Vericel Corporation (NASDAQ:VCEL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On May 6, 2019, Vericel Corporation (Vericel) entered into exclusive license and supply agreements with MediWound Ltd. (MediWound) to commercialize NexoBrid® in all countries of North America (the Territory). NexoBrid is a topically-administered biological product that enzymatically removes nonviable burn tissue, or eschar, in patients with deep partial and full-thickness thermal burns.
NexoBrid is currently in clinical development in the Territory, and to the terms of the License Agreement described below, MediWound will continue to conduct all clinical activities described in the development plan to support the filing of a biologics license application (BLA) with the United States Food and Drug Administration under the supervision of a Central Steering Committee comprised of members of each party.
License Agreement.
Vericel entered into a license agreement (the License Agreement) with MediWound to which MediWound granted Vericel an exclusive license, with the right to grant sublicenses, to develop and commercialize NexoBrid and any improvements of NexoBrid (the Licensed Product) in the Territory.
to the terms of the License Agreement, Vericel will have exclusive control regarding the commercialization of Licensed Products in the Territory and must use commercially reasonable efforts to commercialize Licensed Products within the Territory. Vericel and MediWound have made customary representations and warranties and have agreed to certain customary covenants, including confidentiality and indemnification.
Within ten days from May 6, 2019, Vericel is obligated to pay MediWound $17,500,000 (the Upfront Payment). Vericel is also obligated to pay MediWound $7.5 million upon U.S. regulatory approval of the BLA for NexoBrid and up to $125 million contingent upon meeting certain sales milestones. The first sales milestone of $7.5 million would be triggered when annual net sales of the Licensed Products in the Territory exceed $75 million. Vericel is also obligated to pay MediWound tiered royalties on net sales of Licensed Products ranging from high single-digit to low double-digit percentages, subject to certain customary reductions, and a split of gross profits on committed Biomedical Advanced Research and Development Authority (BARDA) procurement orders and a double-digit royalty on any additional future BARDA purchases of NexoBrid. The royalties will expire on a product-by-product and country-by-country basis upon the latest to occur of (i) twelve years following the first commercial sale of such Licensed Product in such country, (ii) the earliest date on which there are no valid claims of MediWound patent rights covering such Licensed Product in such country, and (iii) the expiration of the regulatory exclusivity period for such Licensed Product in such country (the Royalty Term). Such royalties are subject to reduction in the event that (a) Vericel must license additional third-party intellectual property in order to develop, manufacture or commercialize a Licensed Product, or (b) biosimilar competition occurs with respect to the Licensed Product in any country within the Territory. After the expiration of the applicable royalties for the Licensed Product in any country within the Territory, the license for such Licensed Product in such country would become a fully paid-up, royalty-free, perpetual and irrevocable license.
The License Agreement expires on the date of expiration of all royalty obligations due thereunder unless earlier terminated in accordance with its terms. Either party may terminate the Agreement upon the failure of the other party to comply with its material obligations under the Agreement if such failure is not remedied within certain specified cure periods or in the event of a partys insolvency. In addition, Vericel may terminate the Agreement upon one hundred fifty (150) days written notice to MediWound.
Supply Agreement.
On May 6, 2019, concurrent with the License Agreement, Vericel entered into a supply agreement (the Supply Agreement) with MediWound to which MediWound is obligated to supply Vericel with NexoBrid for sale in the Territory on an exclusive basis for the first five years of the term of the Supply Agreement. The Supply Agreement requires MediWound to take steps to ensure that its manufacturing capacity meets Vericels demand for NexoBrid. In addition, after the exclusivity period or upon supply failure, Vericel will be permitted to establish an alternate source of supply.