Cidara Therapeutics Inc.

04/24/2024 | Press release | Distributed by Public on 04/24/2024 14:10

Material Agreement - Form 8-K

Item 1.01 Entry into a Material Definitive Agreement.
Technology Transfer and License Agreement with Janssen Pharmaceuticals, Inc.
On April 23, 2024 (the "Signing Date"), the Company and Janssen Pharmaceuticals, Inc. ("Janssen") entered into a license and technology transfer agreement (the "Janssen License Agreement") related to drug-Fc conjugates ("DFCs") based on the Company's Cloudbreak®platform for the prevention and treatment of influenza ("Influenza Program"), including CD388, the Company's most advanced DFC program, which has completed a Phase 2a clinical trial. All applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the transactions contemplated by the Janssen License Agreement expired prior to the execution of the Janssen License Agreement.
The Influenza Program was the subject of an exclusive license and collaboration agreement between the Company and Janssen dated March 31, 2021, and effective as of May 12, 2021 (the "2021 Collaboration Agreement"), the material terms of which are described in Note 9 to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on April 22, 2024, and are incorporated herein by reference.
Effectiveness. The Janssen License Agreement became effective upon the Company's payment in full to Janssen of the upfront payment described below, which was paid on April 24, 2024.
Termination of 2021 Collaboration Agreement. Upon the effectiveness of the Janssen License Agreement, the 2021 Collaboration Agreement, including the license granted by the Company to Janssen and the Company's non-compete covenant thereunder, terminated, and the Company assumed responsibility for further clinical development, manufacture, registration and commercialization of DFCs within the Influenza Program ("Compounds"), including CD388, and products containing Compounds ("Products"), including Products containing CD388 ("CD388 Product").
License and Technology Transfer. Upon the effectiveness of the Janssen License Agreement, Janssen granted the Company an exclusive, worldwide, fee-bearing but royalty-free license under certain Janssen-controlled technology to develop, manufacture and commercialize Compounds, including CD388, and Products, including CD388 Product. In addition, Janssen agreed (i) to transfer and disclose to the Company certain Janssen-controlled know-how related to CD388 and CD388 Product, including manufacturing know-how, CMC data and documentation, and other data and reports, (ii) to transfer all existing quantities of CD388 and CD388 Product clinical material (including drug substance, drug product and certain components of CD388) and GLP-grade CD388 and components thereof, and (iii) to transfer to the Company the cell banks used by or on behalf of Janssen for the production of CD388 and components thereof.
Financial Terms. As a condition to the effectiveness of the Janssen License Agreement, the Company paid Janssen an upfront payment of $85 million. The Company will also be obligated to pay Janssen up to $150 million in development and regulatory milestone payments with respect to CD388 Product and up to $455 million in commercialization milestone payments with respect to CD388 Product. The Company has no obligation to pay any royalties to Janssen on the sale of any Product and no obligation to pay any milestone payment or other amount to Janssen with respect to the development, registration, manufacture or commercialization of any Compound other than CD388 or any Product other than CD388 Product.
Termination. Either party may terminate the Janssen License Agreement for uncured material breach by the other party, or in the event the other party becomes subject to bankruptcy or similar insolvency proceedings.
The foregoing description of the Janssen License Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified in its entirety by reference to, the complete text of the Janssen License Agreement, which will be filed with the Securities and Exchange Commission as an exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ending June 30, 2024.
Securities Purchase Agreement
On April 23, 2024 (the "Signing Date"), the Company entered into a securities purchase agreement (the "Securities Purchase Agreement") with certain institutional and other accredited investors (the "Purchasers"), pursuant to which the Company issued and sold, in a private placement (the "Private Placement"), 240,000 shares of Series A Convertible Voting Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock"), at a purchase price of $1,000 per share. The closing of the Private Placement took place on April 24, 2024 (the "Closing Date") and the Company received total gross proceeds of $240 million.


Pursuant to the Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Voting Preferred Stock, which was filed with the Secretary of State of the State of Delaware on the Closing Date (the "Certificate of Designation"), each share of Series A Preferred Stock is, subject to the Stockholder Approval (as defined below) and certain beneficial ownership conversion limitations, automatically convertible into shares of common stock, par value $0.0001 per share, of the Company (the "Common Stock").
Subject to the terms and limitations contained in the Certificate of Designation, the Series A Preferred Stock issued in the Private Placement will not become convertible until the Company's stockholders approve the issuance of all Common Stock issuable upon conversion of the Series A Preferred Stock (the "Conversion Shares") and an amendment to the Company's certificate of incorporation to increase the authorized number of shares of Common Stock to enable the issuance or reservation for issuance, as applicable, of all of the Conversion Shares (the "Stockholder Approval"). On the first Trading Day (as defined in the Certificate of Designation) following the announcement of the Stockholder Approval, each share of Series A Preferred Stock shall automatically convert into Common Stock, at the conversion price of $14.20 per share, rounded down to the nearest whole share, subject to the terms and limitations contained in the Certificate of Designation, including that shares of Series A Preferred Stock shall not be convertible if the conversion would result in a holder beneficially owning more than 9.99% of the Company's outstanding shares of Common Stock as of the applicable conversion date.
Pursuant to the Securities Purchase Agreement, as soon as practicable following the receipt of the Stockholder Approval (the "Filing Date") (and in any event no later than twenty days thereafter), the Company shall file a registration statement providing for the resale by the Purchasers of the Registrable Shares (as defined in the Securities Purchase Agreement) and shall use commercially reasonable efforts to have the registration statement declared effective within fifteen days following the Filing Date or, in the event that the staff of the Securities and Exchange Commission reviews and has written comments to such registration statement, within forty-five days following the Filing Date. The Company further agreed to keep such registration statement continuously effective until all Registrable Shares have been resold or no Registrable Shares remain outstanding.
The Securities Purchase Agreement contains customary representations, warranties and covenants that were made solely for the benefit of the parties to the Securities Purchase Agreement. Such representations, warranties and covenants (i) are intended as a way of allocating risk between the parties to the Securities Purchase Agreement and not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Securities Purchase Agreement is included with this filing only to provide investors with information regarding the terms of transaction and not to provide investors with any other factual information regarding the Company. Investors should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Securities Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.
Additionally, in satisfaction of a condition to closing of the Private Placement, two members of the Board of Directors of the Company (the "Board") tendered their resignations from the Board, the size of the Board was increased to nine, and the Company appointed three directors to the Board, as more fully disclosed in Item 5.02 below.
No statement in this Current Report on Form 8-K or the attached exhibits is an offer to sell or a solicitation of an offer to purchase the Company's securities, and no offer, solicitation or sale will be made in any jurisdiction in which such offer, solicitation or sale is unlawful.
Support Agreements
Concurrently with the execution of the Securities Purchase Agreement and as a condition to closing of the Private Placement, the executive officers, directors and certain stockholders of the Company entered into support agreements (the "Support Agreements") providing, among other things, that such executive officers, directors and stockholders will vote all of their shares of Common Stock: in favor of (i) the issuance of all Conversion Shares upon conversion of the Series A Preferred Stock in compliance with Nasdaq Listing Rule 5635(b) and/or (d), (ii) an amendment to the Company's certificate of incorporation to increase its authorized number of shares of Common Stock to enable the issuance or reservation for issuance, as applicable, of all of the Conversion Shares (without regard to any limitations on conversion set forth in the Certificate of Designation) in compliance with the rules and regulations of Nasdaq (together, the "Transaction Proposals"), (iii) an increase to the reserved shares under the Company's 2015 Equity Incentive Plan of an amount no greater than 2,334,000 shares, and (iv) other customary annual stockholder meeting matters (together, the "Additional Proposals"), and against any proposal that conflicts or materially impedes or interferes with the approval of any of the Transaction Proposals or Additional Proposals or that would adversely affect or delay the consummation of the transactions contemplated by the Securities Purchase Agreement.


The foregoing descriptions of the Securities Purchase Agreement, the Certificate of Designation and the Support Agreements and the transactions contemplated thereby do not purport to be complete and are subject to, and qualified in their entirety by reference to, the complete text of the Securities Purchase Agreement, Certificate of Designation and form of Support Agreement, which are filed as Exhibits 10.1, 3.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.