Item 1.01 Entry into a
Material Definitive Agreement.
On September 15, 2016 (the
“Execution Date”), Geron Corporation (“Geron” or the
“Company”) and Janssen
Pharmaceuticals, Inc. (“Janssen Pharmaceuticals”), entered into a license
agreement (the “License Agreement”) granting Janssen Pharmaceuticals exclusive
worldwide rights (the “Exclusive License”) under Geron’s proprietary patents and
related know-how for the development and commercialization of products based on
specialized oligonucleotide backbone chemistry, as well as novel amidates for
ribonucleic acid interference, or RNAi, for the prevention, treatment and/or
diagnosis of any and all human disorders, excluding cancers originating from the
blood or bone marrow, and products whose predominant or primary mechanism of
action is telomerase inhibition.
In addition to the Exclusive
License, Geron has granted to Janssen Pharmaceuticals a non-exclusive, worldwide
license (the “Non-Exclusive License”) under Geron patent rights covering the
synthesis of monomers, which are the building blocks of oligonucleotides,
necessary for the research, development and commercialization of the
oligonucleotides. The patent rights under the Non-Exclusive License are also
licensed exclusively to Janssen Biotech, Inc., or Janssen Biotech, under the
Collaboration and License Agreement, or CLA, executed by Janssen Biotech and
Geron on November 13, 2014 for the imetelstat program, and the License Agreement
expressly excludes, and is subject to, the rights and licenses granted to
Janssen Biotech under the CLA.
Janssen Pharmaceuticals is
required to use reasonable efforts to perform research, development and
commercialization activities to obtain at least one licensed product to be
researched, developed and commercialized under the License Agreement, at Janssen
Pharmaceutical’s sole cost.
Upon the execution of the
License Agreement, Janssen Pharmaceuticals owes to Geron a non-refundable
upfront payment of $5 million. In addition, Geron will be eligible to receive up
to $75 million in development and regulatory milestone payments, as well as
royalties in the low single digit percentage range on aggregate worldwide net
sales of each licensed product. Earned royalties will be subject to royalty
stacking in the event that Janssen Pharmaceuticals is obligated to make royalty
payments to any third party having patent claims covering a licensed product as
a composition of matter.
Under the terms of the License
Agreement, Geron remains responsible for prosecution and maintenance of the
patent rights under the Exclusive License, with reasonable input provided by
Janssen Pharmaceuticals. The costs of prosecution and maintenance of patent
rights under the Exclusive License will be shared 50/50 by the parties.
Ownership of any intellectual property developed under the License Agreement
will be determined in accordance with U.S. patent laws. Geron remains
responsible for prosecuting and maintaining the patent rights under the
Non-Exclusive License, as set forth in the CLA.
The License Agreement contains
customary representations, warranties and covenants by Geron and Janssen
Pharmaceuticals. Each of Geron and Janssen Pharmaceuticals is required to
indemnify the other against all claims relating to the indemnifying party’s
negligence or willful misconduct, failure to comply with its obligations under
the License Agreement, breaches of warranties, or violations of law, except to
the extent resulting from negligence or breach by the
indemnified party. Janssen Pharmaceuticals is also
responsible for indemnifying Geron against any claims arising from the
development, commercialization or manufacture of any licensed product under the
License Agreement, except to the extent resulting from negligence or breach by
Geron.
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The License Agreement will
remain in effect until the expiration of the last-to-expire licensed patent
right, unless terminated earlier. It may be terminated by either Geron or
Janssen
Pharmaceuticals in the event
of uncured material breach or insolvency proceeding by the other party. Janssen
Pharmaceuticals also may terminate the License Agreement at will upon prior
written notice to Geron. In the event of early termination, all licenses to
Janssen Pharmaceuticals would terminate.
The foregoing description of
the 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 License Agreement, which will be filed with the
Securities and Exchange Commission (the “SEC”) as an exhibit to the Company’s
Quarterly Report on Form 10-Q for the quarter ending September 30,
2016.
Use of Forward-Looking
Statements
Except for the historical
information contained herein, this Current Report on Form 8-K contains
forward-looking statements made pursuant to the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
statements in this Current Report on Form 8-K regarding: (i) the Company’s
receipt of an upfront payment and potential receipt of development and regulatory
milestone payments, as well as royalties on potential sales under the License Agreement;
(ii) that Janssen Pharmaceuticals will exercise reasonable efforts, or any
efforts, to develop at least one licensed product under the License Agreement;
(iii) Janssen Pharmaceuticals’ planned activities under the License Agreement; and (iv) other
statements that are not historical facts, constitute forward-looking statements.
These statements involve risks and uncertainties that can cause actual results
to differ materially from those in such forward-looking statements. These risks
and uncertainties, include, without limitation, risks and uncertainties related
to: (i) the uncertainty and time consuming nature of product development and
regulatory activities by Janssen Pharmaceuticals; (ii) the fact that Geron may
not receive any upfront, milestone, royalty or other payments from Janssen
Pharmaceuticals; (iii) the ability of Geron to prosecute and maintain the
licensed patent rights that are the subject of the License Agreement; (iv) the
risk that Janssen Pharmaceuticals may breach or terminate the License Agreement and Geron may
not obtain the anticipated financial and other benefits of the License
Agreement; and (v) other risks described in Geron’s SEC filings, including under
the heading “Risk Factors”. Additional information and factors that could cause
actual results to differ materially from those in the forward-looking statements
are contained in Geron’s periodic reports filed with the SEC under the heading
“Risk Factors,” including Geron’s quarterly report on Form 10-Q for the quarter
ended June 30, 2016. Undue reliance should not be placed on forward-looking
statements, which speak only as of the date they are made, and the facts and
assumptions underlying the forward-looking statements may change. Except as
required by law, Geron disclaims any obligation to update these forward-looking
statements to reflect future information, events or circumstances.
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