Item 1.01
Entry into a Material Definitive Agreement.
On November 10, 2016, Eagle Pharmaceuticals, Inc. (
Eagle
), entered into a Stock Purchase Agreement (the
Purchase Agreement
) with Arsia Therapeutics, LLC (the
Seller
), Arsia Therapeutics, Inc. (
Arsia
), Amy Schulman, as the Seller Representative, and each other holder of limited liability company interests of the Seller who executes a joinder thereto and becomes a party to the Purchase Agreement (collectively referred to as the
Parties
). The Purchase Agreement provides for the Seller to sell all of the outstanding capital stock of Arsia (the
Shares
) to Eagle, subject to the terms and conditions set forth in the Purchase Agreement.
Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions thereof, at the closing Eagle will pay in exchange for the Shares (a) an amount equal to $27,259,272 in cash,
plus
(i) Arsias cash and cash equivalents at closing,
minus
(ii) any debt of Arsia not paid prior to closing,
minus
(iii) Arsias transaction expenses, to the extent greater than $175,000, and
minus
(iv) $100,000 to cover expenses of the Seller Representative and (b) a number of shares of Eagles common stock equal to $2,740,728 (collectively, the
Closing Amount
). For purposes of paying the Closing Amount, the shares of Eagles common stock will be valued based on the average of the closing sale prices per share as reported on The NASDAQ Stock Market for the thirty (30) trading days prior to the closing date. The terms of the Purchase Agreement require any recipients of Eagles common stock to sign a lock-up agreement that, among other things, provides for a lock-up period of 12 months for all of the shares of Eagle common stock issued in connection with the Closing Amount or the Milestone Payments (as defined below).
Eagle has also agreed to pay up to an additional $48 million to the Seller upon achievement of certain clinical, regulatory and development milestones (collectively, the
Milestone Payments
), subject to acceleration under certain circumstances described in the Purchase Agreement. The Milestone Payments will be in cash, shares of Eagles common stock, or a combination of both, at the election of the Seller or Seller Representative, as applicable. For purposes of paying the Milestone Payments, the shares of Eagles common stock will be valued based on the average of the closing sale prices per share of Eagles common stock as reported on The NASDAQ Stock Market (or other national exchange upon which the Eagles common stock is then listed) for the thirty (30) trading days prior to the date such milestone is achieved or consummated, as applicable, and the thirty (30) trading days including and following the date such milestone is achieved or consummated, as applicable.
The transaction is subject to customary conditions. The Parties currently anticipate that the transaction will be completed within one week. The Purchase Agreement contains customary representations, warranties, covenants and indemnities of each of Eagle and the Seller and the equityholders of the Seller. The Purchase Agreement provides for limited termination rights, including but not limited to, by the mutual consent of the Parties; upon certain breaches of representations, warranties, covenants or agreements; and in the event the transactions have not been consummated on or before December 31, 2016.
The representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of the Purchase Agreement, were made as of specific dates, were made solely for the benefit of the parties to the Purchase Agreement and may not have been intended to be statements of fact but, rather, as a method of allocating risk and governing the contractual rights and relationships among the Parties. The assertions embodied in those representations and warranties may be subject to important qualifications and limitations agreed to by Eagle and Arsia in connection with negotiating their respective terms. Moreover, the representations and warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders of Eagle. For the foregoing reasons, none of Eagles stockholders or any other person should rely on such representations and warranties, or any characterizations thereof, as statements of factual information at the time they were made or otherwise.
The foregoing summary of the Purchase Agreement is subject to, and qualified in its entirety by, the full text of the Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.