may not be revoked after the seven (7) day revocation period has passed. Executive also understands that any
revocation of this Release must be made in writing and delivered to the Company at its principal place of business within the seven (7) day period.
(d)
Executive understands that this Release shall become effective, irrevocable, and binding upon Executive on the eighth (8th) day after his or her execution
of it, so long as Executive has not revoked it within the time period and in the manner specified in clause (c) above. Executive further understands that Executive will not
be given any severance benefits under the Severance Agreement unless this Release is effective on or before the date that is 30 days following the date of Executive's
termination of employment.
3.
Continuing Obligations. Executive acknowledges that Executive's obligations under the Confidentiality and Non-Competition Agreement between the
Executive and the Company dated August 30, 2018 (the “Confidentiality and Non-Compete Agreement”) shall continue in effect. The terms of the Confidentiality and
Non-Compete Agreement are hereby incorporated by reference as material terms of this Release. For the avoidance of doubt, however, pursuant to the federal Defend
Trade Secrets Act of 2016, Executive shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (a) is
made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or
investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
4.
Protected Disclosures and Other Protected Actions. Nothing contained in this Release, the Severance Agreement, or the Confidentiality and Non-Compete
Agreement limits Executive's ability to file a charge or complaint with any federal, state or local governmental agency or commission (a “Government Agency”). In
addition, nothing contained in this Release, the Severance Agreement, or the Confidentiality and Non-Compete Agreement limits Executive’s ability to communicate with
any Government Agency or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including Executive’s ability to
provide documents or other information, without notice to the Company, nor does anything contained in this Release, the Severance Agreement, or the Confidentiality and
NonCompete Agreement apply to truthful testimony in litigation. If Executive files any charge or complaint with any Government Agency and if the Government Agency
pursues any Claim on Executive’s behalf, or if any other third party pursues any claim on Executive’s behalf, Executive waives any right to monetary or other
individualized relief (either individually, or as a part of
any collective or class action), provided that nothing in this Release limits any right Executive may have to receive a whistleblower award or bounty for information
provided to the Securities and Exchange Commission.
5.
No Assignment. Executive represents and warrants to the Company Releasees that there has been no assignment or other transfer of any interest in any
Claim that Executive may have against the Company Releasees. Executive agrees to indemnify and hold harmless the Company Releasees from any liability, claims,
demands, damages, costs, expenses and attorney’s fees incurred as a result of any such assignment or transfer from Executive.
6.
Severability. In the event any provision of this Release is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision
shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the Parties shall receive the benefit
contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable
provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.
7.
Interpretation; Construction. The headings set forth in this Release are for convenience only and shall not be used in interpreting this Release. This
Release has been drafted by legal counsel representing the Company, but Executive has participated in the negotiation of its terms. Furthermore, Executive acknowledges
that Executive has had an opportunity to review and revise the Release and have it reviewed by legal counsel, if desired, and, therefore, the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting Party shall not be employed in the interpretation of this Release. Either Party's failure to enforce any
provision of this Release shall not in any way be construed as a waiver of any such provision, or prevent that party thereafter from enforcing each and every other
provision of this Release.
8.
Governing Law and Venue. This Release will be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts
applicable to contracts made and to be performed wholly within such Commonwealth, and without regard to the conflicts of law principles that would result in the
applicable of the laws of another jurisdiction. Any suit brought hereon shall be brought in the state or federal courts sitting in Boston, Massachusetts, the parties hereby
waiving any claim or defense that such forum is not convenient or proper. Each Party hereby agrees that any such court shall have in personam jurisdiction over it and
consents to service of process in any manner authorized by Massachusetts law.
9.
Entire Agreement. This Release, the Severance Agreement, the Confidentiality and Non-Compete Agreement, the Radius Health, Inc. 2018 Stock Option
and Incentive Plan, any predecessor plan, the applicable stock option or other equity award agreements between the Executive and the Company (subject to the
Accelerated Vesting set forth above) constitute the entire agreement of the Parties in respect of the subject matter contained herein and therein and supersede all prior or
simultaneous representations, discussions, negotiations and agreements, whether written or oral. This Release may be amended or modified any with the written consent
of Executive and an authorized representative of the Company. No oral waiver, amendment or modification will be effective under any circumstances whatsoever.
10.
Counterparts. This Release may be executed in multiple counterparts, each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed the foregoing Release as of the later of the dates set forth below.
RADIUS HEALTH, INC.
Dated: 12/16/2020 By: /s/ G. Kelly Martin
Name: G. Kelly Martin
Title: CEO
Dated: 16 December, 2020 By: /s/ Charles Morris
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EXECUTIVE
Exhibit 10.22
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (“Agreement”) is effective as of 16 December, 2020 (the “Effective Date”), is made by and between Radius Health, Inc., together
with its affiliates (“Radius”), with an address of 950 Winter Street, Waltham, MA 02451 USA and cq-consulting LLC, with an address of 16 William Beaser Drive,
Garnet Valley PA 19060, United States (“Consultant”). Radius and Consultant are collectively referred to as the “Parties”.
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WHEREAS, Radius has a legitimate business need for the Services (as defined below) that can be provided by the Consultant;
WHEREAS, Consultant has the required professional qualifications, practical experience and knowledge to provide the Services; and
WHEREAS, Consultant agrees to provide the Services to Radius, and Radius wishes to retain Consultant to perform the Services, in accordance with the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of Consultant’s engagement hereunder to perform the Services described herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties agree to the following terms and conditions:
1. Definitions.
1.1 “Applicable Laws” shall mean any applicable business conduct, regulatory and health and safety guidelines, laws, statutes, rules, regulations, ordinances,
and professional and industry codes of conduct which are applicable to the Services, Consultant or Radius anywhere in the world, including, but not limited to, those
relating to anti-corruption, anti-bribery, data protection, personal health information, clinical trials and industry conduct.
1.2 “Confidential Information” shall mean any and all scientific, technical, trade, business and any other confidential or proprietary information, and Protected
Data whether or not marked as confidential or proprietary, provided to Consultant by Radius, its suppliers, customers, employees, officers, agents, or others in connection
with the Services or any proposed Services, or indirectly learned by Consultant as a result of provision by Consultant of the Services for which this Agreement provides,
or obtained by Consultant while visiting Radius’ facilities, regardless of whether such information is in written, oral, electronic, or other form. Radius’ “Confidential
Information” shall include, without limitation, the Data and personal data subject to the Applicable Laws.
1.3 “Data” shall mean any resulting data and information (including without limitation, written, printed, graphic, video, or audio material, and/or information
contained in any computer database or in computer readable form) generated in the course of conducting Services.
1.4 “Inventions” shall mean improvements, developments, discoveries, inventions, know-how and other rights (whether or not protectable under state,
provincial, federal, or foreign intellectual property laws) which are conceived and/or reduced to practice by Consultant, alone or jointly with others as a result of, or in the
performance of, the Services, or which are related to the Material, as defined below, or its use, or are developed using the Material or the Confidential Information.
1.5 “Services” shall mean support for abaloparatide product leader, expert medical input to Business Development and other strategic initiatives and all such
other services as the Parties may mutually agree. Services may be described in a proposal or other document, which document shall be subject to the terms hereof and be
attached as an exhibit (“Exhibit”) hereto. In the event of any conflict between the terms of an Exhibit and the terms of this Agreement, the terms of this Agreement shall
control.
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2.
Services.
2.1 Radius would like Consultant to provide the Services and Consultant wishes to provide the Services.
2.2 Consultant will diligently provide the Services in a timely manner on behalf of and for Radius in accordance with this Agreement, the reasonable written
instructions of Radius not inconsistent with any of Consultant's obligations hereunder, and Applicable Laws.
2.3 Subject to the provisions contained in this Section and in Section 2.4, Consultant retains the right to control or direct the details, manner and means by
which the Services are provided to Radius. Consultant retains the right to provide services to other individuals or companies except to the extent inconsistent with
Consultant's obligations under this Agreement. Unless otherwise approved in advance in writing by Radius, Consultant shall perform the Services only at Radius’ or
Consultant's own facilities.
2.4 Consultant shall not use a subcontractor to perform the Services or otherwise subcontract Consultant's obligations hereunder without the prior written
consent of Radius. Any permitted subcontractor shall be obligated to perform in accordance with this Agreement, and Consultant agrees to be responsible for the actions
and omissions of such subcontractor as if Consultant had made such actions or omissions himself/herself.
3.
Term.
3.1 This Agreement will commence on the Effective Date and, subject to earlier termination in accordance with this Section, shall continue until March 31, 2021
(“Term”). This Agreement may be renewed thereafter if both Parties agree in writing to such extension.
3.2 Radius or Consultant may terminate this Agreement upon 30 days written notice to the other Party.
3.3 Radius may terminate this Agreement immediately and without prior notice if Consultant refuses to or is unable to perform the Services or is in breach of
any provision of this Agreement or the Applicable Laws. In the event Radius terminates this Agreement without cause before any Services have been performed by
Consultant, Radius will not be obligated to pay Consultant any unearned compensation. If Radius terminates this Agreement without cause and Consultant has performed
a portion of the Services to Radius’ satisfaction, Radius will compensate Consultant for Services satisfactorily completed up to the time of such termination.
3.4 Consultant may terminate this Agreement immediately and without prior notice if Radius fails to pay any amounts due to Consultant within fifteen days
after sending Radius written notice of late payment due.
3.5 Upon termination of this Agreement by Radius, Consultant shall immediately cease provision of Services and return to Radius all Radius Confidential
Information.
4. Confidentiality; Publication; Data Privacy.
4.1 Consultant agrees to treat any Confidential Information as the exclusive property of Radius, and Consultant agrees not to disclose any of the Confidential
Information to any third party without first obtaining the written consent of Radius. Consultant agrees to protect the Confidential Information that was received with at
least the same degree of care Consultant uses to protect Consultant's own confidential information.
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4.2 Consultant agrees to use any Confidential Information only for the purpose of conducting Services hereunder and for no other purpose. The above
provisions of confidentiality shall not apply to that part of Confidential Information which Consultant is able to demonstrate by documentary evidence: (i) was lawfully in
Consultant's possession prior to receipt from Radius without an obligation of confidentiality; (ii) was in the public domain at the time of receipt from Radius; (iii)
becomes part of the public domain other than due to Consultant's fault; or (iv) is lawfully received by Consultant from a third party without an obligation of
confidentiality. Notwithstanding the foregoing, Consultant may disclose that part of Confidential Information that is required by an order of a court of competent
jurisdiction or any regulatory authority to be disclosed, provided that Consultant gives Radius prompt and reasonable notification of such requirement prior to such
disclosure and takes all reasonable and lawful actions to obtain confidential treatment for such disclosure and to minimize the extent of such disclosure. Upon request by
Radius, any and all Confidential Information received by Consultant hereunder shall be destroyed or returned promptly to Radius.
4.3 Neither Party shall disclose the existence or substance of this Agreement, except as required by Applicable Laws. Consultant shall not publish any articles or
make any presentations or communications (including any written, oral, or electronic manuscript, abstract, presentation, or other publication) relating to the Services, the
Confidential Information, Inventions or Data, in whole or in part, without the prior written consent of Radius. Consultant shall not engage in interviews or other contacts
with the media, including but not limited to newspapers, radio, television and the Internet, related to this Agreement without Radius’ prior related written consent.
4.4 Consultant hereby grants written consent to the processing of Consultant’s personal data by Radius for the purposes of this Agreement and to the possible
transfer of this data outside Consultant’s country of residence, including to the United States of America where different data protection rules apply
4.5 Data Privacy.
(a)
(b)
(c)
Consultant shall comply with any and all applicable data protection, privacy or similar laws anywhere in the world (“Data Protection Laws”)
that apply in relation to any personal data processed in connection with this Agreement (“Protected Data”), and render such assistance and co-
operation as is reasonably necessary or reasonably requested by Radius to ensure Radius is in compliance with the Data Protection Laws.
Without prejudice to the generality of subparagraph (a), in respect of Protected Data disclosed to Consultant in connection with this Agreement
(and whether disclosed by Radius, data subjects or otherwise), Consultant shall ensure that it only processes such Protected Data for purposes
notified to it by Radius and that it maintains appropriate security measures in respect of the Protected Data to prevent unauthorised access to the
Protected Data and against accidental loss or destruction of, or damage to, the Protected Data.
If required by the Applicable Laws, Consultant shall not disclose to any third party or provide to Radius any personal data unless the individual to
whom such personal data pertains has granted his or her informed written consent to such disclosure. This includes unambiguous and explicit
written consent to the potential transfer of personal data outside such person’s country of residence to another jurisdiction, including the United
States of America, where different data protection rules apply.
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(d)
(e)
Consultant will take all steps required and communicated in writing to Consultant by Radius that Radius reasonably considers are necessary in
order to comply with Radius’ own obligations under Data Protection Laws.
Consultant, for the purposes of facilitating Radius’ compliance with the Data Protection Laws, shall additionally comply with such data
protection policies as Radius shall provide to the Consultant from time to time. To the extent Consultant uses non-Radius devices that could be
used to store or access Protected Data, Radius shall be permitted, during regular business hours and upon reasonable prior notice, to conduct
audits or inspections of such devices to monitor Consultant’s compliance with the obligations hereunder. Consultant shall cooperate fully in any
audits or inspections conducted by Radius under this Section. Consultant agrees to take any reasonable actions requested by Radius to cure any
deficiencies noted during any such audit or inspection. In the event that either Radius or Consultant becomes aware of any unauthorised, unlawful
or dishonest conduct or activities, or any breach of the terms of this Agreement relating to Protected Data, such Party shall promptly notify the
other in writing thereof and the Parties shall take such action as Radius may deem reasonably necessary to prevent any further unauthorised,
unlawful or dishonest conduct or activities or breach of the terms of this Agreement relating to Protected Data.
4.6 This Section 4 shall survive the termination or expiration of this Agreement.
5.
Intellectual Property.
5.1 Consultant shall promptly and fully disclose in writing to Radius any and all Inventions.
5.2 Consultant agrees that, as between Consultant and Radius, Radius owns all rights, title and interest in any Data or Invention, including any intellectual
property (including, but not limited to, patent, trademark, copyright and trade secret) rights therein. Consultant hereby assigns to Radius all of Consultant's rights to and
interest in any Data or Invention. To the extent that any of Radius’ ownership rights contemplated under this section are not perfected, fail to arise, revert or terminate by
operation of law, then in lieu of such ownership rights, Consultant shall automatically grant to Radius an exclusive, perpetual, irrevocable, fully paid up, royalty-free,
transferable, sublicensable (through multiple layers of sublicensees) license to all rights, title and interest in the Data or Inventions for which such ownership rights failed
to arise, reverted or terminated by operation of law. Consultant shall take all actions necessary in order to perfect, maintain, and/or enforce (to “Protect”) Radius’ rights in
the Data and Inventions, including without limitation, executing and delivering all requested applications, assignments and other documents. Consultant hereby permits
Radius to execute and deliver any such documents on Consultant's behalf in the event Consultant fails to do so and accepts Radius as Consultant’s agent for the limited
purpose of Protecting Radius’ ownership and/or exclusive rights.
5.3 During and after the Term of this Agreement, Consultant agrees to assist Radius, at Radius’ request, in preparing and prosecuting patent applications and
patent extensions or in obtaining or maintaining other forms of intellectual property rights protection for Inventions which Radius elects to protect. Radius shall reimburse
Consultant for any reasonable costs incurred in providing such assistance.
5.4 Without Radius’ prior written consent, Consultant shall not engage in any activities, on its own or in collaboration with a third party, or use any third party
facilities or third party intellectual property in performing the Services which could result in claims of ownership to any Inventions being made by such third party.
5.5 This Section 5 shall survive the termination or expiration of this Agreement.
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6.
Insider Trading.
Consultant acknowledges that in connection with this Agreement Consultant may have advance access to information that may be considered “material nonpublic
information” under the United States securities laws and the equivalent laws of the country in which Consultant is established. Consultant agrees to treat such information
as Confidential Information and acknowledges and agrees to be bound by the terms and conditions of Radius’ Insider Trading Policy, a copy of which will be provided to
Consultant upon request from Consultant's Radius business contact, and all related Applicable Laws. Accordingly, Consultant shall be subject to any and all restrictions
on trading set forth therein.
7. Representations.
7.1 Mutual Representations. Radius and Consultant each represent, warrant and/or covenant to the other that:
(a) Radius enters into this Agreement with Consultant in order to meet a legitimate and genuine business need for the Services and that the selection of the
Consultant is based exclusively on the Consultant’s qualifications, expertise, experience, knowledge and ability to meet this legitimate and genuine
business need;
(b) entry into this Agreement, its performance and the payment for the Services, are in no way contingent, conditional or depending on any other previous,
current, or potential future business that is or may be generated by the Consultant or on the recommendation, endorsement, prescription, purchase, order,
supply, use or administration by the Consultant of any medicinal products which are manufactured or marketed by Radius; and
(c) entry into this Agreement, its performance and payment for the Services, are in no way contingent, conditional or dependent on any other previous,
current, or potential future agreements between the Parties.
7.2 Services and Deliverables. Consultant represents, warrants and/or covenants that:
(a) he or she is permitted to provide Services in the country(ies) in which he or she is established and shall maintain all licenses and permits for Consultant’s
activities in accordance with Applicable Laws during the Term of this Agreement; and
(b) his or her independence and professional judgment in the performance of the Services under this Agreement are not influenced or affected by this
Agreement or any previous, current, or future agreements or interaction between the Consultant and Radius.
7.3 Absence of Restrictions. Consultant represents, warrants and/or covenants that:
(a) Consultant has not (i) been excluded, debarred, suspended or otherwise made ineligible to exercise his or her profession under Applicable Laws; or (ii)
engaged in any act that would be grounds for such exclusion, debarment or suspension; Upon learning or acquiring knowledge of any facts or
circumstances that may lead to actions relating to the representations above, Consultant will immediately disclose such facts or circumstances to Radius;
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(b) Consultant is authorized to enter into this Agreement and that Consultant is not a party to any other agreement or under any obligation to any third party
which would prevent Consultant from entering into this Agreement or from performing Consultant’s obligations.
(c) Consultant has (i) made all notifications and registrations of this Agreement to his or her employer, national and local competent authorities and/or
professional organizations that may be required by the Applicable Laws, as well as by employment contract provisions; and (ii) prior to entering this
Agreement Consultant has sought and received all authorizations from his or her employer, national and local competent authorities and/or professional
organizations to enter the Agreement that may be required by the Applicable Laws, as well as by employment contract provisions, or if such
authorizations are not received or refused, or if authorizations are rescinded at a later date, Consultant shall inform Radius immediately and Radius shall
have the option to terminate this Agreement immediately, pursuant to Section 3.3.
7.4 Compliance. Consultant further represents, warrants and/or covenants that the amounts payable hereunder shall constitute the fair market value for the
Services to be provided hereunder.
8. Ethical Business Practices.
8.1. Consultant agrees to conduct the Services contemplated herein in a manner which is consistent with both Applicable Laws, including anti-bribery laws, and
good business ethics. In performing the Services for Radius, Consultant (i) shall not offer to make, make, promise, authorize or accept any payment or giving anything of
value, including but not limited to bribes, either directly or indirectly to any public official, regulatory authority or anyone else for the purpose of influencing, inducing or
rewarding any act, omission or decision in order to secure an improper advantage, or obtain or retain business and (ii) shall comply with all applicable anti-corruption and
anti-bribery laws and regulations. Consultant shall not make any payment or provide any gift to a third party in connection with Consultant’s performance of this
Agreement except as may be expressly permitted in this Agreement without first identifying the intended third-party recipient to Radius and obtaining Radius’ prior
written approval. Consultant shall notify Radius immediately upon becoming aware of any breach of Consultant’s obligations under this Section.
8.2. Consultant shall promptly notify Radius in the event of any government investigation or inquiry related to compliance with Applicable Laws and shall
allow Radius to participate in the event it relates to the Services hereunder.
8.3 In the event that Radius has reason to believe that a breach of this Section 8 has occurred or may occur, Radius is entitled to conduct an audit and Consultant
shall fully cooperate in connection with any such audit. Consultant expressly understands and agrees that any breach of this Section 8 is considered a material breach of
this Agreement entitling Radius to terminate this Agreement with immediate effect hereof.
9.
Intentionally Omitted.
10. Disclaimer.
Except for breaches of confidentiality or intellectual property, IN NO EVENT SHALL Either PArty BE LIABLE FOR SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES of the other party ARISING UNDER THIS AGREEMENT Even IF ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES.
11. Independent Contractor Status.
Page 6 of 9
11.1 This Agreement establishes between the Parties an independent contractor relationship. This relationship is completely independent of any other
relationship that exists or may exist in the future between the Parties.
11.2 This Agreement does not create any employer-employee, agency or partnership relationship between the Parties. The Consultant shall in no circumstances
hold himself or herself out as representing the position of Radius. Consultant shall not be entitled to or eligible to participate in Radius’ insurance plans and other
compensation or benefit plans Radius maintains for its own employees. Consultant retains full and sole responsibility for complying with income reporting and other
requirements imposed by Applicable Laws. Radius will not provide workers’ compensation insurance coverage to Consultant for work-related accidents, illnesses,
damages or injuries arising out of or in connection with the Services. Further, Consultant understands and agrees that the consulting relationship with Radius is not
covered under unemployment compensation laws
11.3 It is expressly understood that nothing in this Agreement is intended to (i) be, nor shall it be construed as, an obligation or inducement, either expressed or
implied, to recommend, purchase, order, prescribe, promote, or otherwise support any Radius product or service; (ii) to induce, obligate or require Consultant to use, rent,
purchase or otherwise become or maintain its status as customer of Radius products or services; or (iii) to compromise Consultant's personal judgment or integrity.
12. Payment.
12.1 Radius will pay Consultant for Services rendered as set forth in the applicable Exhibit (the “Budget”). Any amount in excess of the Budget requires the
prior written approval of Radius.
12.2 Radius will reimburse out-of-pocket travel and other reasonable expenses that have been preapproved by Radius, in writing, and incurred in connection
with the Services rendered hereunder, and are supported by original evidence or receipts. Reimbursement of pre-approved expenses shall be made by Radius within thirty
(30) days of receipt of an itemized statement with receipts or other evidence of reimbursable expenses.
12.3 A purchase order (“PO”) may be generated for this work. If a PO is generated, all invoices should include the Radius PO number and a detailed description
of the Services effectively and actually provided by the Consultant to ensure prompt payment. Invoices will be delivered to Radius monthly for Services satisfactorily
provided in the preceding month. Radius will pay invoices within thirty (30) days of their receipt, provided that such invoices have been provided to Radius within thirty
(30) days of completion of the Services to which they relate.
12.4 Prior to any payment, Radius must have a W-9 on file for the payee. W-8s or W-9s must be sent to invoices@radiuspharm.com.
Invoices should be sent to Radius via email (.pdf format acceptable):
invoices@radiuspharm.com
If email invoicing is not possible, invoices may be sent via mail:
Radius Health, Inc.
950 Winter Street
Waltham, MA 02451
Page 7 of 9
Attention: Accounts Payable
Checks must be made payable to: cq-consulting LLC
Checks to be mailed to:
16 William Beaser Drive
Garnet Valley PA, 19060
13. Miscellaneous Matters.
13.1 Any notices to be given hereunder shall be in writing and shall be delivered to the address below: (a) in person; (b) first class registered or certified mail,
postage prepaid, (c) next day express delivery service; or (d) by fax or email, with originals to follow immediately thereafter by methods (a), (b) or (c). Notice shall be
effective upon delivery or, in the case of (d), upon confirmation of delivery of the fax or email.
If to Radius:
Radius Health, Inc.
950 Winter Street
Waltham, MA 02451
United States of America
Attention: Chief Business Officer
Fax: 781.861.0620
With a copy to: General Counsel
Email: notices@radiuspharm.com
If to Consultant:
Dr. Charles Morris
cq-consulting LLC
16 William Beaser Drive
Garnet Valley, PA 19060
e-mail:
13.2 This Agreement, together with any Exhibit(s), constitutes the entire agreement of the Parties with regard to its subject matter and supersedes all previous
written or oral representations, agreement(s), and understandings between the Parties hereto with respect to the subject matter hereof. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but collectively shall constitute one and the same instrument. Counterparts may be signed and
delivered by facsimile or electronic transmission (including by e-mail delivery of .pdf signed copies), each of which will be binding when sent. This Agreement shall be
construed and enforced in accordance with the laws of the Commonwealth of Massachusetts without regard to any choice of law principle that would dictate the
application of the law of another jurisdiction.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorised representatives.
Radius Health, Inc. Consultant
Page 8 of 9
By:
Name:
Title:
Date:
/s/ G. Kelly Martin
G. Kelly Martin
Chief Executive Officer
Page 9 of 9
/s/ Dr. Charles Morris
Dr. Charles Morris
Sole Manager
By:
Name:
Title:
Date:
EXHIBIT
This document shall serve as an Exhibit, dated 12/16/2020 to that certain Consulting Agreement, with an Effective Date of 12/16/2020 (the “Agreement”), by and
between Radius Health, Inc., together with its affiliates (“Radius”) and cq-consulting LLC , which Agreement is hereby incorporated by reference.
1. Description of Services.
– Support for abaloparatide product leader
– Advise and contribute medical expertise to Business Development and other strategic initiatives
2. Budget.
Radius will pay an aggregate total of one hundred fifty thousand United States Dollars ($150,000 USD) for the Services rendered to Radius’ satisfaction. Any
amount in excess of the Budget requires the prior written approval of Radius.
3. Payment Schedule and Invoicing.
The aggregate total will be paid in three equal monthly installments with the first payment due January 29 , 2021.
th
Radius Health, Inc. cq-CONSULTING LLC
By:
Name:
/s/ G. Kelly Martin
G. Kelly Martin
Title:
Date:
Chief Executive Officer
Page 10 of 9
By:
Name:
Title:
Date:
/s/ Dr. Charles Morris
Dr. Charles Morris
Sole Manager
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [*], HAS BEEN OMITTED BECAUSE IT IS NOT
MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO RADIUS HEALTH, INC. IF PUBLICLY DISCLOSED
Exhibit 10.37
EXECUTION
ASSET PURCHASE AGREEMENT
by and among
RADIUS PHARMACEUTICALS, INC.,
BENUVIA THERAPEUTICS INC. and
FRESH CUT DEVELOPMENT, LLC,
DATED AS OF DECEMBER 30, 2020
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND TERMS
Section 1.1. Definitions
Section 1.2. Other Definitional Provisions
ARTICLE II PURCHASE AND SALE OF ASSETS
Section 2.1. Purchase and Sale of Assets
Section 2.2. Excluded Assets
Section 2.3. Assumed Liabilities
Section 2.4. Excluded Liabilities
Section 2.5. Product API DMFs
Section 2.6. Purchase Price
Section 2.7. Closing
Section 2.8. Purchased Assets Not Transferred at Closing
Section 2.9. Tax Matters
Section 2.10. Wrong Pockets
ARTICLE III EARNOUTS, ROYALTIES AND OTHER FINANCIAL OBLIGATIONS
Section 3.1. Earnout Payments
Section 3.2. Commitment Royalty
Section 3.3. Licensing Revenue
Section 3.4. Royalties
Section 3.5. Payment
Section 3.6. Record Keeping
Section 3.7. Audit Rights
Section 3.8. Late Payments
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 4.1. Organization and Good Standing
Section 4.2. Authority
Section 4.3. No Conflict
Section 4.4. Required Filings and Consents
Section 4.5. Purchased Assets
Section 4.6. Contracts
Section 4.7. Intellectual Property
Section 4.8. Inventory
Section 4.9. Compliance with Laws; Regulatory Compliance
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Section 4.10. Brokers
Section 4.11. Taxes
Section 4.13. No Other Representations and Warranties
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 5.1. Organization and Good Standing
Section 5.2. Authority
Section 5.3. No Conflict
Section 5.4. Required Filings and Consents
Section 5.5. Litigation
Section 5.6. Brokers
Section 5.7. Independent Investigation
ARTICLE VI PRE-CLOSING COVENANTS
Section 6.1. Certain Contracts
Section 6.2. Actions and Omissions with Respect to the Purchased Assets
Section 6.3. Access to Information; Notice of Developments
Section 6.4. Commercially Reasonable Efforts
POST-CLOSING COVENANTS
ARTICLE VII
Section 7.1. Certain Contracts
Section 7.2. Technical Assistance; Access
Section 7.3. Non-Competition; Scope of the Non-Compete Field
Section 7.5. Records Retention; Access
Section 7.6. Further Assurances
ARTICLE VIII INTELLECTUAL PROPERTY; KNOW HOW TRANSFER
Section 8.1. Patent Management Committee Framework
Section 8.3. Unblocking Licenses
Section 8.4. Know How Transfer
Section 8.5. Right of Reference
Section 8.6. Insolvency
ARTICLE IX CONDITIONS TO CLOSING
Section 9.1. Conditions to Purchaser’s Obligation to Close
Section 9.2. Conditions to Sellers’ Obligation to Close
Section 9.3. Conditions to Obligations of Each Party to Close
ARTICLE X TERMINATION
Section 10.1. Circumstances for Termination
Section 10.2. Effect of Termination
ARTICLE XI INDEMNIFICATION
Section 11.1. Survival
Section 11.2. Indemnification by the Sellers
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Section 11.3. Indemnification by Purchaser
Section 11.4. Notice of Claims
Section 11.5. Defense of Third-Party Claims
Section 11.7. Certain Limitations
Section 11.8. Setoff
Section 11.9. Exclusive Remedy
ARTICLE XII MISCELLANEOUS
Section 12.1. Further Assurances and Post-Closing Covenants
Section 12.2. Notices
Section 12.3. Amendment; Waiver
Section 12.4. Assignment
Section 12.5. Entire Agreement
Section 12.6. No Third-Party Beneficiaries
Section 12.7. Public Disclosure
Section 12.8. Confidentiality; Return of Information
Section 12.9. Equitable Relief
Section 12.10. Fees and Expenses
Section 12.11. Governing Law; Jurisdiction; Venue and Service; Waiver of Jury Trial; Dispute Resolution
Section 12.12. Counterparts
Section 12.13. Headings
Section 12.14. Severability
EXHIBITS
A Form of Bill of Sale and Assignment and Assumption Agreement
B Form of Patent Assignment
C Form of Supply and Development Agreement
D Form of Trademark Assignment
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of December 30, 2020, is made by and between Fresh Cut Development, LLC, a Delaware limited liability company
(“Fresh Cut”), Benuvia Therapeutics Inc., a Delaware corporation (“Benuvia”; Fresh Cut and Benuvia are collectively referred to herein as the “Sellers” and individually
as a “Seller”), and Radius Pharmaceuticals, Inc., a Delaware corporation (“Purchaser”). Fresh Cut, Benuvia and Purchaser are collectively referred to herein as the
“Parties” and each individually as a “Party.”
WHEREAS, Purchaser desires to purchase from the Sellers and obtain a license from the Sellers, and the Sellers desire to sell to Purchaser and to license to
Purchaser, the Purchased Assets and the Background IP (each, as defined below) on the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the Parties hereby agree
as follows:
ARTICLE I.
DEFINITIONS AND TERMS
Section i.. Definitions. As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:
“AAA” shall have the meaning set forth in Section 12.11(f).
“Addition of Indications” shall have the meaning set forth in Section 7.3(b).
“Annual Net Sales Thresholds” shall have the meaning set forth in Section 3.1(a).
“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at
any time during the period for which the determination of affiliation is being made. For purposes of this definition, “control” of a Person means the power, direct or
indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.
“Agreement” shall mean this Asset Purchase Agreement, including all Schedules and Exhibits attached hereto, as the same may be amended, modified or
supplemented from time to time in accordance with the terms hereof.
“Allocation” shall have the meaning set forth in Section 2.9(b).
“Ancillary Agreements” shall mean the Supply and Development Agreement, the Bill of Sale, the Patent Assignment and the Trademark Assignment.
“Assignable Necessary Contracts” shall have the meaning set forth in Section 6.1.
“Assigned Patents” shall mean the Patents listed on Schedule 1.1(a).
“Assumed Contracts” shall have the meaning set forth in Section 2.1.
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“Assumed Liabilities” shall have the meaning set forth in Section 2.3.
“Background IP” shall mean the Background Know-How and Background Patents.
“Background Know-How” shall mean all Know-How Controlled by Seller or an Affiliate of Seller as of the Closing Date, other than Seller IP, that is used by
Seller or any Affiliate in connection with, or that are otherwise necessary or useful for, the Exploitation of the Products in the Field.
“Background Patents” shall mean all Patents Controlled by Seller or an Affiliate as of the Closing Date, other than Seller IP, that but for the license granted to
Purchaser in this Agreement would be infringed by the Exploitation of the Products in the Field.
“Bankruptcy Code” shall mean Chapter 11 of U.S.C., Title 11, as amended from time to time and any successor statute and all rules and regulations promulgated
thereunder.
“Basket Amount” shall have the meaning set forth in Section 11.7.
“Benuvia” shall have the meaning set forth in the preamble of this Agreement.
“Bill of Sale” shall mean the bill of sale and assignment and assumption agreement to be executed by the Parties on the Closing Date in the form attached hereto
as Exhibit A.
“Blocking IP” shall have the meaning set forth in Section 3.4(b).
“Business Day” shall mean any day other than a Saturday, a Sunday or a United States Federal Holiday.
“Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.
“Calendar Year” shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31.
“CBD” shall mean the compound with the chemical structure set forth in Schedule 1.1(b) as well as any salts, isomers (other than tetrahydrocannabinol),
prodrugs, hydrates, solvates, metabolites, or derivatives thereof that, in the case of derivatives, have been reduced to practice by the Sellers or any of their Affiliates on or
before the Closing Date.
“Claim Notice” shall have the meaning set forth in Section 11.4.
“Closing Date” shall mean the date of Closing.
“Closing” shall mean the consummation of the transactions contemplated by this Agreement pursuant to the terms of this Agreement.
“Code” shall mean the United States Internal Revenue Code of 1986, as amended.
“Commercially Reasonable Efforts” shall mean, with respect to Purchaser’s obligation under this Agreement to commence a Pivotal Clinical Trial, the level of
efforts required to carry out such obligation in a manner consistent with the efforts a similarly situated biopharmaceutical company devotes to
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products of similar stage of development, product life, market potential, profit potential, safety and efficacy, scientific potential and strategic value, taking into
consideration the market, the regulatory environment and market exclusivity.
“Confidential Information” shall mean any and all proprietary, confidential, or nonpublic information, including information that is written, electronic, graphic,
oral, or visual, or derived from inspection of documents or other tangible property, that is exclusively related to the Purchased Assets and the Assumed Liabilities. For the
avoidance of doubt, Confidential Information does not include Excluded Assets or Excluded Liabilities or information directly or indirectly related thereto.
“Confidentiality Agreement” shall mean the Confidential Disclosure Agreement, effective as of May 8, 2020, by and between Purchaser and Seller.
“Contract” shall mean any written or oral agreement, contract, subcontract, settlement agreement, lease, sublease, instrument, note, bond, mortgage, indenture,
trust document, loan or credit agreement, license, sublicense or legally binding commitment or undertaking, including any and all amendments or other changes thereto.
“Control”, “Controls” or “Controlled by” shall mean, with respect to any IP Rights (including any Patent or Know-How), the possession of (whether by
ownership or license, other than pursuant to this Agreement) the ability of a Person or its Affiliates to assign, transfer, to grant a covenant not to sue, to grant the right to
sue, to grant access to or to grant a license or sublicense of such right as provided for herein without violating the terms of any agreement or other arrangement with any
Third Party existing as of the Closing Date.
“Copyrights” shall mean all works of authorship (whether copyrightable or not) and all copyrights (whether registered or not), including works for hire, and all
other rights corresponding thereto throughout the world, whether published or unpublished, including rights to prepare, reproduce, perform, display and distribute
copyrighted works and copies, compilations and derivative works thereof (including all unregistered copyrights).
“Cover” means, with respect to a Patent, a Product that, but for ownership of or rights granted to a Person under such Patent the act of making, using, importing,
offering to sell or selling of such Product by such Person would infringe a Valid Claim included in such Patent, or in the case of a Patent that is a patent application, would
infringe a Valid Claim in such patent application if it were to issue as a Patent.
“Development” shall mean, together with all correlative meanings, pre-clinical and clinical drug development activities, conducted before or after obtaining
Regulatory Approval, that are reasonably related to or leading to the development, preparation, and submission of data and information to a Regulatory Authority for the
purpose of obtaining, supporting or expanding Regulatory Approval or to the appropriate body for obtaining, supporting or expanding pricing and reimbursement
approval, including all activities related to preclinical testing, discovery, assay and test method development and validation, in vivo testing, biomarker development and
validation, toxicology, stability, pharmacology, pharmacokinetic profiling, design and conduct of clinical trials or studies, process scale-up, formulation development,
delivery system development quality assurance and quality control development, statistical analysis, regulatory affairs, statistical analysis, report writing, and Regulatory
Materials creation, submission, and approvals (including the services of outside advisors and consultants in connection therewith and specifically excluding activities
directed to obtaining pricing and reimbursement approvals).
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“DEA” shall mean the United States Drug Enforcement Administration.
“Development Earnout Payments” shall have the meaning set forth in Section 3.1(b).
“Development Milestones” shall have the meaning set forth in Section 3.1(b).
“Encumbrance” shall mean, with respect to any Purchased Asset, any pledge, lien, license, charge, security interest, mortgage or similar encumbrance.
“Excluded Assets” shall have the meaning set forth in Section 2.2.
“Excluded Liabilities” shall have the meaning set forth in Section 2.4.
“Existing API DMFs” shall mean the drug master files set forth on Schedule 1.1(c).
“Exploit” shall mean, together with all correlative meanings, any or all of the following: research, Development, design, test, modify, manufacture, service, make,
use, sell, have made, used or sold, offer for sale, import, export, reproduce, promote, market and distribute, including commercial activities conducted in preparation for a
product launch.
“FDA” shall mean the United States Food and Drug Administration and any successor agency.
“FD&C Act” shall mean the Federal Food, Drug, and Cosmetic Act of 1938, as amended (21 U.S.C. § 301 et seq.), and all regulations promulgated, and any
Orders issued, thereunder by the FDA.
“Field” shall mean administration orally of a liquid formulation of CBD for therapeutic use in humans or animals.
“Fresh Cut” shall have the meaning set forth in the preamble of this Agreement.
“FTC” shall mean the United States Federal Trade Commission and any successor agency.
“Fundamental Representations” shall mean representations and warranties contained in Section 4.1 (Organization and Good Standing); Section 4.2 (Authority);
Section 4.3 (No Conflict); Section 4.5 (Purchased Assets); Section 4.7 (Intellectual Property) subsection (a), the first sentence of subsection (b) and the third sentence of
subsection (c); Section 4.10 (Brokers); Section 5.1 (Organization and Good Standing); Section 5.2 (Authority); and Section 5.6 (Brokers).
“Future Product DMFs” shall mean drug master files for Products that are submitted by Purchaser or its Affiliates to a Regulatory Authority following the Closing
Date.
“GAAP” shall mean accounting principles generally accepted in the United States, consistently applied.
“Generic Product” means, with respect to a Product, and on a Product-by-Product and country-by-country basis, any product (including a “generic product,”
“biogeneric,” “follow-on biologic,” “follow-on biological product,” “follow-on protein product,” “similar biological medicinal product,” or “biosimilar product”)
approved by way of an abbreviated regulatory mechanism by the relevant Regulatory Authority in a country in reference to such Product, that in each case: (a) is sold in
the same country (or is commercially available in the same country via import from another country) as such
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Product by any Third Party that is not a licensee or sublicensee of Purchaser or its Affiliates and that did not purchase such product in a chain of distribution that included
any of Purchaser or any of its Affiliates or its licensees or sublicensees of rights to a Product; and (b) either (i) is approved for use in such country by the applicable
Regulatory Authority through a regulatory pathway by referencing clinical data first submitted for obtaining Regulatory Approval for such Product, including applications
under 21 U.S.C. § 505(b)(2) and 505(j), or (ii) is approved for use in such country by the applicable Regulatory Authority through a regulatory pathway by showing
bioequivalency or interchangeability with the Product or (iii) meets the equivalency determination by the applicable Regulatory Authority in such country (including a
determination that the product is “comparable,” “interchangeable,” “bioequivalent,” “biosimilar” or other term of similar meaning, with respect to the Product), in each
case, as is necessary to permit substitution of such product for the Product under applicable Laws in such country.
“Good Clinical Practices” shall mean the FDA’s requirements for the design, conduct, performance, monitoring, auditing, recording, analysis, and reporting of
clinical trials contained in 21 C.F.R. Parts 50, 54, 56 and 312.
“Good Laboratory Practices” shall mean the FDA’s requirements for conducting non-clinical laboratory studies contained in 21 C.F.R. Part 58.
“Good Manufacturing Practices” shall mean the current good manufacturing practices mandated by applicable Laws of any applicable Regulatory Authority as in
effect at the time of manufacture, relating to the manufacturing, development, processing, holding, storing, testing, commercial distribution, packaging, repackaging,
packing, labeling, relabeling, holding, importing, and exporting of products subject to Regulatory Laws, including the FDA’s implementing regulations contained in 21
C.F.R. Parts 210 and 211, or other comparable applicable Laws of any other Regulatory Authority.
“Governmental Entity” shall mean any United States federal, state or local or any foreign government, or political subdivision thereof, or any multinational
organization or authority or any authority, agency or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power, any court or tribunal (or any department, bureau or division thereof), or any governmental arbitrator or arbitral body or any court, administrative or
other governmental or government-authorized authority or agency, domestic or foreign, including any Regulatory Authority.
“Hold Period” shall have the meaning set forth in Section 3.2.
“Indemnified Party” shall have the meaning set forth in Section 11.4.
“Indemnifying Party” shall have the meaning set forth in Section 11.4.
“Independent Accounting Firm” shall mean an independent accounting firm mutually agreed to by Purchaser and Seller that has no prior existing obligation to or
fiduciary relationship with either Party.
“IND” shall mean (i) an Investigational New Drug Application, together with all amendments and supplements thereto, as defined in the FD&C Act, or (ii) a
clinical trial application, clinical trial exemption, or similar equivalent application or submission to the equivalent Regulatory Authority in any other regulatory
jurisdiction, the filing of which is necessary to initiate or conduct clinical testing of a pharmaceutical product in humans in such jurisdiction.
“IP Contracts” shall have the meaning set forth in Section 4.7(c).
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“IP Rights” shall mean all rights in and to intellectual property rights anywhere in the world, including (i) Patents, (ii) Know-How, (iii) Copyrights, (iv)
Trademarks, (v) all other proprietary rights, including any rights similar, corresponding or equivalent to any of the foregoing, (vi) all issuances, registrations and
applications for any of the foregoing and (vii) all copies and tangible embodiments of the foregoing, if applicable (in whatever form or medium).
“Know-How” shall mean all confidential, non-public or proprietary information, in any tangible or intangible form whatsoever, including trade secrets, know-
how, inventions, processes, procedures, data and results (including pre-clinical, clinical and animal), formulae, formulations, specifications, assays, designs, methods,
techniques, and chemical and pharmaceutical compositions and materials and all documentation thereof (including related papers, invention disclosures, Regulatory
Materials, drawings, flowcharts, diagrams, sketches, plans, diaries, notebooks, records (including batch records and laboratory records), compilations of information,
customer and supplier lists, pricing and cost information, and business and marketing plans and proposals) and all claims and rights related thereto.
“Knowledge of Seller” shall mean the actual knowledge, after reasonable inquiry, of the individuals listed on Schedule 1.1(d).
“Laws” shall mean, as applicable, any United States federal, state, provincial, or local, international or multinational or any foreign statute, law, standard, rule,
regulation, resolution, promulgation, ordinance, code; any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any
Governmental Entity, or any license, franchise, permit or similar right granted by a Governmental Entity under any of the foregoing; or any provision similar to any of the
foregoing having the force or effect of law or any other requirement or rule of law including Regulatory Laws.
“Liabilities” shall mean any and all debts, liabilities, costs, guarantees, assessments, expenses, claims, penalties, Losses, damages, deficiencies and obligations,
whether accrued or fixed, known or unknown, liquidated or unliquidated, asserted or unasserted, absolute or contingent, matured or unmatured, determined or
determinable, accrued or not accrued, due or to become due, direct or indirect, whenever or however arising (including whether arising out of any contract, common law
or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes
thereto.
“Licensing Revenues” means amounts (including any licensing fees, license maintenance fees, milestone payments, royalties or the fair market value of any non-
cash consideration other than, for the avoidance of doubt, the value of any cross-license, grant-back, covenants provided to or by Purchaser, its Affiliates or its Third Party
licensees) received by or payable to Purchaser or its Affiliates from any Third Party in consideration for a license of Purchaser’s rights in, to or under the Seller IP,
Background IP or Purchased Assets in connection with the Exploitation of Products outside of the United States, as determined in accordance with Section 3.3(b) with
respect to (a) a grant of rights that applies to the United States and countries outside of the United States and (b) a grant of rights to Seller IP and/or Background IP as well
as other IP Rights controlled by Purchaser that are related to the Products and to products other than the Products; provided that Licensing Revenues will not include
amounts received by or payable to Purchaser, in a bona fide, arm’s length transaction, attributable or allocable (as determined in accordance with Section 3.3(b) with
respect the following clauses (i) and (v)) to any of the following: (i) Exploitation of Products by any such Third Party in the United States, (ii) reimbursements of out-of-
pocket patent prosecution costs actually incurred by Purchaser related to the Products being licensed; (iii) payment to Purchaser for research, development, manufacturing,
commercialization, consulting, or other
6
activities performed or services provided by Purchaser for the specific Products being licensed; (iv) payments for Product supplied by the licensee to such Third Party not
in excess of fair market value; (v) payment for IP Rights controlled by Purchaser, other than Seller IP and Background IP, that are related to products other than the
Products; and (vi) payments for the issuance of equity of Purchaser to the extent not in excess of the fair market value of such equity; provided, further, that no amounts
shall be excluded from Licensing Revenues pursuant to the foregoing clauses (i)-(vi) if such transaction or arrangement is entered into for the purpose of reducing the
amount of Licensing Revenues in contravention of this Agreement.
“Licensee” shall mean, as applicable, (i) with respect to the Seller Unblocking License, Purchaser, and (ii) with respect to the Purchaser Unblocking License, the
Sellers.
“Licensor” shall mean, as applicable, (i) with respect to the Seller Unblocking License, the Sellers, and (ii) with respect to the Purchaser Unblocking License,
Purchaser.
“Litigation” shall have the meaning set forth in Section 4.9(c).
“Losses” shall have the meaning set forth in Section 11.2.
“Managed Patents” shall have the meaning set forth in Section 8.1.
“Mandatory Mediation” shall have the meaning set forth in Section 12.11(f).
“Material Adverse Effect” shall mean any event, change, effect, occurrence, circumstance or development that, individually or in the aggregate with all other
changes, effects, events, occurrences, circumstances or developments, (a) is materially adverse to, taken as a whole, (i) the Purchased Assets, (ii) the Assumed Liabilities
or (iii) Sellers’ financial condition, operations or properties, or (b) would reasonably be expected to prevent the consummation of the transactions contemplated by this
Agreement; provided, however, that any event, change, effect, occurrence, circumstance or development will not be deemed to constitute a Material Adverse Effect and
will be disregarded when determining whether a Material Adverse Effect has occurred, to the extent resulting, directly or indirectly, from (i) general economic or political
conditions, (ii) conditions generally affecting the industries in which the Seller operates, (iii) any changes in financial, banking or securities markets in general, including
any disruption thereof and any decline in the price of any security or any market index or any change in prevailing interest rates, (iv) acts of war or terrorism (or the
escalation of the foregoing) or natural disasters, pandemics, epidemics, or other force majeure events, (v) any changes in applicable Laws, (vi) compliance by Seller or
any of its Affiliates with this Agreement, compliance by Seller or any of its Affiliates with a request by Purchaser that Seller or any of its Affiliates take an action (or
refrain from taking an action) to the extent such action or inaction is in compliance with such request or actions taken by Seller or any of its Affiliates with the consent of
Purchaser, or (vii) the execution or announcement of this Agreement or the pendency or consummation of the transactions contemplated by this Agreement or the
Ancillary Agreements; provided, that any effect arising out of or resulting from any change or event referred to in clause (i) through clause (iv) above may constitute, and
be taken into account in determining the occurrence of, a Material Adverse Effect if such change or event has a disproportionate impact on the Sellers relative to other
companies in the Sellers’ industry.
“NDA” shall mean a new drug application that is submitted to the FDA for marketing approval, pursuant to 21 C.F.R. § 314.3.
7
“Net Sales” shall mean, with respect to a Product, the aggregate gross revenues of such Product, calculated in United States Dollars, invoiced by or on behalf of
Purchaser or any of its Affiliates or licensees or sublicensees, on account of sales of such Product by such Person to Third Parties anywhere in the world, with respect to
sales by or on behalf of Purchasers or any of its Affiliates and solely in the United States, with respect to sales by or on behalf of Third Party licensees or sublicensees of
Purchaser or its Affiliates, less the following relating to such sales:
(a) bona fide trade and/or quantity discounts or allowances actually allowed and taken that are not already reflected in the amount invoiced;
(b) sales, value added or other excise taxes and import duties to the extent invoiced to the customers and to the extent such taxes are remitted to the applicable
taxing authority;
(c) amounts repaid or credited by reason of bona fide purchase chargebacks, product returns or rebates, or other pricing adjustments;
(d) charges for freight, insurance, handling and transportation, to the extent included in the invoice price and separately identified on the invoice or other
documentation maintained in the ordinary course of business;
(e) reasonable estimates for allowances and credits to Third Parties on account of rejected, damaged, returned or recalled Product or for doubtful accounts; and
(f) other similar or customary deductions or reserves taken in the ordinary course of business or established in accordance with GAAP.
Net Sales shall not be imputed to transfers of any Product without consideration or for nominal consideration for use in any clinical trial, or for any bona fide
charitable, compassionate use or indigent patient program purpose or as a sample.
In the case of any sale or transfer of a Product between or among a Person and its Affiliates for subsequent resale, Net Sales shall be calculated as above only on
the first arm’s length sale thereafter to a Third Party. In the case of any sale or transfer of a Product in any particular country for value to a Third Party other than in an
arm’s length transaction exclusively for cash, such as barter or counter-trade, Net Sales shall be determined by referencing Net Sales at which substantially similar
quantities of such product or other device, as applicable, are sold in an arm’s length transaction in such particular country for cash.
In the event that any Product is sold by a Person or its Affiliates in combination with another product, the Net Sales attributable to the sale of such Product in such
combination shall be reduced to an amount obtained by multiplying the Net Sales of such combination product by a percentage determined by dividing (x) the selling
Person’s regional (or, if practical, country) average net selling price of such Product by (y) the sum of such selling Person’s regional (or, if practical, country) average net
selling price of each component of such combined product. If the components of such combination are not separately sold in the relevant region or country, Net Sales of a
Product in such circumstance shall be determined through an alternative allocation method proposed by Purchaser that is reasonably satisfactory to Seller.
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In the event that any sales of Products are made in any currency other than U.S. Dollars, such sales shall be converted to U.S. Dollars using the same exchange
rates and methodologies utilized by Purchaser in preparing its consolidated financial statements.
“Net Sales Earnout Payments” shall have the meaning set forth in Section 3.1(a).
“Non-Assignable Necessary Contracts” shall have the meaning set forth in Section 7.1.
“Non-Assigned Assets” shall have the meaning set forth in Section 2.8(b).
“Non-Compete Field” shall have the meaning set forth in Section 7.3(a).
“OFAC” shall have the meaning set forth in Section 4.9(l).
“Order” shall mean any Governmental Entity’s charge, temporary restraining order or other order, writ, injunction (whether preliminary, permanent or otherwise),
judgment, guideline, doctrine, guidance, decree, ruling, determination, directive, corporate integrity agreement or similar agreement, award or settlement, whether civil,
criminal or administrative.
“Party” shall have the meaning set forth in the preamble of this Agreement.
“Patent Assignment” shall mean a Patent assignment, substantially in the form of Exhibit B attached hereto, for all of the Assigned Patents.
“Patent Dispute” shall have the meaning set forth in Section 8.2.
“Patent Management Committee” shall have the meaning set forth in Section 8.1.
“Patents” shall mean (a) all issued United States and foreign patents and utility models, all pending patent applications, and all reissues, term restorations,
supplemental protection certificates, re-examinations, revisions, renewals, extensions, provisionals, continuations, divisionals, and continuations-in-part thereof, (b) any
patent rights claiming priority directly or indirectly to any of the foregoing and (c) equivalent or similar rights anywhere in the world or under any multinational
organization or authority in inventions and discoveries.
“Permitted Encumbrance” shall mean any (i) mechanics’, carriers’, warehousemens’, workmens’ and other similar Encumbrance arising in the ordinary course of
business and not yet due and payable; (ii) Encumbrance for Taxes, assessment and other governmental charge not yet due and payable; (iii) Encumbrance arising by
operation of law on an insurance policy and proceeds thereof to secure premiums thereunder and that are not delinquent.
“Person” shall mean any individual, corporation, partnership (general or limited), limited liability company, limited liability partnership, trust, joint venture, joint-
stock company, syndicate, association, entity, unincorporated organization or government or any political subdivision, agency or instrumentality thereof.
“Pivotal Clinical Trial” shall mean, with respect to a Product, a clinical trial in humans performed with the intent to gain evidence with statistical significance of
the efficacy of such Product in a target population, and to obtain expanded evidence of safety for such Product that is needed to evaluate the overall benefit-risk
relationship of such Product, to form a basis for filing a marketing approval
9
application and obtaining Regulatory Approval from a Regulatory Authority for such Product and to provide an adequate basis for physician labeling, as described in 21
C.F.R. § 312.21(c), as amended from time to time, or the corresponding regulations in jurisdictions other than the United States.
“Product Registrations” shall mean all authorizations, approvals, registrations, clearances, consents, qualifications, certifications, licenses, permits, franchises,
variances, exemptions, orders and other rights from the FDA and other Regulatory Authorities that are necessary for the research, Development, clinical testing,
investigational use, marketing approval, commercialization, manufacturing, packaging, labeling, storage, shipping, transport, distribution, advertising marketing,
promotion, offer for sale, use, import, export and sale of a Product.
“Products” shall mean any and all formulations of CBD in the Field.
“Purchase Price” shall have the meaning set forth in Section 2.6.
“Purchased Assets” shall have the meaning set forth in Section 2.1.
“Purchaser Indemnified Party” shall have the meaning set forth in Section 11.2.
“Purchased Inventory” shall mean the inventory of work in progress, intermediates and finished goods of the Product formulated for use in the Field (including
any precursor or packaging), and any and all rights to market and sell such inventory.
“Purchaser” shall have the meaning set forth in the preamble of this Agreement.
“Purchaser Unblocking License” shall have the meaning set forth in Section 8.3(b).
“PWS” shall have the meaning set forth in Section 7.3(a).
“Regulatory Approval” shall mean, with respect to a country, region, or regulatory jurisdiction, all approvals, licenses, registrations, or authorizations from the
relevant Regulatory Authority necessary for the manufacture, marketing, importation, distribution, and sale of a product for one or more indications in such a country,
region, or regulatory jurisdiction, which may include satisfaction of all applicable regulatory and notification requirements, but not including any pricing and
reimbursement approvals. Regulatory Approvals include approvals by Regulatory Authorities of INDs.
“Regulatory Authority” shall mean the FDA, the DEA, the FTC, the United States Department of Health and Human Services, Centers for Medicare and
Medicaid Services, the European Medicines Agency, or any other federal, state, local or foreign Governmental Entity that is concerned with or regulates the Development,
testing, packaging, labeling, storage, sale, quality, safety, efficacy, reliability or manufacturing of pharmaceuticals, federal or state health care programs, or the provision
of health care or similar services or grants or authorizes Regulatory Approvals or permits (including any required pricing or reimbursement approvals) for the
Development, manufacture or commercialization of any pharmaceutical product (including any Product).
“Regulatory Laws” shall mean the following Laws: (i) the FD&C Act, (ii) the Federal Controlled Substances Act of 1970, and all regulations of the DEA
promulgated thereunder, (iii) the federal False Claims Act (42 U.S.C. § 1320a-7b(a)), as amended, (iv) the Physician Payments Sunshine Act, (v) the Patient Protection
and Affordable Care Act, (vi) the federal Medicare and Medicaid statutes, (vii) the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, (viii) the federal Physician Self-
Referral (Stark)
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Law, 42 U.S.C. § 1395nn, (ix) the federal Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a, (x) the Federal Trade Commission Act, (xi) any other Laws governing
research, Development, clinical testing, investigational use, marketing approval, manufacturing, packaging, labeling, storage, shipping, transport, distribution, advertising,
marketing, promotion, offer for sale, sale, use, import or export of pharmaceuticals and other products regulated by the FDA or other Regulatory Authority, and (xii) all
Laws similar to the foregoing within any other federal, state, local or foreign jurisdiction.
“Regulatory Materials” shall mean copies of the Product Registrations, Existing API DMFs, reference studies and any applications (including applications for
designation as “Orphan Product(s)” under the Orphan Drug Act, applications for “Fast Track” status under Section 506 of the FD&C Act (21 U.S.C. § 356) or
applications for a Special Protocol Assessment under Section 506(b)(4)(B) and (C) of the FD&C Act (21 U.S.C. § 355 (b)(4)(B)) therefor, including currently pending,
previously denied or previously withdrawn applications, together with copies of related correspondence between Seller and the applicable Regulatory Authority, and any
other existing files and dossiers directly relating to the Product Registrations, and the underlying data or information used to support, maintain or obtain Product
Registrations.
“Representatives” shall mean, with respect to a Party, such Party’s Affiliates and their respective members, principals, officers, directors, shareholders, trustees,
employees, agents, consultants and advisors.
“Restricted Period” shall mean, with respect to any therapeutic indication in the Non-Compete Field, the period commencing on the Closing Date and ending on
the tenth anniversary of the Closing Date; provided, however, that if, with respect to any therapeutic indication in the Non-Compete Field for which Purchaser is
Exploiting a Product designated as an “orphan drug” under the Orphan Drug Act and for which Purchaser receives, during such ten-year period, orphan drug exclusive
approval from the FDA, the Restricted Period with respect to such therapeutic indication shall end upon the later of (i) the tenth anniversary of the Closing Date and (ii)
expiration of the period of exclusive marketing under the Orphan Drug Act with respect to such Product.
“Right of Reference” shall mean the “right of reference or use” defined in 21 CFR 314.3(b), or its equivalents outside the United States, and shall in any event
include the right to allow the applicable Regulatory Authority in a country to have access to relevant information (by cross-reference, incorporation by reference or
otherwise) contained in Regulatory Materials and Regulatory Approvals (and any data contained or referenced therein).
“Royalties” shall have the meaning set forth in Section 3.4(a).
“Royalty Rates” shall have the meaning set forth in Section 3.4(a).
“Royalty Statement” shall have the meaning set forth in Section 3.5.
“Royalty Term” shall mean, on a country-by-country and Product-by-Product basis, the period commencing upon the first commercial sale of a Product in a
country and ending upon the earlier to occur of (a) the expiration of (i) the last Valid Claim of a Patent included in the Seller IP or the Background IP that Covers such
Product in such country or (ii) if applicable, the period of exclusive marketing under the Orphan Drug Act with respect to any Product designated as an “orphan drug”
under the Orphan Drug Act, whichever is later, or (b) fifteen (15) years after the first commercial sale of such Product in such country.
“Scheduled IP” shall have the meaning set forth in Section 4.7(a).
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“Seller Disclosure Schedules” shall have the meaning set forth in Section 1.2(f).
“Seller Indemnified Party” shall have the meaning set forth in Section 11.3.
“Seller IP” shall mean all IP Rights, whether registered or unregistered, granted or not, which are both (a) owned by Seller or an Affiliate and (b) either used
exclusively or held exclusively for use by Seller or an Affiliate in connection with the Exploitation of Products in the Field, with respect to (a)-(b), together with all rights
to sue or recover and retain damages, costs and attorneys’ fees for past, present and future infringement, misappropriation or other violation of any of such IP Rights.
“Seller IP” expressly includes the IP Rights set forth on Schedule 2.1(a).
“Seller” and “Sellers” shall have the meaning set forth in the preamble of this Agreement.
“Seller Unblocking License” shall have the meaning set forth in Section 8.3(a).
“Selling Affiliate” shall have the meaning set forth in Section 4.1.
“Successful Completion of a Pivotal Clinical Trial” shall mean that, for such Pivotal Clinical Trial, all primary endpoints set forth in the protocol for such Pivotal
Clinical Trial are met with statistical significance.
“Supply and Development Agreement” shall mean the supply and development agreement, to be entered into by Seller and Purchaser as of the Closing Date in the
form attached hereto as Exhibit C.
“Tax Return” shall mean any return, report, declaration, information return, statement or other document filed or required to be filed with any Taxing Authority in
connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax, including any attachment or schedule
thereto and including any amendments thereof.
“Taxes” shall mean all taxes, charges, duties, fees, levies or other assessments, including income, excise, real property and personal property, sales or use, value
added, profits, license, withholding (with respect to compensation or otherwise), payroll, employment, unemployment, disability, net worth, capital gains, transfer,
documentary, stamp, social security, environmental, occupation, and franchise, gross receipts, premium, escheat or unclaimed property obligation, ad valorem, alternative
or add-on minimum, custom duty, and estimated taxes, imposed by any Taxing Authority, and including any interest, penalties and additions attributable thereto, and all
amounts payable pursuant to an agreement or arrangement with respect to taxes or payable with respect to taxes as successor or transferee.
“Taxing Authority” shall mean any Governmental Entity exercising any authority to impose, regulate or administer the imposition of Taxes.
“Third Party” shall mean any Person other than Purchaser or Seller or their respective Affiliates.
“Third-Party Claim” shall have the meaning set forth in Section 11.4.
“Trademark Assignment” shall mean a Trademark assignment, substantially in the form of Exhibit D attached hereto, for all of the Trademarks included in the
Seller IP.
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“Trademarks” shall mean any and all trademarks, service marks, trade dress, logos, slogans, trade names and all other indicia of source or origin, including all
goodwill associated with or embodied by any of the foregoing throughout the world.
“Transfer Taxes” shall mean any federal, state, county, local, foreign or other sales, use, transfer, value added, conveyance, documentary transfer, stamp duty,
recording or other similar tax, fee or charge imposed in connection with the transactions contemplated by this Agreement or the recording of any sale, transfer or
assignment of property (or any interest therein) effected pursuant to this Agreement.
“Unblocking License” means the Seller Unblocking License or the Purchaser Unblocking License, as applicable.
“United States” or “U.S.” shall mean the United States of America and its territories, commonwealths and possessions.
“Valid Claim” shall mean a claim of any pending Patent application or any issued, unexpired United States or granted foreign Patent (a) that has not been
dedicated to the public, disclaimed, abandoned or held invalid or unenforceable by a court or other body of competent jurisdiction from which no further appeal can be
taken (b) that has not been explicitly disclaimed, or admitted in writing to be invalid or unenforceable or of a scope not covering a particular product or service through
reissue, disclaimer or otherwise, (c) that is being actively prosecuted, or (d) that has not been determined to be unallowable by the applicable Governmental Entity from
which no appeal is or can be taken.
Section 1.2. Other Definitional Provisions.
(a) The words “hereof,” “herein,” “hereto” and “hereunder” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.
(c) The terms “Dollars” and “$” shall mean lawful currency of the United States.
(d) The words “include,” “includes” and “including” and words of similar import will be by way of example rather than by limitation.
(e) Time periods based on a number of days within or following which any payment is to be made or act is to be done shall be calculated by excluding the day
on which the period commences and including the day on which the period ends and, if applicable, by extending the period to the next Business Day following if the last
day of the period is not a Business Day.
(f) When a reference is made in this Agreement to an Article, a Section, an Exhibit or a Schedule, such reference shall be to an Article or a Section of, or an
Exhibit or a Schedule to, this Agreement unless otherwise indicated. All references herein to a Schedule or Schedules, shall be to Sellers’ disclosure schedules delivered
by Seller contemporaneously with the execution and delivery of this Agreement (the “Seller Disclosure Schedules”).
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ARTICLE II.
PURCHASE AND SALE OF ASSETS
Section 2.1. Purchase and Sale of Assets. Upon the terms and subject to the conditions set forth herein, at the Closing, the Sellers and their Affiliates shall sell,
convey, assign and transfer to Purchaser, and Purchaser shall purchase, acquire and accept from the Sellers and their Affiliates, all of the Sellers’ and their Affiliates’ right,
title and interest in, to and under, in each case free and clear of all Encumbrances other than Permitted Encumbrances, (i) the Assigned Patents (including the right to
enforce such patents for activities that occurred prior to the Closing) and (ii) all assets owned by the Sellers and their Affiliates, and all Contracts to which any Seller or its
Affiliates are a party, in each case that are exclusively related to research, Development, manufacture or commercialization of Products in the Field ((i) and (ii)
collectively, the “Purchased Assets”), including:
(a) the Seller IP;
(b) all raw and summarized data, including clinical data, pre-clinical data, animal data, batch records, laboratory records and all other data and information, to
the extent exclusively related to research, Development, manufacture or commercialization of Products in the Field;
(c) all Regulatory Materials, including regulatory filings, approvals, documentation, correspondence, INDs, NDAs (including NDAs pursuant to Section 505(b)
(2) of the FD&C Act), orphan drug designations and other materials and all other permits, to the extent exclusively related to research, Development, manufacture or
commercialization of Products in the Field;
(d) all Contracts that are primarily related to the Products, including clinical trial agreements, in-licenses, out-licenses, inventor assignments, confidentiality
agreements and consulting agreements, including those listed on Schedule 2.1(d) (the “Assumed Contracts”); and
(e) the Purchased Inventory.
Section 2.2. Excluded Assets. Purchaser acknowledges and agrees that it is not acquiring any right, title or interest in, to or under any assets, property, rights and
interests of the Sellers or any of their Affiliates other than the Purchased Assets, including, for the avoidance of doubt, (a) those assets that relate generally to the
manufacturing business of the Sellers or any of their Affiliates and not specifically to the Products in the Field, (b) Know-How that is primarily related to the manufacture
of CBD and (c) Know-How that relates or pertains to any composition of matter that is not a Product (such assets collectively, the “Excluded Assets”).
Section 2.3 Assumed Liabilities. Upon the terms and subject to the conditions set forth herein, Purchaser shall, effective as of the Closing, assume, satisfy and
thereafter discharge all Liabilities of the Sellers arising after the Closing under the Assumed Contracts, other than any Liability in respect of (a) any breach of an Assumed
Contract prior to the Closing or (b) any indemnification obligation to the extent arising out of any act or omission by any Seller in connection with the ownership or
Exploitation by such Seller of the Purchased Assets prior to the Closing (collectively, the “Assumed Liabilities”).
Section 2.4 Excluded Liabilities. Seller acknowledges and agrees that Purchaser will not assume any Liability of either Seller or any of its Affiliates other than
the Assumed Liabilities (such Liabilities collectively, the “Excluded Liabilities”).
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Section 2.5 Product API DMFs. All Existing API DMFs shall be retained by the Seller, and Rights of Reference with respect to such Existing API DMFs shall
be granted to Purchaser pursuant to Section 8.5(a). All Future Product DMFs that are filed and maintained by Purchaser and that are related to the Products shall be owned
by Purchaser, and Rights of Reference with respect to such Future Product DMFs shall be granted to the Sellers pursuant to Section 8.5(b), provided that such Future
Product DMFs are (i) used only outside the Field and (ii) subject to the non-competition obligations set forth in Section 7.3. Purchaser’s Rights of Reference under all
such Existing API DMFs shall attach to and run with such Existing API DMFs as covenants and shall be obligations of and binding upon any successors, heirs,
purchasers, and assigns of Seller whether by law, equity, contract, or bankruptcy.
Section 2.6 Purchase Price. As consideration for the conveyance of the Purchased Assets the grant of licenses pursuant to this Agreement and subject to the
terms and conditions set forth in this Agreement, Purchaser shall (i) on the Closing Date deliver to the Sellers, in immediately available funds by wire transfer and in
accordance with written instructions given by Sellers to Purchaser reasonably in advance of the Closing, an amount equal to $12,500,000 (the “Purchase Price”), (ii) make
the payments described in ARTICLE III, if, as and when due and payable thereunder, and (iii) assume the Assumed Liabilities.
Section 2.7 Closing.
(a) The Closing shall take place remotely by the electronic exchange of documents on the second Business Day following the satisfaction of the conditions set
forth in ARTICLE IX that may be satisfied prior to Closing, or at such other place and on such other date as Purchaser and the Sellers may agree in writing, in each case,
subject to the satisfaction of the conditions set forth in ARTICLE IX. Except as otherwise provided in ARTICLE X, the failure to consummate the purchase and sale
provided for in this Agreement on the date and time and at the place specified herein will not relieve any Party to this Agreement of any obligation under this Agreement.
(b) At the Closing, each of Purchaser and the Sellers shall, as applicable, execute and deliver to each other the Ancillary Agreements, along with such other
instruments, certificates, and affidavits of title as Purchaser may reasonably request or as may be otherwise necessary to evidence the sale, assignment, transfer,
conveyance and delivery of the Purchased Assets to Purchaser and the other transactions contemplated by this Agreement and the Ancillary Agreements and to carry out
the obligations of the Parties hereunder and thereunder.
Section 2.8 Purchased Assets Not Transferred at Closing.
(a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign or transfer any Purchased Asset that
is not assignable or transferable without the consent of any Person, other than the Sellers, Purchaser or any of their respective Affiliates, to the extent that such consent
shall not have been given prior to the Closing; provided, however, that, subject to the satisfaction or waiver of the conditions contained in ARTICLE IX, the Closing shall
occur notwithstanding the foregoing without any adjustment to the Purchase Price on account thereof. The Sellers shall use their respective commercially reasonable
efforts to obtain, and Purchaser shall cooperate with the Sellers in connection therewith, all necessary consents to the assignment and transfer thereof; provided, however,
that neither of the Sellers shall be required to pay any consideration therefor.
(b) With respect to any Purchased Asset that is not transferred, licensed or assigned to Purchaser at the Closing by reason of Section 2.8(a) (the “Non-Assigned
Assets”), after the Closing and until any requisite consent is obtained and the foregoing is transferred and assigned to Purchaser, Seller shall, and shall cause its Affiliates
to, at Purchaser’s expense, to the extent practicable, provide to Purchaser the benefits thereof and shall enforce, at the request of and for the account of Purchaser, any
15
rights of the Sellers arising thereunder against any Person, including the right to elect to terminate in accordance with the terms thereof upon the request of Purchaser. To
the extent that Purchaser is provided with benefits of any Non-Assigned Asset, Purchaser shall perform, at the direction of the Sellers, the obligations of the Sellers
thereunder. Notwithstanding anything to the contrary set forth herein, to the extent that any Assumed Liability relates to any Non-Assigned Asset, such Assumed Liability
shall be deemed to be an Excluded Liability until such Non-Assigned Asset is transferred and assigned to Purchaser, at which point such Excluded Liability shall
automatically become an Assumed Liability and, except as otherwise provided in Section 2.3, Purchaser shall be solely responsible for all Liabilities of the Sellers arising
after the Closing under such Non-Assigned Asset to the extent Purchaser receives the benefits of such Non-Assigned Asset.
Section 2.9 Tax Matters.
(a) Any Transfer Taxes incurred in connection with this Agreement and the transactions contemplated hereby shall be borne [*]% by Purchaser and [*]% by the
Sellers. Purchaser and the Sellers shall cooperate in timely filing all Tax Returns as may be required to comply with the provisions of such Transfer Tax laws. All property
Taxes and assessments on the Purchased Assets for any taxable period commencing prior to the Closing Date and ending after the Closing Date shall be prorated on a per
diem basis between Purchaser and the Sellers as of the Closing Date.
(b) The conveyance of the Purchased Assets pursuant to this Agreement is intended by the Parties to constitute a sale of the Purchased Assets by the Sellers for
federal and state income tax purposes and all payments to be made by Purchaser hereunder, regardless of whether such payments are fixed or contingent on the use or
productivity of the Purchased Assets and regardless of whether such payments are denominated as “royalties”, including without limitation any payments pursuant to
Section 3.1, through Section 3.4 of the Agreement, are intended by the Parties to be treated for federal income tax purposes as payments in consideration for the sale by
the Sellers of the Purchased Assets. The Parties agree to report the conveyance of the Purchased Assets and all payments made under this Agreement for federal and state
income tax purposes in a manner consistent with the foregoing intent and no Party shall take any position on any income tax filing that is inconsistent with the foregoing.
(c) Within [*] days after the Closing Date, Purchaser shall prepare and deliver to the Sellers a statement allocating the purchase price and Assumed Liabilities in
accordance with the principles of Section 1060 of the Code (as finally determined pursuant to this Section 2.9(b), the “Allocation”). The Sellers shall have the right to
review and comment on the allocation provided by Purchaser, and the Parties shall work together in good faith to agree upon the Allocation. If the Parties are unable to
reach agreement regarding the Allocation, all unresolved items will be referred to the Independent Accounting Firm for resolution, the costs of which will be borne
equally by Purchaser, on the one hand, and the Sellers, on the other. The Parties each agree to (i) be bound by the Allocation, (ii) act in accordance with the Allocation in
the filing of all Tax Returns (including filing Form 8594 with its federal income Tax Return for the taxable year that includes the Closing Date) and (iii) take no position
inconsistent with the Allocation for all Tax purposes, provided that this shall not limit a Party’s ability to settle audits or other proceedings. In the event that any Taxing
Authority disputes the Allocation, the Sellers or Purchaser, as the case may be, shall promptly notify the other Party in writing of the nature of such dispute.
(d) Each Party shall cooperate, to the extent reasonably requested by any other Party, in connection with any Tax matters relating to the Purchased Assets
(including by the provision of reasonably relevant records or information). Notwithstanding the foregoing, no Party shall have an obligation to provide any copies of its
consolidated, combined or unitary Tax Returns to the other Party.
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(e) The Sellers shall cause all Tax sharing or allocation agreements or arrangements and all powers of attorney with respect to the Purchased Assets to be
terminated as of the Closing such that, after the Closing, Purchaser will not be bound thereby or have any liability thereunder.
(f) Where required by applicable Laws, Purchaser shall have the right to withhold applicable Taxes from any payments to be made by Purchaser to the Sellers
pursuant to this Agreement; provided that, to the extent allowed by applicable Laws, prior to such withholding, Purchaser shall give written notice of its intention to
withhold and allow the Sellers sufficient time to furnish any documentation or forms to the applicable Governmental Entity to minimize or eliminate such withholding.
Where applicable, Purchaser shall provide the Sellers with receipts from the appropriate taxing authority for all payments of Taxes withheld and paid by Purchaser to such
authorities on behalf of the Sellers. To the extent that any such amounts are so deducted and withheld, such amounts shall be treated for all purposes of this Agreement as
having been paid to the Sellers.
Section 2.10 Wrong Pockets. In the event that, after the Closing, it is discovered that (a) Purchaser or its Affiliate is the owner of, receives or otherwise comes to
possess any Excluded Asset or (b) the Sellers or any of their Affiliates is the owner of, receives or otherwise comes to possess any Purchased Asset, such Party shall, or
shall cause its Affiliates to, use commercially reasonable best efforts to convey such asset, at no cost, to the Party so entitled thereto in accordance with this Agreement,
and the entitled Party shall accept such asset.
ARTICLE III.
EARNOUTS, ROYALTIES AND OTHER FINANCIAL OBLIGATIONS
Section 3.1. Earnout Payments.
(a) Annual Net Sales Earnout Payments. Upon the attainment of certain annual Net Sales thresholds by Purchaser, its Affiliates or its licensees or sublicensees in
a given Calendar Year (the “Annual Net Sales Thresholds”), Purchaser shall make certain earnout payments to Fresh Cut or its designee (the “Net Sales Earnout
Payments”). Such Annual Net Sales Thresholds and the corresponding Net Sales Earnout Payments are set forth in Table 1 below:
#
(1)
(2)
(3)
Calendar Year Net Sales Threshold
Net Sales Earnout Payment
TABLE 1
$[*]
$[*]
$[*]
$[*]
$[*]
$[*]
Each of the Net Sales Earnout Payments set forth above in Table 1 is payable only once. Purchaser shall provide Fresh Cut or its designee with written notice of the
achievement of any Annual Net Sales Threshold on or prior to April 30 of the Calendar Year following the Calendar Year during which the applicable Annual Net Sales
Threshold was met and shall make the applicable payment within [*] days thereafter. Each Net Sales Earnout Payment shall be made by wire transfer of immediately
available funds into an account designated by Fresh Cut or its designee reasonably in advance of the due date of the payment.
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(b) Development Earnout Payments. Upon the attainment of certain milestones by Purchaser, its Affiliates or its licensees or sublicensees (the “Development
Milestones”), Purchaser shall make certain earnout payments to Fresh Cut or its designee (the “Development Earnout Payments”). Such Development Milestones and the
corresponding Development Earnout Payments are set forth in Table 2 below.
TABLE 2
#
(1)
(2)
Development Milestone
[*]
[*]
Development Earnout Payment
$5,000,000
$10,000,000
Each of the Development Earnout Payments set forth above in Table 2 is payable only once with respect to each of the first four indications for which a Product is
developed and will be paid within 45 days of the achievement of the applicable Development Milestone. Notwithstanding the foregoing, for the first indication for which
a Product is developed, in lieu of the payment described in Item 1 of Table 2 above, Purchaser shall pay $[*] following [*] and $[*] upon [*], subject to the same
procedural requirements with respect to payment as set forth in the preceding sentence. The maximum aggregate amount payable by Purchaser in respect of the
Development Milestones shall be $60,000,000.
Section 3.2. Commitment Royalty. Purchaser shall use Commercially Reasonable Efforts to commence a Pivotal Clinical Trial within [*] months following
Closing. Unless commencement of a Pivotal Clinical Trial is prohibited or delayed by the FDA (for example, through the imposition of a clinical hold or a requirement to
conduct unanticipated additional non-clinical studies) notwithstanding Purchaser’s Commercially Reasonable Efforts (the term of any such prohibition, the “Hold
Period”), if the first patient in a Pivotal Clinical Trial for a Product for any indication is not dosed within [*] months following Closing, then, commencing in the [*]
month following Closing, Purchaser shall pay to Fresh Cut or its designee a commitment royalty of $[*] per month until the first patient in such Pivotal Clinical Trial is
dosed, with each such payment due and payable on the last day of the month (commencing on the last day of the [*] month following Closing). Notwithstanding the
foregoing, (a) the [*]-month time period described in the first sentence of this Section 3.2 shall be extended by the length of time that Purchaser’s development of a
Product is delayed as a result of any Failure to Supply (as defined in the Supply and Development Agreement) or any Hold Period and (b) Purchaser’s obligation to make
any payments pursuant to this Section 3.2 shall terminate in the event (i) of a Major Failure to Supply (as defined in the Supply and Development Agreement) if, as of the
occurrence of such Major Failure to Supply, there has not been a Technology Transfer (as defined in the Supply and Development Agreement) that has enabled the supply
of Products to Purchaser (or its Affiliates, licensees or sublicensees) by a third party contractor as a second supplier of Products, or (ii) that Purchaser determines to cease
development of all Products due to safety or efficacy issues, as determined by Purchaser in good faith in its sole discretion.
Section 3.3 Licensing Revenue.
(a) During the Royalty Term, Purchaser will pay to Fresh Cut or its designee [*]% of all Licensing Revenue (or the allocable portion of Licensing Revenue
determined in accordance with Section 3.3(b)) actually received by Purchaser or its Affiliates. Such amounts shall be paid on a Calendar Quarterly basis concurrent with
the payment of the Royalties.
(b) To the extent any amounts of Licensing Revenues are received by or payable to Purchaser or any of its Affiliates from any Third Party in consideration for a
license of Purchaser’s rights
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in, to or under the Seller IP, Background IP or Purchased Assets in connection with (i) the Exploitation of Products outside of the United States in connection with a grant
of rights that applies to the United States and countries outside of the United States or (ii) a grant of rights to Seller IP, Background IP or Purchased Assets as well as other
IP Rights controlled by Purchaser that are related to the Products and to products other than the Products, then with respect to the foregoing clause (i), such amounts shall
be reasonably allocated by agreement of the Parties such that Licensing Revenues does not include the portion attributable to the Exploitation of Products in the United
States, and with respect to the foregoing clause (ii), such amounts shall be reasonably allocated by agreement of the Parties such that Licensing Revenues does not include
the portion attributable to such other IP Rights controlled by Purchaser that are related to the Products and to products other than the Products. If the Parties do not agree
on the allocation of Licensing Revenue in a particular case, then, upon written notice by either Party to the other, such dispute may be submitted for resolution pursuant,
mutatis mutandis, to Section 3.7. Neither Party shall be deemed in breach of this Agreement by reason of a failure to agree on such allocation (or with respect to
Purchaser, to pay any portion of the disputed allocation); provided that, in the case of Purchaser, it has paid the undisputed portion of such allocation and, following
resolution pursuant, mutatis mutandis, to Section 3.7 promptly pays any amount determined to be due thereunder.
Section 3.4 Royalties.
(a) Royalty Payments. During the Royalty Term, and pursuant to Section 3.5, Purchaser will pay to Fresh Cut or its designee, on a Product-by-Product basis,
royalties (the “Royalties”) on worldwide Net Sales of Products during the Royalty Term (as determined on a country-by-country and Product-by-Product basis) at the
rates (“Royalty Rates”) set forth in Table 3 below:
Annual Net Sales of Products in a Country
TABLE 3
Portion of Net Sales of such Product that is less than or equal to $[*]
Portion of Net Sales of such Product that is greater than $[*] and less than or equal to $[*]
Portion of Net Sales of such Product that is greater than $[*]
Rate
[*]%
[*]%
[*]%
For the avoidance of doubt, with respect to sales of Products by any Person other than Purchaser or its Affiliates, Royalties will be due only on Net Sales of Products by
such Person in the United States.
(b) Reductions.
(i) In the event that Purchaser identifies any IP Right owned or controlled by a Third Party that absent a license or agreement with such Third Party, (I)
would be infringed by Exploiting a Product in the Field in a territory or (II) that it is otherwise necessary for Purchaser to obtain a license to such IP Right in order to
Exploit the Products in such territory ((I) and (II) together (“Blocking IP”), Purchaser may enter into an agreement with a Third Party to acquire or obtain such Blocking
IP outright or acquire or obtain a license, covenant not to sue or other similar right to such Blocking IP. If Purchaser enters into such agreement, Purchaser will be entitled
to deduct from any Royalties due to Purchaser hereunder with respect to Net Sales in such territory, [*]% of royalties or any other amounts paid to such Third Party in
respect of such agreement.
(ii) If, with respect to any Product in any territory, a Generic Product is available in such territory and gross amounts invoiced or otherwise billed by
Purchaser or its Affiliates with respect to sales of such Product to Third Parties in such territory (“Gross Sales”) decrease by [*]% or more during any Calendar Year
following the first sale of any such Generic Product in such territory, as compared to
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Gross Sales with respect to such Product in such territory during the last full Calendar Year immediately preceding the first sale of any such Generic Product in such
territory, then Net Sales in such territory shall be reduced by [*]% for purposes of determining Royalties hereunder.
(iii) On a Product-by-Product and territory-by-territory basis, if, during the Royalty Term with respect to such Product in such territory, there is no Valid
Claim of a Patent that is included in the Seller IP or the Background IP that Covers such Product in such territory and, with respect to the Exploitation of such Product in
the United States, such Product either is not designated as an “orphan drug” under the Orphan Drug Act or the period of exclusive marketing under the Orphan Drug Act
has expired, then Net Sales related to such Product in such territory shall be reduced by [*]% for purposes of determining Royalties hereunder.
(iv) Notwithstanding the foregoing, in no event shall the aggregate amount of Royalties payable to Fresh Cut hereunder be reduced by more than [*]%,
on a Product-by-Product and territory-by-territory basis, in any Calendar Quarter as a result of the adjustments described in Section 3.4(b)(i), Section 3.4(b)(ii) and
Section 3.4(b)(iii); provided, further, that any deductions in excess of [*]% may be carried forward to reduce subsequent Royalties payable hereunder until all such
amounts are fully deducted.
(c) Acknowledgement. The Parties acknowledge that payments under this ARTICLE III are made in consideration of the sale and delivery of the Purchased
Assets (including the Seller IP and other assets) and the license granted hereunder with respect to Background Patents and Background Know-How.
Section 3.5. Payment. On or prior to the [*]th day following the end of each Calendar Quarter during the Royalty Term, Purchaser shall deliver to Fresh Cut a
written report detailing the Royalties earned by Fresh Cut during the preceding Calendar Quarter and Licensing Revenue received by Purchaser during such Calendar
Quarter. Such report will include, on a Product-by-Product and country-by-country basis, (a) the aggregate gross sales of each Product during such Calendar Quarter, (b)
Net Sales of each Product during such Calendar Quarter, (c) deductions taken from gross sales (by category as set forth in the definition of Net Sales) to arrive at the Net
Sales calculation, provided that, in the case of Net Sales by a licensee of Purchaser, that such information is provided to Purchaser by any such third party licensee, (d) the
Royalty Rates applied, (e) the amount of Royalties payable with respect to such Net Sales and (f) the amount of Licensing Revenue received by Purchaser during such
Calendar Quarter (each, a “Royalty Statement”). Each such report shall be accompanied by payment of the aggregate amount due to Fresh Cut pursuant to Section 3.3 and
Section 3.4 in United States Dollars by wire transfer to an account designated in writing by Fresh Cut to Purchaser reasonably in advance of the due date of the payment.
In the event that no Royalties and no portion of Licensing Revenue are payable following the end of a given Calendar Quarter during the Royalty Term, the Royalty
Statement shall so state that this is the case.
Section 3.6. Record Keeping. Purchaser shall keep and shall cause its Affiliates and sublicensees to keep books and accounts of record in connection with the
sale of Products in sufficient detail to permit accurate determination of all figures necessary for verification of Royalties, Net Sales Earnout Payments, Licensing Revenue
payments and other amounts to be paid hereunder. Purchaser shall maintain, and cause its Affiliates and sublicensees to maintain, such records for a period of at least [*]
([*]) years after the end of the Calendar Year in which they were generated.
Section 3.7. Audit Rights.
(a) Fresh Cut may engage, at its own cost and expense, subject to this Section 3.7, an Independent Accounting Firm to conduct an audit of Purchaser (or, if
applicable, its Affiliates or
20
sublicensees) for the sole purpose of confirming the amount of Royalties and the portion of Licensing Revenue due to Fresh Cut pursuant to the provisions of this
Agreement.
(b) Not later than [*] days following Fresh Cut’s request of an audit pursuant to this Section 3.7, Purchaser shall afford, or cause its Affiliates or sublicensees to
afford, the Independent Accounting Firm access to and an opportunity to examine the pertinent books and records of Purchaser or, if applicable, its Affiliates or
sublicensees, as it reasonably requests, during regular business hours, subject to such Independent Accounting Firm executing and delivering to Purchaser a reasonable
confidentiality agreement.
(c) Each of Fresh Cut and Purchaser will be entitled to receive (substantially simultaneously) a full written report of the Independent Accounting Firm with
respect to its findings directly from the Independent Accounting Firm. Within [*] Business Days after completion of the Independent Accounting Firm’s audit, Purchaser
will pay to Fresh Cut any deficiency in the Royalty amount or portion of Licensing Revenue determined by the Independent Accounting Firm. If the report of the
Independent Accounting Firm shows that Purchaser overpaid, then Purchaser will be entitled to off-set such overpayment against any Royalties or portion of Licensing
Revenue then owed to Fresh Cut or against any amount subsequently owed to Fresh Cut. If the report of the Independent Accounting Firm shows a discrepancy between
the amount of the Royalty or portion of Licensing Revenues to which Fresh Cut is entitled and the Royalty amount or portion of Licensing Revenues reflected by
Purchaser in the Royalty Statement in Fresh Cut’s favor, then in addition to the payment of the shortfall in the Royalty amount or portion of Licensing Revenue, and if
such discrepancy exceeds [*]% of the Royalty amount or portion of Licensing Revenues, as applicable, payable with respect to the period covered by the audit, then the
fees and expenses of the Independent Accounting Firm in performing such audit will be paid by Purchaser.
(d) Fresh Cut’s exercise of its audit rights under this Section 3.7 may not (A) be conducted for any Calendar Quarter more than [*] ([*]) years after the end of
such Calendar Quarter to which such books and records pertain, (B) be conducted more than once in any twelve (12) month period (unless a previous audit during such
twelve (12) month period revealed a material underpayment with respect to such period), or (C) be repeated for any Calendar Quarter.
Section 3.8. Late Payments. Any payments due under this Agreement shall be due on such date as specified in this Agreement or, in the event such date is not a
Business Day, then the next succeeding Business Day. In the event that any payment due under this Agreement is not made when due, unless there is a good faith dispute
between the Parties as to the payment, the amount due shall accrue interest beginning on the Business Day following the date on which such payment was due, calculated
at the annual rate equal to the prime interest rate reported in the Wall Street Journal for the due date plus [*]%, calculated from the due date until paid in full. Each
payment made after the due date shall be accompanied by all interest so accrued. Notwithstanding the foregoing, a Party shall have recourse to any other remedy available
at law or in equity with respect to any delinquent payment, subject to the terms of this Agreement.
ARTICLE IV.
The Sellers, jointly and severally, hereby represent and warrant as of the date of this Agreement to Purchaser as follows:
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Section 4.1. Organization and Good Standing. Benuvia is a corporation duly organized, validly existing and in good standing under the Laws of the State of
Delaware. Fresh Cut is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of
21
Delaware. Sellers’ Affiliates who own Purchased Assets (each, a “Selling Affiliate”) are duly organized, validly existing and in good standing under the laws of their
respective jurisdiction of organization. Each Seller and each Selling Affiliate is duly qualified or licensed to do business and is in good standing in each jurisdiction in
which the nature or conduct of its business or the ownership, leasing or operation of its properties or assets requires it to be so qualified, licensed or in good standing,
except where the failure to be so qualified, licensed or in good standing would not have a Material Adverse Effect.
Section 4.2. Authority. Each Seller and each Selling Affiliate has all power and authority to own and operate their respective properties and assets, and to carry
on its business as it is now being conducted. Each Seller has all power and authority to execute and deliver this Agreement and the Ancillary Agreements and to perform
its obligations hereunder and thereunder. The execution and delivery by each Seller of this Agreement and the Ancillary Agreements to which such Seller is a party and
the performance by each Seller of its obligations hereunder and thereunder have been duly authorized by all requisite corporate or other similar action on the part of such
Seller. This Agreement has been, and each Ancillary Agreement to be executed on the Closing Date will be, duly executed and delivered by each Seller, as applicable,
and, assuming the valid execution and delivery by Purchaser, constitute a legal, valid and binding obligation of each Seller, as applicable, enforceable against each Seller,
as applicable, in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
Section 4.3. No Conflict. The execution, delivery and performance by each Seller and each Selling Affiliate of this Agreement and each of the Ancillary
Agreements and the consummation of the transactions contemplated hereby and thereby, do not and will not (a) violate any provision of the by-laws or limited liability
company operating agreement of such Seller or such Selling Affiliate; (b) except as set forth in Schedule 4.3, require any action by (including any authorization, consent
or approval) or in respect of (including notice to), any Person under any Assumed Contract; (c) violate or conflict with, or result in a breach of, constitute a default under,
or create rights of acceleration, termination or cancellation under any Assumed Contract; or (d) result in the creation or imposition of a material Encumbrance (other than
Permitted Encumbrances) upon, or the forfeiture of, any Purchased Asset; or (e) violate, in any material respect, or result in a material breach of or constitute a material
default under any Law or other restriction of any Governmental Entity to which either Seller or any Selling Affiliate is subject.
Section 4.4. Required Filings and Consents. The execution and delivery of this Agreement by the Sellers and each Selling Affiliate, if any and as applicable, and
the consummation of the transactions contemplated hereby, do not require any consents, approvals, notices or filings with any Governmental Entities.
Section 4.5. Purchased Assets. The Sellers have good, valid and marketable title to all the Purchased Assets free and clear of all Encumbrances other than
Permitted Encumbrances.
Section 4.6. Contracts. Schedule 2.1(d) identifies all of the Assumed Contracts. The Sellers have delivered to Purchaser a true, correct and complete copy of
each Assumed Contract, as amended. Each Assumed Contract is, in all material respects in full force and effect and is a legal, valid and binding agreement of the Seller or
Seller Affiliate that is party thereto and, to the Knowledge of Seller, is a legal, valid and binding agreement of each other party thereto, enforceable against the applicable
Seller or Seller Affiliate and each other party thereto in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity). The Sellers and any applicable Seller Affiliates have performed or are performing all material obligations required to be performed by them under the Assumed
Contracts and neither Seller or any applicable Seller Affiliate is in material breach or default thereunder. To the Knowledge of Seller, no other party to any of the Assumed
Contracts is in material breach or default
22
thereunder, and no event has occurred which, with or without notice, lapse of time, or both, would constitute a material default under the provisions of such Assumed
Contract or would give to others any right of termination, amendment or cancellation of any Assumed Contract.
Section 4.7. Intellectual Property.
(a) Schedule 4.7(a) sets forth an accurate, correct and complete list of (i) all Assigned Patents, (ii) all IP Rights included in the Seller IP and (iii) all IP Rights
included in the Background IP, respectively, that are registered to the Sellers, their Affiliates or any other Person according to the records of any Governmental Entity or
for which an application for issuance or registration has been filed with a Governmental Entity, in each case, indicating for each item (as applicable) the registration or
application numbers, the filing, registration or issue dates, the applicable filing jurisdiction(s), titles and owners (the “Scheduled IP”). Fresh Cut owns the entire right, title
and interest in, under and to the Scheduled IP, free and clear of any Encumbrances other than Permitted Encumbrances. All such Scheduled IP is registered and recorded
in the name of Fresh Cut except where the failure to be so registered or recorded would not have a Material Adverse Effect. The Sellers or their Affiliates have good and
sufficient title to all Seller IP and, as of the Closing, all Seller IP shall be fully transferable to Purchaser, without restriction and without payment (other than as set forth in
this Agreement) of any kind to any Person.
(b) To the Knowledge of Seller, the Scheduled IP is valid, enforceable, subsisting and in full force and effect. With respect to Scheduled IP, neither Seller nor its
Affiliates, as applicable, have taken nor failed to take any action that reasonably would be expected to result in the abandonment, cancellation, forfeiture, relinquishment,
invalidity or unenforceability of any of such Scheduled IP. The docket attached as Schedule 4.7(b) is the complete docket for all actions that must be taken within the 6
months following the Closing to maintain the registered IP Rights included in the Seller IP in full force and effect. Schedule 4.7(b) also includes the names, street
addresses, telephone numbers, and e-mail addresses of each outside counsel responsible, as of the Closing, for each item of registered IP Rights included in the Seller IP.
(c) Schedule 4.7(c) lists (i) all Assumed Contracts that restrict either Sellers’ or its Affiliates’ use, transfer, delivery or licensing of any material Seller IP, (ii) all
Assumed Contracts involving the licensing of any material Seller IP to a Third Party and (iii) all contracts pursuant to which either Seller or its Affiliates have licensed
any IP Rights included in the Background IP to or from a Third Party (collectively, the “IP Contracts”). As of the date hereof, the Sellers have provided Purchaser with
access to true and complete copies of all IP Contracts. Except as set forth in Schedule 4.7(c), each IP Contract is a valid and binding agreement of the Seller party thereto
or its Affiliates, as applicable, enforceable against such Seller or its Affiliates in accordance with its terms. Neither of the Sellers nor their Affiliates are, or have received
any written notice that any other party is, in default or breach in any material respect under and, to the Knowledge of Seller, there has not occurred, and neither of the
Sellers nor their Affiliates have received any written notice that there has occurred or alleging the occurrence of, any event that with or without the lapse of time or the
giving of notice or both would constitute, or would reasonably be expected to constitute, such a material default or breach under, or give to others any right of rescission,
acceleration, termination or cancellation of any IP Contract or result in the creation of an Encumbrance (other than a Permitted Encumbrance) upon any Seller IP or any
Encumbrance on the Background IP that conflicts with or would limit the rights granted thereunder to Purchaser. The Sellers do not own or have rights to any IP Rights
that would, but for any restrictions on the Sellers’ ability to grant a license thereunder to Purchaser in accordance with Section 8.3, constitute Background IP. There are no
outstanding or threatened disputes with respect to any IP Contract.
(d) Since November 1, 2019 each Person that has been involved in or contributed to the conception, creation, invention, discovery, reduction to practice or
development of any material Seller IP or Background IP owned by the Sellers or their Affiliates have executed a valid written agreement assigning and transferring all
right, title and interest to a Seller or an Affiliate, as applicable, and such assignments have been recorded where recording is available, except where the failure to be so
recorded
23
would not have a Material Adverse Effect. Since November 1, 2019, each Person that has been involved in or contributed to the conception, creation, invention, discovery,
reduction to practice or development of any material Seller IP or Background IP owned by Seller or its Affiliates has executed a valid written agreement to cooperate with
and assist the Sellers or their Affiliates, as applicable, in the prosecution and enforcement of such Seller IP and Background IP. No current or former employee, officer,
director, consultant or independent contractor of either Seller or its Affiliates owns, or has claimed in a writing addressed to either Seller or its Affiliates, any rights in any
material Seller IP or Background IP claimed to be owned by the Sellers or their Affiliates. The Sellers have taken commercially reasonable measures to protect and
safeguard the proprietary nature of the Seller IP and Background IP and to maintain in confidence all material Know-How that is included in the Seller IP and Background
IP. With respect to material Know-How included in Seller IP or Background IP, neither of the Sellers nor their Affiliates have disclosed or authorized the disclosure of
such Know-How to any Third Party not subject to written confidentiality obligations to a Seller or its Affiliates, as applicable, and to the Knowledge of Seller, no party
subject to such confidentiality obligations is in breach or default thereof. To the Knowledge of Seller, there have been no violations of any confidentiality or assignment
agreement relating to the Seller IP or Background IP or any unauthorized disclosure of any material Know-How that is included in the Seller IP or Background IP.
(e) To the Knowledge of Seller, the Exploitation by Purchaser of the Products (including the Seller IP and Background IP rights contained therein or embodied
thereby) in the Field does not, and following commercialization would not reasonably be expected to, misappropriate, infringe, dilute or otherwise violate any Third
Party’s IP Rights. To the Knowledge of Seller, no Person has misappropriated, infringed, diluted, or otherwise violated, either directly or indirectly, any material Seller IP
or Background IP, and neither of the Sellers nor their Affiliates have brought or threatened to bring any claim, suit, or proceeding against any Person alleging any such
misappropriation, infringement, dilution or violation.
(f) Neither of the Sellers nor their Affiliates have been notified of any interference, reissue, reexamination, opposition, derivation proceeding, protest, public use
proceeding, observations, submission of references or other proceedings before the United States Patent and Trademark Office (USPTO) or the European Patent Office
(EPO) and, to the Knowledge of Seller, there are no such proceedings or actions pending before any other Governmental Entity anywhere in the world related to any of
the Scheduled IP. Seller is not undertaking any interference, reissue, reexamination, opposition or derivation proceeding, or other post-grant proceeding, with respect to IP
Rights of any Third Party that would be infringed by the manufacture, use, offer for sale, sale, or import of any Product.
(g) Since November 1, 2019, there has not been any claim, suit or proceeding asserted or threatened in writing or, to the Knowledge of Seller, orally, including
in the form of an offer or invitation to obtain a license, against either Seller or its Affiliates relating to the Seller IP or Background IP (i) alleging misappropriation,
infringement, dilution, or other violation of any Person’s IP Rights, (ii) challenging either Sellers’ or its Affiliates’ ownership of, right, title, or interest in, under or to, use
of, or the registrability or maintenance of, any Seller IP or Background IP, (iii) adversely affecting the ownership rights of either Seller or its Affiliates in, under, or to any
Seller IP, (iv) challenging the validity or enforceability of any Seller IP or Background IP and, to the Knowledge of Seller, there is no basis for any such claim, suit or
proceeding, (v) alleging that either Seller or its Affiliates is in breach of any applicable grant, license, agreement, instrument, or other arrangement pursuant to which
either Seller or its Affiliates acquired the right to use such Seller IP or Background IP, or (vi) alleging misuse or antitrust violations arising from the use or other
Exploitation by the Sellers or their Affiliates of any Seller IP or Background IP, in each case, that would result in material liability to the Sellers or their Affiliates. To the
Knowledge of Seller, no material Seller IP or Background IP has been or is being used or enforced by the Sellers or their Affiliates in a manner that, individually or in the
aggregate, is reasonably likely to result in the cancellation, invalidity, or unenforceability of such material Seller IP or Background IP.
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(h) Neither of the Sellers nor their Affiliates have granted any Person any right to control the prosecution or registration of any Seller IP or Background IP or to
bring, defend, or otherwise control any Litigation with respect to any Seller IP or Background IP. Neither of the Sellers nor their Affiliates have entered into, or is subject
to, any consents, indemnifications, forbearances to sue, licenses or other arrangements in connection with the resolution of any disputes or Litigation that (i) restrict either
Seller or its Affiliates with respect to the use, registration or maintenance of any Seller IP or Background IP or (ii) permit any Person to use any Seller IP or Background
IP.
(i) Since November 1, 2019, no funding, facilities or personnel of any Governmental Entity were used, directly or indirectly, to develop or create, in whole or in
part, any Seller IP or Background IP. No current or former partner, director, stockholder, officer, contractor or employee of either Seller or its Affiliates will, after giving
effect to the transactions contemplated by this Agreement, own or retain any rights to use any of the Seller IP or Background IP.
(j) To the Knowledge of Seller, all of those who owe any duty of candor, disclosure and good faith to the U.S. Patent and Trademark Office with respect to the
Patents within the Seller IP and Background IP owned by the Sellers or their Affiliates have fully complied with such duties with respect to such Patents under all
applicable Laws, including 37 C.F.R. § 1.56.
Section 4.8. Inventory. All of the Purchased Inventory is set forth on Schedule 4.8.
Section 4.9. Compliance with Laws; Regulatory Compliance.
(a) The Exploitation by the Sellers of the Products and the ownership by the Sellers of the Purchased Assets have been, since November 1, 2019, in compliance
with all applicable Laws, including Regulatory Laws. Since November 1, 2019, neither of the Sellers has received any written communication from a Governmental
Entity that alleges that either Seller or a Seller Affiliate is not in compliance in any material respect with any Law or Order with respect to their respective Exploitation of
the Products or ownership of the Purchased Assets.
(b) To the extent the Sellers or their Affiliates have Exploited the Products, the Sellers and their Affiliates, as applicable, have, and have had, all Product
Registrations necessary for such Exploitation of the Products, and each of such Product Registrations, if any, is valid and in full force and effect. Since November 1, 2019,
there has occurred no violation by either Seller or any Seller Affiliate of, default (with or without notice or lapse of time or both) by either Seller or any Seller Affiliate
under, or event giving to others any right of termination, suspension, revocation, material modification or cancellation of, with or without notice or lapse of time or both,
any Product Registrations. Seller and its Affiliates are, and have been, in compliance with the terms of all Product Registrations and the consummation of this Agreement,
in and of itself, will not cause the revocation or cancellation of any Product Registrations pursuant to the terms of any such Product Registrations.
(c) Since November 1, 2019, all Products that are subject to the jurisdiction of the FDA, DEA, or any other Regulatory Authority are being manufactured,
imported, exported, processed, developed, labeled, stored, tested, marketed, advertised, promoted, and distributed by Seller and any Seller Affiliate in compliance with all
applicable requirements under any Product Registrations or Laws administered or enforced by the FDA, DEA or any other applicable Regulatory Authority.
(d) There has not been any claim of which either Seller or a Seller Affiliate has received notice, suit, action, subpoena, demand, investigation, indictment,
administrative proceedings, hearing, arbitration, alternative dispute resolution or other legal proceeding (whether sounding in contract, tort or otherwise, whether civil or
criminal and whether brought at law or in equity) (“Litigation”) pending or
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threatened against either Seller or an Affiliate relating to the Products or the Purchased Assets, including by a Governmental Entity or Third Party with regard to any
Regulatory Laws.
(e) Each Seller and each Seller Affiliate has timely filed all material reports, statements, documents, registrations, filings, amendments, supplements and
submissions required to be filed by it with respect to the Products and the Purchased Assets under applicable Regulatory Laws. Each such filing was, in all material
respects, true, complete and correct as of the date of submission, and any material and legally necessary or required updates, changes, corrections, amendments,
supplements or modifications to such filings have been submitted to the applicable Governmental Entity.
(f) Neither Seller nor any Seller Affiliate has provided false or misleading information or made any significant omission in any applications or other submission
to any Regulatory Authority with respect to the Products or Purchased Assets. Neither Seller nor any Seller Affiliate is aware of any payment, gratuity or other thing of
value provided by the Sellers or any of their Affiliates respective agents that is prohibited by any applicable Laws, such as to a government official.
(g) Neither Seller nor any Seller Affiliate has, regarding or related to any of the Products or the Purchased Assets, (i) received any Form FDA-483, notice of
adverse finding, FDA warning letters, notice of violation or “untitled letters,” notice of FDA action for import detentions or refusals, or any other written correspondence
from the FDA or been subject to any action, notice, warning, administrative proceeding, review or investigation by a Regulatory Authority that alleges or asserts that
either Seller or a Seller Affiliate has violated any applicable Regulatory Laws or (ii) been a party to any corporate integrity agreement, deferred prosecution agreement,
consent decree, monitoring agreement, settlement agreement or other similar agreement or Order mandating or prohibiting future or past activities.
(h) The studies, tests, and preclinical and clinical trials conducted by or on behalf of the Sellers or their Affiliates, or in collaboration with other institutions, in
connection with any of the Products or the Purchased Assets have been, and if still ongoing are being, conducted in compliance with experimental protocols, procedures,
and controls pursuant to accepted professional scientific standards and all authorizations and applicable Regulatory Laws, including Good Laboratory Practices and Good
Clinical Practices. The descriptions of the results of such studies, tests and trials contained in any Regulatory Materials submitted by Sellers or any of their Affiliates to
Regulatory Authorities since November 1, 2019 are accurate and complete in all material respects and fairly present the data derived from such studies, tests and trials.
Since November 1, 2019, no such studies, tests, and trials have been terminated or suspended prior to completion for safety or other non-business reasons, and neither the
FDA nor any other applicable Regulatory Authority, clinical investigator that has participated or is participating in, or institutional review board that has or has had
jurisdiction over, such studies, tests and trials has commenced, or threatened to initiate, any action to place a clinical hold order on, or otherwise terminate, delay or
suspend, any such ongoing studies, tests or trials conducted by or on behalf of Seller and its Affiliates, or in collaboration with other institutions.
(i) The manufacturing operations conducted by or on behalf of Seller and its Affiliates with respect to the Products have been, and currently are, conducted in
compliance with applicable Regulatory Laws, including Good Manufacturing Practices and similar federal, state, local or foreign requirements for the manufacture of the
Products.
(j) Seller and its Affiliates are, and since November 1, 2019 have been, in compliance with the Controlled Substances Act, the regulations of the DEA, and all
other analogous Laws of any Governmental Entity. No Products manufactured by or on behalf of the Sellers contain the Cannabis sativa plant or any part of that plant,
including its seeds and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, meet the definition of “hemp” in section 297A of the
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Agricultural Marketing Act of 1946, as amended by the Agriculture Improvement Act of 2018, and otherwise comply in all material respects with the Agriculture
Improvement Act of 2018.
(k) Since November 1, 2019, neither Seller nor any Seller Affiliate 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 any other Regulatory Authority to invoke its policy with respect to “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities,” or similar policies, set forth in any applicable Laws. Neither Seller, a Seller Affiliate, nor any officer, employee or, to the Knowledge of
Seller, agent of Seller or a Seller Affiliate, in each case who has been materially involved in the Exploitation of the Products (i) has been convicted of any crime or
engaged in any conduct in the operation of Sellers’ business that has resulted, or would reasonably be expected to result, in debarment under 21 U.S.C. § 335a or any
similar applicable Laws,; (ii) has been convicted of any crime or engaged in any conduct that has caused, or would reasonably be expected to cause, Seller to be excluded,
suspended or debarred from participating in any federal or individual state health care programs, including but not limited to the federal health care programs defined
under Section 1128 of the Social Security Act of 1935, as amended, or any similar applicable Laws; or (iii) is subject to an investigation or proceeding by any Regulatory
Authority that could result in such a suspension, exclusion or debarment, and there are no facts, to the Knowledge of Seller, that would reasonably be expected to give rise
to such suspension, exclusion or debarment.
(l) Neither Seller nor any Seller Affiliate of the Sellers has, in connection with its Exploitation of a Product, conducted any business or engaged in any
transaction or dealing with any Person with whom transactions were, at the time of such transaction, prohibited as to U.S. Persons by any applicable sanctions Laws
administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), including persons appearing on the List of Specially Designated Nationals
and Blocked Persons published by OFAC.
Section 4.10. Brokers. No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Sellers.
Section 4.11. Taxes.
(a) All Taxes required to be paid with respect to the Purchased Assets have been timely paid in full. All Tax Returns required to be filed with respect to the
Purchased Assets through the Closing Date have been timely filed. All such Tax Returns are true, correct and complete in all material respects as they relate to the
Purchased Assets. There are no Encumbrances for Taxes upon any of the Purchased Assets other than Permitted Encumbrances. No claim has been made by a Taxing
Authority in a jurisdiction where the Sellers do not file Tax Returns with respect to the Purchased Assets that either Seller is subject to taxation by or required to file Tax
Returns in such jurisdiction with respect to the Purchased Assets.
(b) There is no audit, examination or other proceeding concerning any Tax Liability with respect to the Purchased Assets pending, being conducted, claimed,
raised or threatened by a Taxing Authority. Neither Seller has waived any statute of limitations in respect of Taxes or agreed to, or is the beneficiary of, any extension of
time with respect to a Tax assessment or deficiency in respect of the Purchased Assets.
Section 4.12 Date of Acquisition of Assets. All of the Purchased Assets and Background IP were acquired by the Sellers on November 1, 2019, and the Sellers
did not conduct any operations or business related to the Purchased Assets or the Background IP prior to such date.
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Section 4.13 No Other Representations and Warranties. Except for the representations and warranties contained in this ARTICLE IV, neither the Sellers nor any
other Person has made or makes any other express or implied representation or warranty, either written or oral, on behalf of either Seller or any of their Affiliates,
including any representation or warranty as to the accuracy or completeness of any information regarding the Purchased Assets furnished or made available to Purchaser
or as to the future revenue, profitability or success of the Products or Purchased Assets, or any representation or warranty arising from statute or otherwise in law.
Purchaser hereby represents and warrants as of the date of this Agreement to the Sellers as follows:
REPRESENTATIONS AND WARRANTIES OF PURCHASER
ARTICLE V.
Section 5.1. Organization and Good Standing. Purchaser is a corporation duly organized, validly existing and in good standing under the Laws of the State of
Delaware. Purchaser is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature or conduct of its business or the
ownership, leasing or operation of its properties and other assets requires it to be so qualified, licensed or in good standing.
Section 5.2. Authority. Purchaser has all power and authority to own and operate its properties and assets, to carry on its business as it is now being conducted
and to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by
Purchaser of this Agreement and the Ancillary Agreements and the performance by Purchaser of its obligations hereunder and thereunder have been duly authorized by all
requisite corporate or other similar action on the part of Purchaser and no additional authorization on the part of Purchaser is necessary in connection with the execution,
delivery and performance of this Agreement or of the Ancillary Agreements. No approval of Purchaser’s shareholders is necessary for Purchaser to execute and deliver
this Agreement or any Ancillary Agreements or perform the transactions contemplated hereby or thereby. This Agreement and each Ancillary Agreement to be executed
on the Closing Date has been, and each other Ancillary Agreement to be executed on the Closing Date will be, duly executed and delivered by Purchaser and, assuming
the valid execution and delivery by the Sellers, constitute a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms.
Section 5.3. No Conflict. The execution, delivery and performance of this Agreement and each of the Ancillary Agreements by Purchaser and the
consummation of the transactions contemplated hereby and thereby, do not and will not (a) violate any provision of the certificate of incorporation or bylaws of Purchaser,
(b) violate or conflict with, or result in a breach of, constitute a default under, or create rights of acceleration, termination or cancellation under, or to a loss of any benefit
to which Purchaser or any of its Affiliates is entitled under, any Contract to which Purchaser or any of its Affiliates is a party or to which its properties or assets are
subject or (c) violate, in any material respect, or result in a material breach of or constitute a material default under any Law or other restriction of any Governmental
Entity to which Purchaser is subject, in the case of clauses (b) and (c) where any of the listed items, individually or in the aggregate, would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by this Agreement.
Section 5.4. Required Filings and Consents. The execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated
hereby, do not require any consents, approvals, notices or filings of, to or with any Governmental Entities or any other Person.
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Section 5.5. Litigation. There is no Litigation pending or threatened against Purchaser which, individually or in the aggregate, would reasonably be expected to
prevent or materially delay the consummation of the transactions contemplated by this Agreement. There are no Orders of any Governmental Entity or arbitrator
outstanding against or investigation by any Governmental Entity involving Purchaser or any of its assets which, individually or in the aggregate, would reasonably be
expected to prevent or materially delay the consummation of the transactions contemplated by this Agreement.
Section 5.6. Brokers. No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser or any of its Affiliates.
Section 5.7. Independent Investigation. Purchaser has conducted its own independent investigation, review and analysis of the business, results of operations,
prospects, condition (financial or otherwise) and assets of the Sellers and acknowledges that it has been provided adequate access to the personnel, properties, assets,
premises, books and records, and other documents and data of the Sellers and their Affiliates for such purpose. Purchaser acknowledges and agrees that: (a) in making its
decision to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser has relied solely upon its own investigation and the express
representations and warranties of the Sellers set forth in ARTICLE IV; and (b) none of the Sellers, their Affiliates or any other Person has made any representation or
warranty as to either Seller, the Products, the Purchased Assets or this Agreement, except as expressly set forth in ARTICLE IV of this Agreement.
ARTICLE VI.
PRE-CLOSING COVENANTS
Section 6.1. Certain Contracts. The Parties acknowledge that the Contracts listed on Schedule 6.1 are necessary to the research, development and
commercialization of the Products (the “Assignable Necessary Contracts”). The Sellers therefore agree to make commercially reasonable efforts to obtain any consents
necessary to assign the Assignable Necessary Contracts prior to Closing; provided, however, that neither Seller shall be required to pay any consideration therefor.
Section 6.2. Actions and Omissions with Respect to the Purchased Assets. Except as contemplated in this Agreement or with the written consent of Purchaser,
from the date of this Agreement until the Closing or the earlier termination of this Agreement pursuant to its terms, the Sellers shall undertake only such actions or
omissions with respect to the Purchased Assets that are in the ordinary course of business.
Section 6.3. Access to Information; Notice of Developments.
(a) From the date of this Agreement until the Closing, the Sellers shall permit Purchaser and its Representatives to have reasonable access to all premises,
properties, books, records (including Tax records) contracts and documents to the extent related to the Purchased Assets; provided, however, that any such access shall be
provided only during normal business hours upon reasonable advance notice to the Sellers, under the supervision of the Sellers’ personnel and in such a manner as not to
interfere with the conduct of the business of the Sellers or their Affiliates.
(b) From the date of this Agreement until the Closing, the Sellers shall give Purchaser prompt written notice upon becoming aware of (i) any development that
is or would reasonably be
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expected to constitute a Material Adverse Effect, (ii) any event or circumstance that results in a breach of, or inaccuracy in, the Sellers’ representations and warranties, or
(iii) any breach of a covenant or agreement by the Sellers that would reasonably be expected to give rise to the failure of any condition set forth in Section 9.1; provided,
however, that no such disclosure will be deemed to prevent or cure any such breach of, or inaccuracy in, amend or supplement any Section of the Seller Disclosure
Schedules to, or otherwise disclose any exception to, any of the representations and warranties or the covenants of the Seller set forth in this Agreement.
Section 6.4. Commercially Reasonable Efforts. The Sellers and Purchaser shall, and shall cause their respective Affiliates, to use commercially reasonable
efforts to cause to be fulfilled and satisfied all of the conditions to Closing set forth in ARTICLE IX.
ARTICLE VII.
POST-CLOSING COVENANTS
Section 7.1. Certain Contracts. The Parties acknowledge that the Contracts listed on Schedule 7.2 (the “Non-Assignable Necessary Contracts”) are necessary to
the research, development and commercialization of Products but not primarily related to Products. The Sellers therefore agree to use commercially reasonable efforts to
provide Purchaser with the benefit of the Non-Assignable Necessary Contracts with respect to the Products in the Field including by (i) providing Purchaser with the
benefit of each Non-Assignable Necessary Contract, including the right to enforce the Non-Assignable Necessary Contracts with respect to the Products, and acting at
Purchaser’s request with respect to such Non-Assignable Necessary Contracts to the extent related to the Products and (ii) from and after the Closing until the [*]
anniversary of the Closing, including, at Purchaser’s request and in Purchaser’s sole discretion, by assisting Purchaser in entering into direct agreements with the parties to
the Non-Assignable Necessary Contracts. Notwithstanding the foregoing, the Sellers shall have no obligation to take or forbear from taking any action under or with
respect to any Non-Assignable Necessary Contract that, in the Sellers’ reasonable discretion, is or could impair the Sellers’ rights under the Non-Assignable Necessary
Contract or otherwise adversely affect either Seller or the performance of the Non-Assignable Necessary Contract.
Section 7.2. Technical Assistance; Access. Promptly following the Closing, the Sellers shall promptly transfer to Purchaser all materials, documents and
electronic copies of all information, data, materials and Know-How contained within the Purchased Assets (in the English language if available); provided, however, that
the Sellers may retain copies of such materials, documents, information and data for the purposes of performing their respective obligations hereunder and under the
Ancillary Agreements and as reasonably necessary to comply with applicable Laws. In addition, promptly following the Closing, the Sellers shall promptly transfer to
Purchaser all materials, documents and electronic copies of all information, data, materials and Know-How contained within the Background IP. Seller shall provide
Purchaser with reasonable access (by teleconference or in person at Purchaser’s facilities) to all personnel involved in the research, development and manufacturing of the
Products. If, after the Closing, access to materials, documents, information or data previously transferred to Purchaser hereunder is reasonably required by the Sellers or
their Affiliates for regulatory compliance purposes or to otherwise comply with applicable Laws, Purchaser shall provide to the Sellers, promptly after either Seller’s
written request, copies of or reasonable access to such materials, documents, information and data.
Section 7.3. Non-Competition; Scope of the Non-Compete Field.
(a) During the Restricted Period, neither Sellers nor any of their Affiliates (in the case of any Additional Indication, only to the extent any Person is an Affiliate
at the time notice of the Additional
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Indication is delivered to Sellers pursuant to Section 7.3(b)) shall develop, manufacture or commercialize products on its own behalf, or knowingly provide development,
manufacturing or commercialization services or supply of any products to any Third Party, or otherwise knowingly enable any Third Party to Exploit any product, for
therapeutic indications of (i) Prader-Willi Syndrome (“PWS”), (ii) [*] or (iii) [*] (such indications, together with up to [*] Additional Indications added by Purchaser
pursuant to Section 7.3(b), the “Non-Compete Field”).
(b) Purchaser shall have the right (but not the obligation) to add to the Non-Compete Field, by written notice to Sellers, [*] additional indications (the
“Additional Indications”) in addition to those set forth in clauses (i), (ii) and (iii) in Section 7.3(a) (the “Addition of Indications”); provided that (i) [*], (ii) notice of the
Addition of Indications is provided to the Sellers within [*] of the Closing Date, and (iii) with respect to such Additional Indications, the restrictions set forth in Section
7.3(a) shall apply solely with respect to [*].
(c) In the event that Purchaser, its Affiliates and any applicable licensee or sublicensee of any of the foregoing ceases to actively Exploit a Product in any
Additional Indication for a [*]-month period, or in the event that the Board of Directors of Purchaser determines to abandon the Exploitation of any Product for any other
indications in the Non-Compete Field, Purchaser shall so notify Sellers promptly and such Additional Indication or other indication in the Non-Compete Field shall no
longer be part of the Non-Compete Field; provided, however, that, in the case of an Additional Indication that has ceased to be a part of the Non-Compete Field pursuant
to this Section 7.3(c) at any time during the first [*] period following the Closing, Purchaser shall have the right, within [*] of the Closing Date, to add a new Additional
Indication in addition to the two Additional Indications provided for under Section 7.3(b) each time that any indication in the Non-Compete Field becomes an Abandoned
Indication.
(d) Notwithstanding anything to the contrary in Section 7.3(a), neither the Sellers nor their Affiliates shall be restricted in any way with respect to (i) the
Exploitation of Products for Additional Indications to the extent either Seller or any of their Affiliates commenced Development, manufacturing, commercialization or
other activities with respect to such indications prior to receiving Purchaser’s notice of the Addition of Indications or (ii) providing development, manufacturing,
commercialization or other services with respect to any Additional Indications to any customer in connection with any customer relationship that existed prior to receiving
Purchaser’s notice of the Addition of Indications.
Section 7.4. Covenant Not to Sue.
(a) Except with respect to any enforcement of the terms of this Agreement, any Seller’s IP Rights that are not a Purchased Asset or are not licensed to Purchaser
under this Agreement, or any Seller’s IP Rights arising pursuant to Section 8.1 or Section 8.2, Sellers and their respective Affiliates individually and jointly hereby
covenant and agree not, either alone or in cooperation with any Third Party, to sue or to bring any action or claim, including those for any type of infringement of any
intellectual property rights, against Purchaser or any of its Affiliates or any of their respective officers, directors, employees, agents, representatives, distributors,
salespersons, customers, licensees, or end-users to prevent, inhibit, financially affect or encumber in any manner any of the activities of any of Purchaser or any of its
Affiliates related, in whole or in part, to the use, offer for sale, sale, import, Development, or commercialization of any Products.
(b) Except with respect to any enforcement of the terms of this Agreement or any IP Rights that are a Purchased Asset, Purchaser and its Affiliates individually
and jointly hereby covenant and agree not, either alone or in cooperation with any Third Party, to sue or to bring any action or claim, including those for any type of
infringement of any intellectual property rights, against Sellers or any of their respective Affiliates or any of their respective officers, directors, employees, agents,
representatives, distributors, salespersons, customers, licensees, or end-users to prevent, inhibit, financially affect or
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encumber in any manner any of the activities of any of Sellers or any of their respective Affiliates related, in whole or in part, to the use, offer for sale, sale, import,
Development, or commercialization of any non-liquid products containing CBD outside the Field.
Section 7.5. Records Retention; Access. After the Closing Date, Purchaser shall retain all books and records included in the Purchased Assets for a period
consistent with its current record retention policies and practices, but in no event less than [*] years. Purchaser shall provide the Sellers and their representatives
reasonable access to such books and records during normal business hours and upon reasonable notice to enable the Sellers to (a) prepare financial statements or Tax
Returns or to act with respect to audits by any Taxing Authority, (b) prosecute or defend Third Party claims or litigation and (c) take any other action reasonably related to
this Agreement. After the Closing Date, if Purchaser determines in good faith that such cooperation is reasonably necessary, Seller and its accountants shall reasonably
cooperate with Purchaser and its accountants and auditors and provide to Purchaser and its accountants and auditors, during normal business hours and upon reasonable
prior written notice, but without unreasonably disrupting its business, access to such information, books and records related to the Purchased Assets as Purchaser may
reasonably request in connection with the preparation by Purchaser of historical financial statements related to the Purchased Assets as may be required to be included in
any filing under the Securities Exchange Act of 1934 and the regulations promulgated thereunder, including Regulation S-X, to be reported on a current report on Form 8-
K filed in connection with the transactions contemplated hereby and any other filing as may be required under applicable Laws. Without limiting the foregoing, such
cooperation shall include: (a) where required, the signing of management representation letters as are required in connection with such audit and (b) as reasonably
requested by Purchaser, access, during normal business hours and upon reasonable prior written notice, but without unreasonably disrupting its business, to appropriate
individuals with knowledge of the historical financial information related to the Purchased Assets to allow for preparation of such financial statements. Any information
provided by Seller under this Section 7.5 shall be subject to the confidentiality obligations set forth in Section 12.8. Purchaser shall reimburse Seller for all out-of-pocket
expenses incurred by Seller or its Affiliates in connection with this Section 7.5. Purchaser shall be solely responsible for any information it files with, or furnishes to, the
Securities and Exchange Commission.
Section 7.6. Further Assurances. From time to time after the Closing, and for no further consideration, each of the Parties shall, and shall cause its Affiliates to,
execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such other commercially reasonable
actions as may reasonably be requested to more effectively assign, convey or transfer to or vest in Purchaser the Purchased Assets and the Assumed Liabilities
contemplated by this Agreement to be transferred or assumed at the Closing (including transferring, at no additional cost to Purchaser, any Purchased Asset contemplated
by this Agreement to be transferred to Purchaser at the Closing and that was not so transferred at the Closing).
ARTICLE VIII.
INTELLECTUAL PROPERTY; KNOW HOW TRANSFER
Section 8.1. Patent Management Committee Framework. Fresh Cut and Radius shall, within 10 Business Days after the Closing Date, establish a patent
management team (the “Patent Management Committee”) that shall include two representatives of each such Party designated by that Party who have expertise and
authority to address the management of the Assigned Patents and Background Patents (the “Managed Patents”). Fresh Cut and Radius shall establish a protocol for the
Patent Management Committee to determine the strategy for filing, prosecution, defense, maintenance and enforcement of the Managed Patents. Each of Fresh Cut and
Radius shall submit to the Patent Management Committee one or more proposed divisional or continuation patent applications related to the Managed Patents for review
and a decision on filing, by the other Party with the advice of the Patent Management Committee, within
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[*] days after the Closing Date. Each proposed divisional or continuation application shall be presented in good faith, be directed to a currently pending Managed Patent,
and include a set of claims that are properly and sufficiently supported by the disclosure of the associated pending Managed Patent. Purchaser shall submit to the Patent
Management Committee one or more proposed divisional or continuation patent applications related to the Managed Patents and directed to the Product or the Field.
Fresh Cut shall submit to the Patent Management Committee one or more proposed divisional or continuation patent applications related to the Managed Patents and
directed to any non-liquid formulation(s) of CBD. The Parties and the Patent Management Committee shall engage in good faith discussions regarding the scope of the
proposed divisional or continuation applications. Either Party may reasonably object to the scope of any one or more proposed divisional or continuation applications
submitted for review by the Patent Management Committee as not complying with the parameters set forth in this Section 8.1. In the event of an objection raised by Fresh
Cut to a proposed divisional or continuation application submitted by Purchaser related to the Managed Patents and directed to the Product, subject to the potential ability
of Fresh Cut to pursue arbitration as set forth in Section 8.2, Purchaser shall have the final decision to proceed with the filing of such divisional or continuation
application. In the event of an objection raised by Purchaser to a proposed divisional or continuation application submitted by Fresh Cut related to the Managed Patents
and directed to any non-liquid formulation(s) of CBD, subject to the potential ability of Purchaser to pursue arbitration as set forth in Section 8.2, Fresh Cut shall have the
final decision to proceed with the filing of such divisional or continuation application. For clarity, Sellers retain the right to file and seek IP Rights in any products and
methods other than the Product. In the event the Parties are in disagreement regarding whether a proposed divisional or continuation application is in compliance with the
parameters set forth in this Section 8.1 and the Party objecting reasonably believes the non-filing of such divisional or continuation application will likely have a
detrimental effect on the objecting Party, such Party may seek binding arbitration as set forth in Section 8.2.
The Party filing any proposed divisional or continuation application pursuant to this Section 8.1 will pay all costs and fees incurred in the preparation, filing,
prosecution, maintenance and defense of such new divisional or continuation applications(s).
Any such divisional or continuation application(s) filed by Purchaser in compliance with the terms of this Section 8.1 and directed to an Assigned Patent shall be and
remain the property of Purchaser, subject to any rights and licenses granted herein to Sellers. Any such divisional or continuation application(s) filed by Fresh Cut in
compliance with the terms of this Section 8.1 and directed to an Assigned Patent shall be assigned by Purchaser to Fresh Cut (subject to any rights and licenses granted
herein to Purchaser) at the time of filing such divisional or continuation application(s), or as soon as is reasonably practical thereafter, and Purchaser shall take steps to
record such ownership with the relevant patent office or intellectual property office. Purchaser agrees to sign all papers, and perform all acts, reasonably requested by
Fresh Cut for the purposes of confirming ownership, securing, perfecting, asserting, assigning, transferring, recording, maintaining, registering, defending and enforcing
Fresh Cut’s rights in such divisional or continuation applications.
Section 8.2. Arbitration of Patent Disputes. In the event the Parties are in disagreement regarding the ability to file a proposed divisional or continuation
application as set forth in Section 8.1, such dispute (a “Patent Dispute”) shall be finally, exclusively and conclusively settled by mandatory arbitration administered by the
AAA in accordance with the Rules and as otherwise described in this Section 8.2. The Patent Dispute shall be heard and determined by one independent arbitrator. Upon
written request by either Party to the other Party, the Parties shall promptly negotiate in good faith to appoint an appropriate arbitrator. If the Parties have not selected a
mutually acceptable arbitrator within [*] days after such written request, the AAA of New York, or such other similar entity as the Parties may otherwise agree, shall
select an arbitrator with relevant industry experience within [*] days after either Party’s request. The fees and costs of the arbitrator and the AAA shall be borne [*]% by
Purchaser and [*]% by Fresh Cut. Within [*] days after the designation of the arbitrator, the Parties shall each
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simultaneously submit to the arbitrator and one another a written statement of their respective positions on the Patent Dispute. Each Party shall have [*] days from receipt
of the other Party’s submission to submit a written response thereto. The arbitrator shall have the right to meet with the Parties, either alone or together, as necessary to
make a determination. Further, the arbitrator shall have the right to request information and materials and to require and facilitate limited discovery as it shall determine is
appropriate in the circumstances, taking into account the needs of the Parties and the desirability of making discovery expeditious and cost-effective. No later than [*]
days after the Parties each submit their written statements to the arbitrator, or as otherwise agreed by the Parties, the arbitrator shall make a determination by selecting the
resolution proposed by one of the Parties that as a whole is the most consistent with this Agreement and the most fair and reasonable to the Parties in light of the totality
of the circumstances. The decision of the arbitrator shall be final and binding upon all Parties hereto, absent manifest error, and shall be rendered pursuant to a written
decision setting forth the basis of the determination.
Section 8.3. Unblocking Licenses.
(a) Seller, on behalf of itself and its Affiliates, hereby grants to Purchaser and its Affiliates a perpetual, irrevocable, exclusive, royalty-free, fully paid-up,
worldwide license (with the right to grant sublicenses through multiple tiers) under all Background IP to Exploit Products in the Field (the “Seller Unblocking License”).
The Seller Unblocking License shall attach to and run with such Background IP as covenants and shall be obligations of and binding upon any successors, heirs,
purchasers, and assigns of Seller whether by law, equity, contract, or bankruptcy.
(b) Purchaser, on behalf of itself and its Affiliates, hereby grants to Seller and its Affiliates a perpetual, irrevocable, exclusive, royalty-free, fully paid-up,
worldwide license (with the right to grant sublicenses through multiple tiers) under all Assigned Patents to Exploit products outside the Field (the “Purchaser Unblocking
License”). The Purchaser Unblocking License shall attach to and run with such Patents as covenants and shall be obligations of and binding upon any successors, heirs,
purchasers, and assigns of Seller whether by law, equity, contract, or bankruptcy.
Section 8.4. Know How Transfer. To enable Purchaser to Exploit the Products, Seller shall, as promptly as reasonably practicable following Closing, deliver to
Purchaser all books and records included in the Purchased Assets and all copies in all forms of Regulatory Materials, documents, files, diagrams, specifications, designs,
schematics, reports, records, laboratory notebooks, data, materials, prototypes, test devices, models and simulations, or other written, electronic, graphic, biologic, or other
tangible material in the possession or under the control of Seller or a Seller Affiliate in any media, to the extent it discloses or embodies Seller IP or Background IP
licensed pursuant to Section 8.3 above. Following the Closing Date, as reasonably requested by Purchaser from time to time, qualified personnel from Seller or a Seller
Affiliate familiar with the books and records included within the Purchased Assets and the applicable Seller IP or Background IP will meet or participate in telephone
conference calls with personnel from Purchaser or Purchaser’s designee at such times, and in the case of in-person meetings, at such venues, to be agreed upon by the
Parties as reasonably necessary to exchange knowledge necessary to fully transfer all Seller IP and Background IP licensed pursuant to Section 8.2 at no additional cost to
Purchaser.
Section 8.5. Right of Reference.
(a) Fresh Cut, for itself and on behalf of its Affiliates, hereby grants to Purchaser a perpetual, irrevocable Right of Reference, with the right to sublicense or
otherwise confer to any Third Party such Right of Reference (through multiple tiers), under the Existing API DMFs as may be necessary or reasonably useful in Purchaser
seeking Regulatory Approval for, or otherwise Exploiting, Products in the Field. Purchaser’s Rights of Reference under all such Existing API DMFs shall attach to and
run with
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such Existing API DMFs as covenants and shall be obligations of and binding upon any successors, heirs, purchasers, and assigns of Seller whether by law, equity,
contract, or bankruptcy.
(b) Subject to Section 7.3, Purchaser, for itself and on behalf of its Affiliates, hereby grants to Fresh Cut a perpetual, irrevocable Right of Reference, without the
right to sublicense or otherwise confer to any Third Party such Right of Reference unless Purchaser consents to such sublicensing or conferring (such consent not to be
unreasonably withheld, conditioned or delayed) under the Future Product DMFs as may be reasonably useful in Fresh Cut or its Affiliates or licensees seeking Regulatory
Approval for, or otherwise Exploiting, Products solely outside of the Field. Fresh Cut’s Rights of Reference under all such Future Product DMFs shall attach to and run
with such Future Product DMFs as covenants and shall be obligations of and binding upon any successors, heirs, purchasers, and assigns of Purchaser whether by law,
equity, contract, or bankruptcy.
Section 8.6. Insolvency.
(a) Each Unblocking License is for all purposes of Section 365(n) of the Bankruptcy Code a license of rights to “intellectual property” as defined in the
Bankruptcy Code. Each Licensor agrees that each Licensee, as licensee of rights under this Agreement, shall retain and may fully exercise all of its rights and elections
under the Bankruptcy Code. Without limiting the generality of the foregoing, each Licensor intends and agrees that any sale of Licensor’s assets under Section 363 of the
Bankruptcy Code shall be subject to Licensee’s rights under Section 365(n), that Licensor cannot be compelled to accept a money satisfaction of its interests in the
intellectual property licensed pursuant to this Agreement, and that any such sale therefore may not be made to a purchaser “free and clear” of Licensee’s rights under this
Agreement and Section 365(n) without the express, contemporaneous consent of Licensee. Each Licensor shall, during the term of this Agreement, create and maintain in
accordance with its standard practices current copies or, if not amenable to copying, detailed descriptions or other appropriate embodiments, to the extent reasonably
feasible, of all such intellectual property. Each Licensor and each Licensee acknowledge and agree that “embodiments” of intellectual property within the meaning of
Section 365(n) include, without limitation, laboratory notebooks, product samples and inventory, research studies and data, Rights of Reference and regulatory approvals.
If (i) a case under the Bankruptcy Code is commenced by or against Licensor, (ii) this Agreement is rejected as provided in the Bankruptcy Code, and (iii) Licensee elects
to retain its rights hereunder as provided in Section 365(n) of the Bankruptcy Code, Licensor (in any capacity, including debtor-in-possession) and its successors and
assigns (including a trustee) shall:
available to them, promptly upon Licensee’s written request; and
(i) provide to Licensee all such intellectual property (including all embodiments thereof) held by Licensor and such successors and assigns, or otherwise
including any right to obtain such intellectual property (or such embodiments) from another entity, to the extent provided in Section 365(n) of the Bankruptcy Code.
(ii) not interfere with Licensee’s rights under this Agreement, or any agreement supplemental hereto, to intellectual property (or such embodiments),
(b) Each Party agrees and acknowledges that all payments pursuant to Section 3.1(a), Section 3.2 and Section 3.3 do not constitute “royalties” within the
meaning of Section 365(n) of the Bankruptcy Code or relate to licenses of intellectual property hereunder.
(c) All rights, powers and remedies of each Licensee provided herein are in addition to and not in substitution for any and all other rights, powers and remedies
now or hereafter existing at law or in equity (including the Bankruptcy Code) in the event of the commencement of a case under the Bankruptcy Code
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with respect to Licensor. The Parties agree that they intend the following rights to extend to the maximum extent permitted by law and contract, and to be enforceable
under Bankruptcy Code Section 365(n):
(i) the right of access to any intellectual property (including all embodiments thereof) of Licensor covered by the applicable Unblocking License, or any
Third Party with whom Seller contracts to perform an obligation of Seller under the Supply Agreement to the extent allowable under any agreement between Seller and
such Third Party and to the extent covered by the Unblocking License, and, in the case of the Third Party, which is necessary for the manufacture, use, sale, import or
export of products supplied by Seller to Purchaser; and
(ii) the right to contract directly with any Third Party to complete the contracted work; provided, however, that the foregoing rights granted to Licensee
in subsections (i) and (ii) shall be subject to the right of Licensor to perform under the Agreement pursuant to Section 365(n)(4)(A)(i) prior to the assumption or rejection
of the Agreement.
ARTICLE IX.
CONDITIONS TO CLOSING
Section 9.1. Conditions to Purchaser’s Obligation to Close. The obligations of Purchaser to consummate the transactions contemplated by this Agreement will
be subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by Purchaser in writing:
(a) Representations, Warranties and Covenants. (a) The representations and warranties of the Sellers in this Agreement will be true and correct in all material
respects as of the Closing Date and (b) as of the Closing, the Sellers will have performed in all material respects all covenants and obligations in this Agreement required
to be performed by the Sellers on or prior to the Closing;
(b) Officer Certificate. The Sellers will have delivered to Purchaser a certificate as to the matters set forth in Section 9.1(a) having been satisfied;
(c) Consents. The Sellers will have delivered to Purchaser all consents for the Assignable Necessary Contracts;
(d) No Material Adverse Effect. Since the date hereof, no Material Adverse Effect shall have occurred;
(e) Execution of Ancillary Agreements. On or prior to the Closing Date, each of the Ancillary Agreements shall be executed by the parties thereto;
(f) IND Transfer Documentation. Seller will have delivered to Purchaser executed instruments of transfer and other documentation related to the transfer of
INDs in forms reasonably acceptable to Purchaser.
Section 9.2. Conditions to Sellers’ Obligation to Close. The obligations of the Sellers to consummate the transactions contemplated by this Agreement will be
subject to the satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Sellers in writing:
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(a) Representations, Warranties and Covenants. (a) The representations and warranties of Purchaser in this Agreement will be true and correct in all material
respects as of the Closing Date and (b) Purchaser will have performed all covenants and obligations in this Agreement required to be performed by Purchaser as of the
Closing Date;
(b) Officer Certificate. Purchaser will have delivered to the Sellers a certificate as to the matters set forth in Section 9.2(a) having been satisfied; and
(c) Consents. Purchaser will have delivered to the Sellers all consents set forth on Schedule 9.2(b).
Section 9.3. Conditions to Obligations of Each Party to Close. The respective obligations of each Party to consummate the transactions contemplated by this
Agreement will be subject to the satisfaction, on or prior to the Closing Date, of the following condition, which may be waived by mutual consent of Seller and Purchaser,
in writing:
(a) There will not be in effect any Order preventing the consummation of the transactions contemplated by this Agreement or any action pending brought by a
Governmental Entity seeking to prevent or enjoin the consummation of the transactions contemplated by this Agreement.
(b) There will not be any domestic Law prohibiting the Sellers from selling or Purchaser from owning or controlling the Purchased Assets or that makes this
Agreement or the consummation of the transactions contemplated by this Agreement illegal.
ARTICLE X.
TERMINATION
Section 10.1 Circumstances for Termination. At any time prior to the Closing, this Agreement may be terminated by written notice explaining the reason for
such termination:
(a) by the mutual written consent of Purchaser and the Sellers;
(b) by either Purchaser or the Sellers, if the non-terminating Party is in breach of any of its obligations to consummate the transactions contemplated by this
Agreement and such breach has not been cured within 10 Business Days of receipt by such Party of written notice from the terminating Party of such breach;
(c) by either Purchaser or the Sellers, if any of the representations and warranties of the other Party contained in this Agreement fail to be true and correct such
that the condition set forth in Section 9.1 or Section 9.2, respectively, would not be satisfied and such failure or breach with respect to any such representation, warranty or
obligation cannot be cured or, if curable, shall continue uncured for a period of 10 days after the non-terminating Party has received written notice from the terminating
Party of the occurrence of such failure or breach; or
(d) by either the Sellers or Purchaser a breach of this Agreement by the Party seeking to terminate this Agreement hereunder has not primarily caused such
failure to close.
Section 10.2 Effect of Termination. If this Agreement is terminated in accordance with Section 10.1, all rights and obligations of the Parties hereunder shall
terminate, and this Agreement shall
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become null and void, ab initio, except for the rights and obligations set forth in this ARTICLE X (Termination); Section 12.2 (Notices); Section 12.5 (Entire Agreement);
Section 12.7 (Public Disclosure); Section 12.8 (Confidentiality; Return of Information); Section 12.10 (Fees Expenses); Section 12.11 (Governing Law; Jurisdiction;
Venue and Service; Waiver of Jury Trial; Dispute Resolution) all applicable provisions of this Agreement as may be necessary solely to give effect to such surviving
provisions; provided, however, that nothing in this Agreement will relieve any Party from Liability for any intentional breach hereof.
ARTICLE XI.
INDEMNIFICATION
Section 11.1 Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the
Closing and shall remain in full force and effect until the [*] anniversary of the Closing Date; provided, however, that the representations and warranties contained in [*]
shall survive until the [*] anniversary of the Closing Date; and provided, further, that the Fundamental Representations (other than the representations and warranties
contained in Section 4.7 (Intellectual Property) subsection (a), the first sentence of subsection (b) and the third sentence of subsection (c)) (together with any right to assert
a claim in connection therewith) shall survive until [*]. None of the covenants or other agreements contained in this Agreement shall survive the Closing Date other than
those which by their terms contemplate performance after the Closing Date, and each such surviving covenant and agreement shall survive the Closing for the period
contemplated by its terms. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing
by notice from the non-breaching Party to the breaching Party prior to the expiration date of the applicable survival period shall not thereafter be barred by the expiration
of such survival period and such claims shall survive until finally resolved.
Section 11.2 Indemnification by the Sellers. Subject to the other terms and conditions of this ARTICLE XI, the Sellers, jointly and severally, agree to defend,
indemnify and hold harmless Purchaser and its Affiliates and, if applicable, their respective directors, officers, agents, employees, successors and assigns (each, a
“Purchaser Indemnified Party”), from and against any and all damages, losses, Liabilities or other amounts payable to a Third Party claimant, as well as any reasonable
attorneys’ fees and costs of litigation (collectively, the “Losses”) incurred by such Purchaser Indemnified Party to the extent arising from or relating to:
(a) any fraud of the Sellers or any breach of, or inaccuracy in, any representation or warranty made by the Sellers in ARTICLE IV of this Agreement, or in any
certificate delivered pursuant to Section 9.1(b) (in each case, as such representation or warranty would read if all qualifications as to materiality were deleted therefrom);
(b) any breach or violation of any covenant or agreement of the Sellers (including under this ARTICLE XI) in this Agreement; or
(c) any Excluded Liability.
Section 11.3 Indemnification by Purchaser. Purchaser agrees to defend, indemnify and hold harmless the Sellers and their Affiliates and, if applicable, their
respective directors, officers, agents, employees, successors and assigns (a “Seller Indemnified Party”), from and against any and all Losses incurred by such Seller
Indemnified Party to the extent arising from or relating to:
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(a) any fraud of Purchaser or any breach of, or inaccuracy in, any representation or warranty made by Purchaser in this Agreement, or in any certificate
delivered pursuant to Section 9.2(b) (in each case, as such representation or warranty would read if all qualifications as to materiality were deleted therefrom);
(b) any breach or violation of any covenant or agreement of Purchaser (including under this ARTICLE XI) in this Agreement;
(c) any Assumed Liability; or
(d) the Exploitation of any Product by, on behalf of, or under the authority of, Purchaser or its Affiliates, licensees or sublicensees.
Section 11.4 Notice of Claims. If any Litigation (in equity or at law) is instituted by a Third Party (a “Third-Party Claim”) with respect to which any of the
Persons to be indemnified under this ARTICLE XI (the “Indemnified Party”) intends to claim any Loss under this ARTICLE XI, or if an Indemnified Party otherwise
desires to make a claim for indemnification under this ARTICLE XI, the Indemnified Party shall provide written notice thereof (a “Claim Notice”) to the Party from
whom indemnification is sought (the “Indemnifying Party”). In the event of a Third-Party Claim, the Indemnified Party shall deliver the Claims Notice to the
Indemnifying Party as soon as reasonably practicable (and in any event within 30 days) after the Indemnified Party has actual knowledge of the Third-Party Claim. A
failure by the Indemnified Party to give notice of any Third-Party Claim or other claim for indemnification in a timely manner pursuant to this Section 11.4 shall not limit
the obligation of the Indemnifying Party under this ARTICLE XI, except to the extent such Indemnifying Party is actually prejudiced thereby. The Claim Notice shall
describe the Third-Party Claim or other matter giving rise to a claim for indemnification hereunder in reasonable detail, shall include copies of all material written
evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
Section 11.5 Defense of Third-Party Claims.
(a) The Indemnifying Party under this ARTICLE XI shall have the right, but not the obligation, exercisable by written notice to the Indemnified Party, to assume
the conduct and control, at the expense of the Indemnifying Party and through counsel of its choosing that is reasonably acceptable to the Indemnified Party, any Third-
Party Claim, and the Indemnifying Party may compromise or settle the same; provided, that the Indemnifying Party shall give the Indemnified Party advance written
notice of any proposed compromise or settlement and shall not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably
withheld), consent to or enter into any compromise or settlement that commits the Indemnified Party to take, or to forbear to take, any action or does not provide for a full
and complete written release by the applicable Third Party of the Indemnified Party. No Indemnified Party may compromise or settle any Third-Party Claim for which it is
seeking indemnification hereunder without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld). No Indemnifying
Party may consent to the entry of any judgment that does not relate solely to monetary damages arising from any such Third-Party Claim without the prior written consent
of the Indemnified Party (which consent shall not be unreasonably withheld). The Indemnifying Party shall permit the Indemnified Party to participate in, but not control,
the defense of any such Third-Party Claim through counsel chosen by the Indemnified Party; provided, that the fees and expenses of such counsel shall be borne by the
Indemnified Party. If the Indemnifying Party elects not to control or conduct the defense of a Third-Party Claim, the Indemnifying Party nevertheless shall have the
39
right to participate in the defense of any Third-Party Claim and, at its own expense, to employ counsel of its own choosing for such purpose.
(b) The Parties shall cooperate in the defense of any Third-Party Claim, with such cooperation to include (i) the retention and the provision to the Indemnifying
Party of records and information that are reasonably relevant to such Third-Party Claim and (ii) reasonable access to employees on a mutually convenient basis for
providing additional information and explanation of any material provided hereunder.
Section 11.6 Payment of Claims. Any payment for indemnification pursuant to this ARTICLE XI shall be effected by wire transfer in immediately available
funds to the account or accounts designated by the Purchaser Indemnified Party or the Seller Indemnified Party, as applicable, within 10 Business Days after the final
determination thereof.
Section 11.7 Certain Limitations.
(a) Certain Limitations. Neither the Sellers nor Purchaser shall be liable under the indemnification obligations set forth under Section 11.2 or Section 11.3, as
applicable, until the aggregate amount of all Losses in respect of indemnification under Section 11.2 or Section 11.3, as applicable, exceeds $[*] (the “Basket Amount”),
in which event, subject to the other limitations set forth in this ARTICLE XI the Indemnifying Party shall be responsible for the full amount of all Losses and not only
those in excess of the Basket Amount; provided, however, that this Section 11.7(a) shall not apply to Losses resulting from (i) fraud by the Sellers or Purchaser, (ii)
breaches of any Fundamental Representations by Sellers, (iii) any breach or violation of any covenant or agreement in this Agreement or (d) any Assumed Liability (in the
case of any indemnification obligation by Purchaser) or any Excluded Liability (in the case of any indemnification obligation by Sellers).
(b) The aggregate amount of Losses for which the Purchaser Indemnified Parties may be indemnified pursuant to Section 11.2(a) shall not exceed $[*] (the
“Cap”); provided, however, that the Cap shall not apply to Losses resulting from (i) fraud by the Sellers or (ii) breaches of any Fundamental Representations by Sellers.
Except as provided in the immediately preceding sentence, the aggregate amount of Losses for which the Purchaser Indemnified Parties may be indemnified pursuant to
Section 11.2 and the aggregate amount of Losses for which the Seller Indemnified Parties may be indemnified pursuant to Section 11.3 shall not, in either case, exceed
[*].
(c) The right to indemnification on account of any Losses will be reduced by (i) all insurance or other third party indemnification or contribution proceeds
received or reasonably expected to be received by the Indemnified Party in respect of any such Losses, less any related costs and expenses, including the aggregate cost of
pursing any related insurance claims and any related increases in insurance premiums or other chargebacks, and (ii) any Tax benefits actually realized or reasonably
expected to be realized by the Indemnified Party or any of its Affiliates in connection with such Losses.
(d) Each Indemnified Party shall take, and cause its Affiliates to take, all reasonable steps to mitigate any Loss upon becoming aware of any event or
circumstance that would be reasonably expected to, or does, give rise thereto, including incurring costs only to the minimum extent necessary to remedy the breach that
gives rise to such Loss.
(e) The Sellers shall not be liable under this ARTICLE XI for any Losses based upon or arising out of any inaccuracy in or breach of any of the representations
or warranties of the Sellers
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contained in this Agreement if Purchaser had knowledge of such inaccuracy or breach prior to the Closing.
Section 11.8 Setoff. With respect to any and all amounts payable by the Sellers in their capacity as an Indemnifying Party to a Purchaser Indemnified Party,
Purchaser shall have the right, at its sole option and election, to set off and apply any and all payments to any Purchaser Indemnified Parties against any amount due under
Section 3.1, Section 3.2, Section 3.3 or Section 3.4.
Section 11.9 Exclusive Remedy. The Parties acknowledge and agree that, from and after the Closing, the sole and exclusive remedy with respect to any and all
claims and Losses based upon, arising out of or otherwise in respect of any breach of, or inaccuracy in, any representation or warranty made by the Sellers or Purchaser in
ARTICLE IV or ARTICLE V shall be pursuant to the indemnification provisions set forth in this ARTICLE XI; provided that nothing in this Section 11.9 shall limit the
rights or remedies of, or constitute a waiver of any rights or remedies by, any Person under this Agreement based upon any claim of fraud.
ARTICLE XII.
MISCELLANEOUS
Section 12.1 Further Assurances and Post-Closing Covenants. From time to time after the Closing, and for no further consideration, each of the Parties shall,
and shall cause its Affiliates to, execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such
other commercially reasonable actions as may reasonably be requested to give effect to the transactions contemplated by this Agreement.
Section 12.2 Notices. All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal
delivery upon the Party for whom it is intended, delivered by registered or certified mail, return receipt requested, or by a national overnight courier service, or sent by
email (with confirmation of receipt), to the Person at the address or email address set forth below, or such other address as may be designated in writing hereafter, in the
same manner, by such Person:
(a) If to the Sellers, to:
Fresh Cut Development, LLC
444 S Ellis St.
Chandler, AZ 85224
Email: [*]
[*]
Attention: [*]
with a copy to:
Thompson Hine LLP
335 Madison Avenue, 12th Floor
New York, NY 10017
Telephone: (212) 908-3905
Email: faith.charles@thompsonhine.com
matthew.vaughan@thompsonhine.com
Attention: Faith L. Charles, Esq.; Matthew T. Vaughan, Esq.
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(b) If to Purchaser, to:
Radius Pharmaceuticals, Inc.
950 Winter Street
Waltham, MA 02451
Email: [*]
Attention: [*]
with a copy to:
Ropes & Gray LLP
Prudential Tower, 800 Boylston Street
Boston, MA 02199-3600
Telephone: (617) 951-7826
Email: marc.rubenstein@ropesgray.com
Attention: Marc A. Rubenstein, Esq.
All notices and other communications under this Agreement shall be deemed to have been received (i) when delivered by hand, if personally delivered, (ii) 3 Business
Days after being delivered by registered or certified mail, return receipt requested, (iii) one Business Day after being delivered to a national overnight courier service or
(iv) on the date of receipt, if sent by email (with confirmation of receipt).
Section 12.3 Amendment; Waiver. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and
signed (a) in the case of an amendment, by Purchaser and the Sellers and (b) in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or
delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or privilege.
Section 12.4 Assignment. Neither Party may assign or transfer (whether by operation of law or otherwise) this Agreement or any rights or obligations hereunder
without the prior written consent of the other, except that (a) a Party may make such an assignment, in whole or in part, upon written notice to the other Party but without
the other Party’s consent to an Affiliate or to a successor to substantially all of the business to which this Agreement relates, whether in a merger, sale of stock, sale of
assets, reorganization or other transaction, with Purchaser entitled to make such an assignment, in whole or in part, on a Product-by-Product, country-by-country basis and
(b) the Sellers may assign their right to receive payments hereunder upon written notice to Purchaser but without Purchaser’s consent. Any permitted successor or
assignee of obligations hereunder will expressly assume performance of such obligations (and in any event, any Party assigning this Agreement to an Affiliate will remain
bound by the terms and conditions hereof). Any permitted assignment will be binding on and inure to the benefit of the successors of the assigning Party. Any assignment
or attempted assignment by either Party in violation of the terms of this Section 12.4 will be null, void and of no legal effect.
Section 12.5 Entire Agreement. This Agreement, together with the Ancillary Agreements, including for the avoidance of doubt the Seller Disclosure Schedules,
contains the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with
respect to such matters, but excluding the Confidentiality Agreement, which shall remain in full force and effect for the term provided for therein.
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Section 12.6 No Third-Party Beneficiaries. Except to the extent provided for in ARTICLE XI (the provisions of which shall inure to the benefit of all Purchaser
Indemnified Parties and Seller Indemnified Parties), this Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and
permitted assigns. Except to the extent provided for in ARTICLE XI, nothing in this Agreement, express or implied, is intended to confer upon any Person other than
Purchaser, the Sellers or their successors or permitted assigns, any rights or remedies under or by reason of this Agreement.
Section 12.7 Public Disclosure. Following the execution of this Agreement, Purchaser may issue a press release in substantially the form presented to and
approved by Benuvia prior to the date hereof, with such approval not to be unreasonably withheld, conditioned or delayed. Notwithstanding anything herein to the
contrary and except as provided in the foregoing sentence, each Party hereby agrees with the other Party that no press release or similar public announcement or
communication shall, at any time, be made by it or caused to be made by it concerning the execution or performance of this Agreement unless it shall have consulted the
other Party in advance with respect thereto and such other Party consents in writing to such release, announcement or communication, such consent not to be
unreasonably withheld or delayed; provided, however, the provisions of this Section 12.7 shall not prohibit (i) any disclosure required to comply with the requirements of
any applicable Laws (in which case such Party shall notify the other Party promptly and shall use commercially reasonable efforts to provide the other Party with a copy
of the contemplated disclosure prior to submission or release, as the case may be) and (ii) any disclosure made in connection with the enforcement of any right or remedy
relating to this Agreement or the transactions contemplated herein.
Section 12.8 Confidentiality; Return of Information.
(a) From and after the Closing, the Confidentiality Agreement, to the extent it restricts disclosure or use of Purchased Assets or any Confidential Information
included in the Purchased Assets by Purchaser, is hereby amended such that it ceases to do so.
(b) From and after the Closing, the Sellers shall, and shall cause its Affiliates to, keep confidential and not use, (i) any Confidential Information and (ii) any
information received from Purchaser or a designee in the context of Purchaser’s performance of its obligations under this Agreement, including all Know-How included in
the Seller IP, and the Sellers shall be deemed to be the recipient of all information described in clauses (i) and (ii).
(c) The recipient of Confidential Information shall be under no obligation with respect to any information which: (i) at the time of disclosure is available to the
public; or (ii) after disclosure becomes available to the public through no fault of the recipient, provided that the obligation of the recipient shall cease only after the date
on which such information has become available to the public; or (iii) the recipient can demonstrate through tangible evidence was in its possession before receipt from
the disclosing party; or (iv) is disclosed to the recipient without restriction on disclosure by a Third Party who has the lawful right to disclose such information.
Section 12.9 Equitable Relief. The Parties agree that irreparable damage would occur in the event that any provision of this Agreement is not performed in
accordance with the terms hereof or is otherwise breached. Accordingly, each Party shall be entitled to seek an injunction or injunctions to prevent any breach or
threatened breach of this Agreement by the other Party and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which such Party is entitled at law or in equity. Each Party hereby waives (i) any requirement that the
non-breaching Party post a bond or other security
43
as a condition for obtaining any such relief and (ii) any defenses in any action for specific performance, including the defense that a remedy at Law would be adequate.
Section 12.10 Fees and Expenses. Except as otherwise provided in this Agreement, whether or not the Closing takes place, all costs, fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs, fees and expenses.
Section 12.11 Governing Law; Jurisdiction; Venue and Service; Waiver of Jury Trial; Dispute Resolution.
(a) Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York, excluding any conflicts or
choice of Law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
(b) Jurisdiction. The Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York and the United
States District Court for the Southern District of New York for any action, suit or proceeding (other than appeals therefrom) arising out of or relating to this Agreement,
and agree not to commence any action, suit or proceeding (other than appeals therefrom) related thereto except in such courts. The Parties irrevocably and unconditionally
waive their right to a jury trial.
(c) Venue. The Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding (other than
appeals therefrom) arising out of or relating to this Agreement in the courts of the State of New York or in the United States District Court for the Southern District of
New York, and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in an inconvenient forum.
(d) Service. Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 12.2 shall
be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.
(e) Waiver of Jury Trial. Each of the Parties irrevocably waives its right to a jury trial in connection with any action, proceeding or claim arising out of or
relating to this Agreement or the transactions contemplated by this Agreement.
(f) Mandatory Mediation and Arbitration.
(i) Notwithstanding any other provision of this Agreement, all disputes, claims, or controversies arising out of or relating to this Agreement, or the
negotiation, validity or performance hereof, that are not resolved by mutual agreement of the Parties first shall be submitted to a mandatory, non-binding mediation
proceeding (“Mandatory Mediation”) held in Boston, Massachusetts, which Mandatory Mediation shall be conducted before a single mediator selected by Purchaser. The
Parties covenant and agree that they will submit to and participate in such Mandatory Mediation in good faith prior to instituting arbitration pursuant to Section 12.11(f)
(ii) with respect to any indemnification claim or other legal proceeding against any other Party. Unless otherwise agreed to by the Parties, all costs of the Mandatory
Mediation shall be shared equally by the Sellers, on the one hand, and Purchaser, on the other.
44
The “costs of the Mandatory Mediation” shall mean solely those fees and costs charged for the mediation proceeding and/or by the mediator.
(ii) Notwithstanding any other provision of this Agreement, in the event of any controversy between the Parties hereto arising out of, or relating to, this
Agreement, including any controversy concerning the negotiation, validity or enforceability of this Agreement and any dispute as to whether a particular controversy is
subject to arbitration, but excluding any Patent Dispute (which shall be resolved as set forth in Section 8.2), which cannot be settled amicably by the Parties, such
controversy or dispute shall be finally, exclusively and conclusively settled by mandatory arbitration administered by the American Arbitration Association (“AAA”) in
accordance with its Commercial Arbitration Rules (the “Rules”); provided that (A) notwithstanding the foregoing each Party hereto shall be entitled to seek a temporary
restraining order and any other emergency injunctive relief, from a court of competent jurisdiction, restraining another Party from committing or continuing any violation
of the provisions hereof until such time as the controversy is adjudicated in arbitration, and each Party waives any defense that a remedy at law would be adequate in any
action or proceeding for specific performance or injunctive relief; and (B) monetary damages for any breach of this Agreement shall be determined pursuant to this
Section 12.11(f). The controversy or dispute shall heard and determined by one independent arbitrator approved by the Sellers and Purchaser; provided that if the Parties
have not selected an arbitrator within 30 days after the demand for arbitration is filed with the AAA, the arbitrator shall be appointed in accordance with the Rules. Either
the Sellers or Purchaser may institute such arbitration proceeding by filing the required documents with the AAA and giving written notice to the other Party. A hearing
shall be held by the arbitrator within 30 days of his or her appointment either remotely or at a location in Boston, Massachusetts that is mutually acceptable to the Parties.
The decision of the arbitrator shall be final and binding upon all Parties hereto and shall be rendered pursuant to a written decision that contains a detailed recital of the
arbitrator’s legal reasoning. Such written decision shall remain confidential among the Parties hereto, and the arbitrator may issue orders to protect the confidentiality of
the proprietary information, trade secrets and other confidential information of the parties hereto. The prevailing party in any controversy or dispute shall be entitled to
recover all reasonable costs relating thereto, including, without limitation, reasonable attorney’s fees and costs, administrative fees of the AAA and compensation and
expenses of the arbitrator. Judgment upon the award rendered may be entered in any court having jurisdiction thereof pursuant to the Federal Arbitration Act, 9 U.S.C. §
1, et seq.
Section 12.12 Counterparts. This Agreement may be executed in counterparts, and by the Parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile transmission or by e-mail of a .pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 12.13 Headings. The heading references herein and the table of contents hereto are for convenience purposes only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions hereof.
Section 12.14 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof. If any term or other provision of this Agreement, or the application thereof to any Person or any circumstance,
is invalid, illegal or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or
circumstances shall not be affected by such invalidity, illegality or unenforceability, nor shall such invalidity, illegality or unenforceability affect the validity or
enforceability of such provision, or the application thereof, in any other jurisdiction.
45
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
46
IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be executed as of the date first written above.
PURCHASER:
Radius Pharmaceuticals, Inc.
By: /s/ G. Kelly Martin
Name: G. Kelly Martin
Title: Chief Executive Officer
SELLERS:
Fresh Cut Development, LLC
By: /s/ Todd C. Davis
Name: Todd C. Davis
Title: President and Chief Executive Officer
Benuvia Therapeutics Inc.
By: /s/ Todd C. Davis
Name: Todd C. Davis
Title: President and Chief Executive Officer
EXHIBIT A
Form of Bill of Sale and Assignment and Assumption Agreement
[*]
88798311_22
EXHIBIT B
Form of Patent Assignment
[*]
88798311_22
EXHIBIT C
Form of Supply and Development Agreement
[*]
88798311_22
EXHIBIT D
Form of Trademark Assignment
[*]
88798311_22
SELLER DISCLOSURE SCHEDULES
These Seller Disclosure Schedules are delivered pursuant to the Asset Purchase Agreement, dated as of December 30, 2020 (the “Agreement”), by and among
Fresh Cut Development, LLC, a Delaware limited liability company (“Fresh Cut”), Benuvia Therapeutics Inc., a Delaware corporation (“Benuvia”), and Radius
Pharmaceuticals, Inc., a Delaware corporation (“Purchaser”).
The headings set forth herein are for convenience only and shall not affect the disclosures set forth herein. To the extent descriptions or summaries of
documents or instruments are set forth herein, such descriptions or summaries are not necessarily complete but are meant to identify certain documents and instruments
which may be reviewed for their complete terms or information.
Schedule 1.1(a)
Assigned Patents
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
62/004,495
62/154,660
United
States
United
States
5/29/2014 Cannabidiol
Formulations
Expired
4/29/2015 Stable
Expired
Cannabinoid
Formulations
PCT/US15/32955 WO
International
5/28/2015 Stable
2015/184127
Cannabinoid
Formulations
Entered
National
Stage
11/24/2016
Aqueous
formulation
Fresh Cut
Fresh Cut
Fresh Cut
Hydroalcoholic
formulation Lipid
formulation
Methods of use
for various
indications
(No PWS)
2
2015266897
AU
2015266897
AU2015266897 Australia
5/28/2015 Stable
Granted Hydroalcoholic
Fresh Cut
cannabinoid
formulations
2950424
CA 2950424
Canada
5/28/2015 Stable
Pending
cannabinoid
formulations
3
Fresh Cut
formulation
Methods of use
for various
indications
(No PWS)
Aqueous
formulation
Hydroalcoholic
formulation Lipid
formulation
Methods of use
for various
indications
(No PWS)
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
201580041466
CN 106999598
China
5/28/2015 Stable
Pending
Lipid formulation
Fresh Cut
cannabinoid
formulations
Methods of use
for various
indications
(No PWS)
15800669
EP 3148589
Europe
5/28/2015 Stable
Pending
Aqueous formulation
Fresh Cut
2016569911
JP 2017519742
JP6659933B2 Japan
5/28/2015 Stable
Granted
cannabinoid
formulations
cannabinoid
formulations
249197
IL 249197
Israel
5/28/2015 Stable
Pending
cannabinoid
formulations
4
Fresh Cut
Fresh Cut
(No PWS)
Hydroalcoholic
formulation
Methods of use
for various
indications
(No PWS)
Hydroalcoholic
formulation
Methods of use
for various
indications
(No PWS)
2016015636
MX
2016/015636
Mexico
5/28/2015 Stable
Pending
cannabinoid
formulations
Fresh Cut
Hydroalcoholic
formulation
Methods of use
for various
indications
(No PWS)
726746
NZ 726746
NZ726746 New
5/28/2015 Stable
Accepted MCT formulation
Fresh Cut
Zealand
cannabinoid
formulations
Methods of use
for various
indications
(No PWS)
5
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
763449
(DIV of 726746)
New Zealand 4/9/2020
Stable
cannabinoid
formulations
Pending
Aqueous
Fresh Cut
formulation
Hydroalcoholic
formulation Lipid
formulation
Methods of use
for various
indications
(No PWS)
Aqueous
formulation
Hydroalcoholic
formulation Lipid
formulation
Methods of use
for various
indications
(No PWS)
Hydroalcoholic
formulation
(No PWS)
Fresh Cut
Fresh Cut
2016/08209
South Africa
5/28/2015 Stable
Pending
cannabinoid
formulations
14/724,351
US
20150343071
United
States
5/28/2015 Stable
Pending
cannabinoid
formulations
6
14/815,936
15/166,476
US
20150342902
US
20160271252
United
States
United
States
7/31/2015 Stable
Pending MCT formulation
Fresh Cut
cannabinoid
formulations
(No PWS)
5/27/2016 Stable
Pending MCT formulation
Fresh Cut
cannabinoid
formulations
7
MCT
formulation
with ethanol
(PWS disclosed)
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
PCT/US2016/034565 WO
International
5/27/2016 Stable
2016/191651
cannabinoid
formulations
Entered
National
Stage
06/11/2017
Fresh Cut
Lipid
formulation
MCT
formulation
Method of use for
various indications
(PWS disclosed)
15/253,010
US
20160367496
United
States
8/31/2016 Stable
Pending
MCT formulation
Fresh Cut
cannabinoid
formulations
8
Treatment resistant
seizure disorders
pK data from
clinical trial (PWS
disclosed)
2016267585
AU
2016267585
Australia
11/28/2017 Stable
Pending
cannabinoid
formulations
Fresh Cut
Lipid
formulation
MCT
formulation
Methods of use for
various indications
(PWS disclosed)
2986268
CA 2986268
Canada
4/27/2017
Stable
cannabinoid
formulations
Pending
Lipid
Fresh Cut
formulation
MCT
formulation
Methods of use for
various indications
(PWS disclosed)
9
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
16800777
EP 3302437
Europe
4/27/2017
TITLE
STATUS
COVERAGE
OWNER
Stable
cannabinoid
formulations
Pending
MCT formulation
Fresh Cut
Methods of use
for various
indications
(PWS disclosed)
2018513742
JP 2018-516281
Japan
11/28/2017 Stable
Pending
MCT formulation
Fresh Cut
15/499,178
US
20170224634
United
States
4/27/2017
PCT/US2017/029843 WO
International
4/27/2017
2017/204986
cannabinoid
formulations
Stable
cannabinoid
formulations
Stable
cannabinoid
formulations
Methods of use
for various
indications
(PWS disclosed)
Pending
MCT formulation
Fresh Cut
Entered
National
Stage
11/26/2018
Prader-Willi
MCT formulation
Fresh Cut
Methods of use
for various
indications,
including PWS
3025702
CA 3025702
Canada
11/28/2017 Stable
Pending
MCT formulation
Fresh Cut
cannabinoid
formulations
10
Methods of use
for various
indications,
including PWS
17803241
EP 3462885
Europe
11/28/2017 Stable
Pending MCT formulation
Fresh Cut
15/712,515
US
20180028489
United
States
9/22/2017
Methods of use
for various
indications,
including PWS
Pending Methods of treating
Fresh Cut
Prader- Willi
MCT formulation
(Infantile
spasms & CAE
disclosed)
cannabinoid
formulations
Stable
cannabinoid
formulations
11
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
PCT/US2017/052897 WO
International 9/22/2017 Stable
2018/200024
cannabinoid
formulations
Entered
National
Stage
10/25/2019
Methods of treating
Prader- Willi
Fresh Cut
Lipid
formulation
MCT
formulation
(Infantile spasms &
CAE
disclosed)
12
3,062,814
CA 3062814
Canada
10/25/2019 Stable
Pending Methods of treating
Fresh Cut
cannabinoid
formulations
Prader- Willi
Lipid
formulation
MCT
formulation
(Infantile spasms &
CAE
disclosed)
2017907335
EP 3615079
Europe
10/28/2019 Stable
Pending Methods of treating
Fresh Cut
cannabinoid
formulations
Prader- Willi, Infantile
spasms or CAE
Aqueous
formulation
Hydroalcoholic
formulation Lipid
formulation
MCT formulation
13
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
COUNTRY
FILING
DATE
TITLE
STATUS
COVERAGE
OWNER
2019558668
Japan
11/27/2019 Stable
Pending
cannabinoid
formulations
Fresh Cut
Methods of treating
Prader- Willi,
Infantile Spasms or
CAE
Aqueous
formulation
Hydroalcoholic
formulation Lipid
formulation
MCT formulation
14
Schedule 1.1(b)
CBD
15
1. DMF 28255 for old process CBD API
2. DMF 32552 for new process CBD API
Schedule 1.1(b)
Existing API DMFs
16
[*]
Schedule 1.1(c)
Knowledge of Seller
17
1. The Patents listed on Schedule 4.7(a)(i).
2. The Trademarks listed on Schedule 4.7(a)(ii).
Schedule 2.1(a)
Seller IP
18
[*]
Schedule 2.1(d)
Assumed Contracts
19
[*]
Schedule 4.3
No Conflict
20
(i)
See Schedule 1.1(a)
(ii)
Patents
None.
Trademarks
Schedule 4.7(a)
Registered Intellectual Property
21
Trademark Application
Filing Date
Application
Number
Registration
Number
Registration
Date
Owner of
Record
SYNCAN™
6/24/2016
87082849
N/A
N/A
Lapsed
ITU
application
lapsed due
to no use
within
statutory
timeline.
Refiled as
the below
ITU
application
FRESH CUT
DEVELOPMENT,
LLC
22
Goods
and
Services
Pharmaceutical preparation for the treatment of epilepsy,
Prader-Willi syndrome, obesity, graft versus host disease,
gelastic seizures/hypothalamic hamartoma, neonatal
seizures, movement disorders including dystonia, central
pain syndromes, phantom limb pain, multiple sclerosis,
traumatic brain injury, radiation therapy, acute and chronic
graft versus host disease, T-cell autoimmune disorders,
colitis, Dravet Syndrome, Lennox Gastaut Syndrome,
mycolonic seizures, juvenile mycolonic epilepsy,
refractory epilepsy, schizophrenia, juvenile spasms, West
syndrome, infantile spasms, refractory infantile spasms,
tubular sclerosis complex, brain tumors, neuropathic pain,
cannabis use disorder, post-traumatic stress disorder,
anxiety, early psychosis, Alzheimer's Disease, autism,
acne, Parkinson's disease, social anxiety disorder,
depression, chemotherapy-induced peripheral neuropathy
(CIPN), Rett syndrome, and withdrawal from opioids,
cocaine, heroin,
amphetamines, and nicotine.
Trademark Application
Filing Date
Application
Number
Registration
Number
Registration
Date
Owner of
Record
SYNCAN™
1/15/2020
88760408
Pending
Published
for
opposition
FRESH CUT
DEVELOPMENT,
LLC
Goods
and
Services
Pharmaceutical preparation for the treatment of epilepsy,
Prader-Willi syndrome, obesity, graft versus host disease,
gelastic seizures and seizures related to hypothalamic
hamartoma, neonatal seizures, movement disorders
including dystonia, central pain syndromes, phantom limb
pain, multiple sclerosis, traumatic brain injury, injury
caused by radiation therapy, acute and chronic graft
versus host disease, T-cell autoimmune disorders, colitis,
Dravet Syndrome, Lennox Gastaut Syndrome, mycolonic
seizures, juvenile mycolonic epilepsy, refractory epilepsy,
schizophrenia, juvenile spasms, West syndrome, infantile
spasms, refractory infantile spasms, tubular sclerosis
complex, brain tumors, neuropathic pain, cannabis use
disorder, post-traumatic stress disorder, anxiety, early
psychosis, Alzheimer's Disease, autism, acne,
Parkinson's disease, social anxiety disorder, depression,
chemotherapy- induced peripheral neuropathy (CIPN),
Rett syndrome, and withdrawal
from opioids, cocaine, heroin, amphetamines, and nicotine
(iii)
Background IP
23
APPLICATION
NO.
PUBLICATION
NO.
PATENT
NO.
62/846,279
COUNTRY FILING
TITLE
STATUS COVERAGE
OWNER
Expired
CBD
Manufacturing
process
Fresh Cut
DATE
5/10/2019
United
States
Methods of
manufacturing
cannabidiol
and
intermediates
of
manufacturing
cannabidiol
24
APPLICATION NO. PUBLICATION
16/870,637
NO.
US
20200354297
PATENT
NO.
COUNTRY
United
States
FILING
DATE
5/8/2020
PCT/IB2020/000365 WO2020229891
International 5/8/2020
TITLE
STATUS COVERAGE OWNER
Pending CBD
Manufacturing
process
Fresh
Cut
Pending CBD
Manufacturing
process
Fresh
Cut
Methods of
manufacturing
cannabidiol or
cannabidivarin
and
intermediates
of
manufacturing
cannabidiol or
cannabidivarin
Methods of
manufacturing
cannabidiol or
cannabidivarin
and
intermediates
of
manufacturing
cannabidiol or
cannabidivarin
25
62/847,991
United
States
16/874,225
US
20200360286
United
States
5/15/2019 Self-
Expired
CBD composition
Fresh Cut
emulsifying
cannabidiol
formulations
Methods of use
for various
indications,
including PWS
5/15/2020 Self-
Pending CBD composition
Fresh Cut
emulsifying
cannabidiol
formulations
Methods of use
for various
indications,
including PWS
PCT/IB2020/000610
International 5/15/2020 Self-
Pending CBD composition
Fresh Cut
emulsifying
cannabidiol
formulations
26
Methods of use
for various
indications,
including PWS
APPLICATION NO. PUBLICATION
NO.
PATENT
NO.
COUNTRY
62/856,526
United
States
FILING
DATE
6/3/2019
Cannabidiol
nanocrystal
compositions
TITLE
STATUS COVERAGE
OWNER
Fresh
Cut
Fresh
Cut
Fresh
Cut
Expired CBD
composition
A process
for
producing a
CBD
composition
Method of
use for a
variety of
indications,
including
PWS
Pending CBD
composition
A process
for
producing a
CBD
composition
Method of
use for a
variety of
indications,
including
PWS
Pending CBD
composition
A process
for
producing a
CBD
composition
Method of
use for a
variety of
indications,
including
PWS
16/874,300
US 20200375911
United
States
5/14/2020
Cannabidiol
nanocrystal
compositions
PCT/IB2020/000474 WO/2020/245662
International 5/14/2020
Cannabidiol
nanocrystal
compositions
27
28
Schedule 4.7(b)
IP Docket and Law Firms
29
Docketing
Event
Reference
Number
Description/Title
Country
Status
Docketing
Event
Date
01/13/2021
01/21/2021
01/25/2021
02/17/2021
02/25/2021
03/25/2021
03/28/2021
04/13/2021
04/20/2021
04/28/2021
05/17/2021
Respond to
Office Action -
CTFR
Respond to
Office Action -
CTFR
Response to
supplementary
search report
Respond to
Office Action -
CTNF
Response to
supplementary
search report
Response to
supplementary
search report
Renewal
Reminder
15/166,476
STABLE CANNABINOID
FORMULATIONS
15/712,515
STABLE CANNABINOID
FORMULATIONS
EP17907335
Stable Cannabinoid
Formulations
14/815,936
STABLE CANNABINOID
FORMULATIONS
EP17907335
Stable Cannabinoid
Formulations
EP17907335
Stable Cannabinoid
Formulations
ZA2016/08209 Stable Cannabinoid
Formulations
STABLE CANNABINOID
FORMULATIONS
Final Response to
Office
Action
15/166,476
Final
Response to
Office Action
Renewal
Reminder
Final
Response to
Office Action
15/712,515
STABLE CANNABINOID
FORMULATIONS
ZA2016/08209 Stable Cannabinoid
14/815,936
Formulations
STABLE CANNABINOID
FORMULATIONS
05/28/2021
Renewal
ZA2016/08209 Stable Cannabinoid
Formulations
United
States
United
States
EPO
United
States
EPO
e-Office
Action
Received
e-Office
Action
Received
Active
e-Office
Action
Received
Active
Patent
Application
Number
15/166,476
15/712,515
17907335.8
14/815,936
17907335.8
EPO
Active
17907335.8
Active
ZA2016/08209
e-Office Action
Received
15/166,476
e-Office
Action
Received
Active
e-Office
Action
Received
Active
15/712,515
ZA2016/08209
14/815,936
ZA2016/08209
South
Africa
United
States
United
States
South
Africa
United
States
South
Africa
30
LAW FIRM
APPLICATION NO.
62/004,495
62/154,660
PCT/US15/32955
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
CONTACT
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
2015266897
Davies Collison Cave Pty Ltd
1 Nicholson Street Melbourne, VIC 3000 AUSTRALIA https://dcc.com/
Sally Davis SDavis@davies.com.au
2950424
201580041466
15800669
Bereskin & Parr LLP
Scotia Plaza, 40 King Street West, 40th Floor Toronto, ON
M5H 3Y2 Canada https://www.bereskinparr.com/
YUHONG IP LAW FIRM
Suite 1630, South Wing, Central Tower, Junefield Plaza 10
Xuanwumenwai Street, Xicheng District
Beijing 100052, China
www.yuhongip.com
Elkington and Fife LLP
Prospect House, 8 Pembroke Road Sevenoaks,
Kent TN13 1XR https://www.elkfife.com/
2016569911
KAWAGUTI & PARTNERS
https://www.kawaguti.gr.jp/
31
Alex Tzanidis
ATzanidis@davies.com.au
David St. Martin
dstmartin@bereskinparr.com
Katrina Arguin
karguin@bereskinparr.com
Ms. Shuang Wen
liwangfang@yuhongip.com
Oliver Kingsbury
Oliver.Kingsbury@elkfife.com
Andy Nicoll Andy.Nicoll@elkfife.com
Kelci Carter
Kelci.Carter@elkfife.com
Ms. Naoko KOJI
Katsumasa OSAKI
kawapatc@kawaguti.gr.jp
249197
Reinhold Cohn Group 26A Habarzel St.
Tel Aviv, 6971037, Israel https://www.rcip.co.il/en/
2016015636
BC&B
Leibnitz 117 PH1, Col. Anzures
Del. Miguel Hidalgo, C.P. 11590, Ciudad de México
bcb.com.mx
Yigal Fraenkel Ph.D.
yifraenkel@rcip.co.il
Michael Elgrecie
mibenavi@rcip.co.il
Sandra Guerrero Rivera
sguerrero@bcb.com.mx
32
APPLICATION NO.
726746
Davies Collison Cave Pty Ltd
1 Nicholson Street Melbourne, VIC 3000 AUSTRALIA https://dcc.com/
LAW FIRM
763449
(DIV of 726746)
2016/08209
14/724,351
14/815,936
15/166,476
PCT/US2016/034565
Davies Collison Cave Pty Ltd
1 Nicholson Street Melbourne, VIC 3000 AUSTRALIA https://dcc.com/
Adams & Adams
Lynnwood Bridge, 4 Daventry Street
Lynnwood Manor, Pretoria 0081, South Africa
https://www.adams.africa/firm-overview/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
15/253,010
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014 https://kwlaw.co/
33
CONTACT
Sally Davis SDavis@davies.com.au
Alex Tzanidis
ATzanidis@davies.com.au
Sally Davis SDavis@davies.com.au
Alex Tzanidis
ATzanidis@davies.com.au
Dario Tanziani
Dario.Tanziani@adams.africa
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
2016267585
Davies Collison Cave Pty Ltd
1 Nicholson Street Melbourne, VIC 3000 AUSTRALIA https://dcc.com/
Sally Davis SDavis@davies.com.au
2986268
Bereskin & Parr LLP
Scotia Plaza, 40 King Street West, 40th Floor Toronto, ON
M5H 3Y2 Canada https://www.bereskinparr.com/
Alex Tzanidis
ATzanidis@davies.com.au
David St. Martin
dstmartin@bereskinparr.com
Katrina Arguin
karguin@bereskinparr.com
34
APPLICATION NO.
16800777
LAW FIRM
Elkington and Fife LLP
Prospect House, 8 Pembroke Road Sevenoaks,
Kent TN13 1XR https://www.elkfife.com/
2018513742
15/499,178
PCT/US2017/029843
3025702
17803241
15/712,515
KAWAGUTI & PARTNERS
https://www.kawaguti.gr.jp/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
Bereskin & Parr LLP
Scotia Plaza, 40 King Street West, 40th Floor Toronto, ON
M5H 3Y2 Canada https://www.bereskinparr.com/
Elkington and Fife LLP
Prospect House, 8 Pembroke Road Sevenoaks,
Kent TN13 1XR https://www.elkfife.com/
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
35
CONTACT
Oliver Kingsbury
Oliver.Kingsbury@elkfife.com
Andy Nicoll Andy.Nicoll@elkfife.com
Kelci Carter
Kelci.Carter@elkfife.com
Ms. Naoko KOJI
Katsumasa OSAKI
kawapatc@kawaguti.gr.jp
Marie Aucoin
marie@kwlaw.co 617 501
9560
Marie Aucoin
marie@kwlaw.co 617 501
9560
David St. Martin
dstmartin@bereskinparr.com
Katrina Arguin
karguin@bereskinparr.com
Oliver Kingsbury
Oliver.Kingsbury@elkfife.com
Andy Nicoll Andy.Nicoll@elkfife.com
Kelci Carter
Kelci.Carter@elkfife.com
Marie Aucoin
marie@kwlaw.co 617 501
9560
PCT/US2017/052897
3,062,814
KW LAW
6122 N. 7th Street Suite D
Phoenix, AZ 85014
https://kwlaw.co/
Bereskin & Parr LLP
Scotia Plaza, 40 King Street West, 40th Floor Toronto, ON
M5H 3Y2 Canada https://www.bereskinparr.com/
Marie Aucoin
marie@kwlaw.co 617 501
9560
David St. Martin
dstmartin@bereskinparr.com
Katrina Arguin
karguin@bereskinparr.com
36
APPLICATION NO.
2017907335
LAW FIRM
Elkington and Fife LLP
Prospect House, 8 Pembroke Road Sevenoaks,
Kent TN13 1XR https://www.elkfife.com/
2019558668
KAWAGUTI & PARTNERS
https://www.kawaguti.gr.jp/
CONTACT
Oliver Kingsbury
Oliver.Kingsbury@elkfife.com
Andy Nicoll Andy.Nicoll@elkfife.com
Kelci Carter
Kelci.Carter@elkfife.com
Ms. Naoko KOJI
Katsumasa OSAKI
kawapatc@kawaguti.gr.jp
37
[*]
Schedule 4.7(c)
IP Contracts
38
[*]
Schedule 4.8
Inventory
39
Schedule 6.1
Assignable Necessary Contracts
[*]
40
Schedule 7.2
Non-Assignable Necessary Contracts
[*]
41
Schedule 9.2(c)
Required Consents
[*]
88798311_22
Exhibit 21.1
SUBSIDIARIES OF RADIUS HEALTH, INC.
Legal Name of Subsidiary
Jurisdiction of Organization
Radius Global Support, Inc.
Radius Health Securities Corporation
Radius International Limited
Radius Pharmaceuticals (Bermuda) Ltd.
Radius Pharmaceuticals, Inc.
Delaware
Massachusetts
United Kingdom
Bermuda
Delaware
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-201610 on Form S-3 and Registration Statement Nos. 333-177800, 333-195521, 333-213081, 333-213082,
333-215552, 333-224882, 333-231327, 333-238117, and 333-226791 on Form S-8 of our reports dated February 25, 2021, relating to the financial statements of Radius Health, Inc. and
subsidiaries (the “Company”), and the effectiveness of the Company's internal control over financial reporting, appearing in this Annual Report on Form 10-K of Radius Health, Inc. for
the year ended December 31, 2020.
Exhibit 23.1
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 25, 2021
Exhibit 23.2
We consent to the incorporation by reference in the following Registration Statements:
Consent of Independent Registered Public Accounting Firm
1. Registration Statement (Form S-8, File No. 333-177800) pertaining to the 2003 Long-Term Incentive Plan of Radius Health, Inc. and 2011 Equity Incentive Plan
of Radius Health, Inc.;
2. Registration Statement (Form S-8, File No. 333-195521) pertaining to the 2011 Equity Incentive Plan of Radius Health, Inc.;
3. Registration Statement (Form S-3, File No. 333-201610) and related Prospectus of Radius Health, Inc. for the registration of common stock, preferred stock,
warrants, and units;
4. Registration Statement (Form S-8, File No. 333-213081) pertaining to the 2011 Equity Incentive Plan, as amended and restated, of Radius Health, Inc.;
5. Registration Statement (Form S-8, File No. 333-213082) pertaining to the 2016 Employee Stock Purchase Plan of Radius Health, Inc.;
6. Registration Statement (Form S-8, File Nos. 333-215552, 333-224882, and 333-231327, 333-238117) pertaining to Inducement Stock Option Agreements
between Radius Health, Inc. and certain of its employees; and
7. Registration Statement (Form S-8, File No. 333-226791) pertaining to the 2018 Stock Option and Incentive Plan of Radius Health, Inc.;
of our report dated February 27, 2020, with respect to the consolidated financial statements of Radius Health, Inc. as of December 31, 2019 and for the years ended
December 31, 2019 and December 31, 2018, included in this Annual Report (Form 10-K) for the year ended December 31, 2020.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 25, 2021
CERTIFICATIONS
Exhibit 31.1
I, G. Kelly Martin, certify that:
1. I have reviewed this annual report on Form 10-K of Radius Health, Inc.;
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. 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;
b. 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;
c. 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
d. 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.
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. 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
b. 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 25, 2021
/s/ G. Kelly Martin
G. Kelly Martin
President and Chief Executive Officer
CERTIFICATIONS
Exhibit 31.2
I, James G. Chopas, certify that:
1. I have reviewed this annual report on Form 10-K of Radius Health, Inc.;
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. 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;
b. 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;
c. 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
d. 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.
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. 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
b. 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 25, 2021
/s/ James G. Chopas
James G. Chopas
Principal Accounting and 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 Radius Health, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, G. Kelly Martin, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 25, 2021
By:
/s/ G. Kelly Martin
G. Kelly Martin
President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.
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 Radius Health, Inc. (the "Company") on Form 10-K for the fiscal year ended December 31, 2020 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, James G. Chopas, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:
(1)
(2)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
February 25, 2021
By:
/s/ James G. Chopas
James G. Chopas
Principal Accounting and Financial Officer
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and
Exchange Commission or its staff upon request.