Item
1.01 Entry into a Material Definitive Agreement.
Co-Promotion
Agreement
On
October 4, 2022, the Company and Genzyme Corporation, a fully-owned subsidiary of Sanofi (“Sanofi”) entered into a Co-Promotion
Agreement (the “Sanofi Co-Promotion Agreement”). Pursuant to the Sanofi Co-Promotion Agreement, the Company appointed Sanofi
to co-promote and conduct certain commercialization activities with respect to teplizumab in the United States on a co-exclusive basis
for the treatment of the indication for which teplizumab receives approval in the United States during the term of the Sanofi Co-Promotion
Agreement. Under the Sanofi Co-Promotion Agreement, Sanofi commits to making field resources representing more than 100 FTEs available
for such co-promotion and commercialization activities if teplizumab is approved in the United States by a certain date.
Pursuant
to the Sanofi Co-Promotion Agreement, the Company commits to reimburse the field force-related expenses and certain other allowable expenses
that Sanofi will incur in connection with commercializing teplizumab under the agreement, up to an aggregate cap of $33 million, which
includes a pre-determined margin on field force-related expenses.
Pursuant
to the Sanofi Co-Promotion Agreement, the Company also granted Sanofi an exclusive, one-time right of first negotiation to obtain exclusive
rights to research, develop and commercialize teplizumab with respect to the treatment or delay of Type 1 diabetes, or any of its root
causes throughout the world, and to manufacture teplizumab in support of such research, development and commercialization (the “ROFN”)
in exchange for a one-time upfront payment of $20 million, and subject to certain retained rights of the Company to engage in discussions
with third parties with respect to certain transactions (“Third Party Transactions”). Sanofi may exercise the ROFN beginning
on October 4, 2022 until June 30, 2023 (the “Initial ROFN Period”), and the Initial ROFN Period may be extended (a) at Sanofi’s
election, upon payment of a one-time extension fee, to the later of (i) September 30, 2023, and (ii) 60 days after the Company delivers
to Sanofi the top-line data for an identified clinical trial sponsored by the Company (the “Data Delivery Date”); or (b)
automatically, without an extension fee, to 60 days after the Data Delivery Date if the Company does not receive regulatory approval
for teplizumab before November 30, 2022. Within six months following the later of the expiration of (x) the Initial ROFN Period, and
(y) any extension to the Initial ROFN Period pursuant to the terms of the Sanofi Co-Promotion Agreement, the Company may not enter into
a Third Party Transaction on terms that are materially less favorable in the aggregate to the Company than the most recent terms Sanofi
offered, if any, without first permitting Sanofi to execute an agreement with the Company on either such terms previously offered by
Sanofi or the terms offered by such third party.
The
activities of the Company and Sanofi under the Sanofi Co-Promotion Agreement in the United States will be overseen by a joint steering
committee composed of representatives from the Company and Sanofi. Under the Sanofi Co-Promotion Agreement, subject to any execution
of a definitive agreement following an exercise of the ROFN (as defined below), the Company will retain the right to develop, manufacture,
supply and distribute, as well as determine the commercialization strategy for, teplizumab and will remain responsible for the costs
of holding and maintaining regulatory approval of, reporting adverse events relating to, developing, manufacturing, supplying and distributing
teplizumab.
The
term of the Sanofi Co-Promotion Agreement expires on December 31, 2023. Subject to specified notice periods and limitations, (a) Sanofi
may terminate the Sanofi Co-Promotion Agreement early if regulatory approval for teplizumab either is not obtained in the U.S. by December
31, 2022 or is obtained but later withdrawn or the Company undergoes a change of control with a major biopharmaceutical company with
a certain level of financial resources and (b) either the Company or Sanofi may terminate the Sanofi Co-Promotion Agreement early if
(i) the other party commits an uncured material breach, (ii) the other party undergoes a bankruptcy event, (iii) there is a material
safety event associated with teplizumab, or (iv) there is a prolonged delay in performance due to a force majeure event.
Securities
Purchase Agreement
Simultaneously
with their entry into the Sanofi Co-Promotion Agreement, the Company and Sanofi also entered into a Securities Purchase Agreement (the
“Purchase Agreement”). Pursuant to the Purchase Agreement, if the Biologics License Application submitted to the United States
Food and Drug Administration (the “FDA”) for the delay of clinical type 1 diabetes in at-risk individuals is approved by
the FDA, Sanofi has agreed to purchase $35 million of the Company’s common stock, par value $0.0001 per share (the “Common
Stock”). The purchase price per share will equal 140% of the daily volume-weighted average per share price of the Common Stock
for the five consecutive trading days prior to the closing date. The closing date and five consecutive trading day period for determining
the purchase price per share shall be at the Company’s election, but the closing must occur no later than February 16, 2023.
Pursuant
to the Purchase Agreement, prior to June 30, 2023 (the “Lock-Up Period”) Sanofi will not, without the prior written consent
of the Company, directly or indirectly, (i) offer, pledge, sell, contract to sell, sell any shares of Common Stock, or otherwise dispose
of or transfer any Shares (collectively, the “Lock-Up Securities”) or (ii) enter into any swap or any other agreement or
any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Securities,
whether any such swap or transaction is to be settled by delivery of Common Stock or other securities, provided, that the foregoing shall
not prohibit (a) Sanofi from transferring any Lock-Up Securities to any of its affiliates or to the Company, (b) the disposition of any
Lock-Up Securities pursuant to (x) any merger, consolidation or similar transaction to which the Company is a constituent corporation
or (y) a bona fide tender offer or exchange offer made to all holders of Common Stock by a person other than the Sanofi or any of Sanofi’s
affiliates, or (c) Sanofi from transferring shares of Common Stock to reduce its ownership below 19.9% if the Common Stock owned by Sanofi
represents greater than 19.9% ownership of the then-outstanding shares of Common Stock solely as a result of an action taken by the Company.
The
Purchase Agreement also provides Sanofi with demand registration rights in respect of the shares of Common Stock issued pursuant to the
Purchase Agreement, subject to certain conditions. In addition, in the event that the Company registers additional shares of common stock
for sale to the public, the Company will be required to give notice of such registration to Sanofi, and, subject to certain limitations,
include Sanofi’s shares of Common Stock in such registration. The registration rights granted under the Purchase Agreement will
commence on June 30, 2023 and expire on June 30, 2025.
The
foregoing is a summary description of certain terms of the Sanofi Co-Promotion Agreement and the Purchase Agreement are not complete
and are qualified in its entirety by reference to the text of the Sanofi Co-Promotion Agreement and the Purchase Agreement, which the
Company expects to file as exhibits to the Company’s Annual Report on Form 10-K for the fiscal ending December 31, 2022.