Item 1.01
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Entry into a Material Definitive Agreement
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On July 12, 2017, BioDelivery Sciences
International, Inc. (BDSI), its wholly-owned subsidiary Arius Pharmaceuticals, Inc. (collectively with BDSI, the Company), and Purdue Pharma, an Ontario limited partnership (Purdue), entered into a License
Agreement (the License Agreement) under which the Company granted to Purdue the exclusive rights to commercialize BELBUCA
®
(buprenorphine hydrochloride buccal film) in Canada.
BELBUCA is BDSIs approved treatment for the management of pain severe enough to require daily, continuous, long-term treatment and that is opioid-responsive and for which alternative options are inadequate.
Also on July 12, 2017, the Company and Purdue also entered into a Supply Agreement (the Supply Agreement) under which the
Company agreed to supply (directly or indirectly through third party contractors) to Purdue, and Purdue agreed to acquire exclusively from the Company, all of Purdues needs of BELBUCA in connection with Purdues activities under the
License Agreement, subject to certain exceptions.
Under the terms of the License Agreement, Purdue is responsible for the distribution,
marketing and sale of BELBUCA in Canada. In connection therewith, the Company and Purdue each have agreed to use their best efforts to cause a transfer to Purdue of the current marketing authorization in Canada for BELBUCA, including the previously
issued Notice of Compliance for BELBUCA in Canada and BELBUCAs Canadian drug identification numbers.
Financial terms of the License
Agreement include: (i) total upfront and other cash milestone payments (relating to marketing authorization transfer and certain other marketing- and sales-related milestones) of up to an aggregate of CAD$4.5 million, including
approximately CAD$1.5 million which is expected to be paid to the Company during 2017; (i) a low double digit percent royalty payable quarterly by Purdue to the Company based on Canadian net sales of BELBUCA, which royalty rate is subject to
adjustment in certain negotiated circumstances; (iii) an annual royalty fee commencing a period of time after the commercial launch of BELBUCA in Canada, which fee is creditable against royalties payable by Purdue and subject to reduction in
certain negotiated circumstances; and (iv) reimbursement by Purdue of certain fees and expenses incurred by the Company for obtaining and transferring to Purdue the marketing authorization for BELBUCA in Canada, a portion of which will be
credited against royalties payable by Purdue.
The License Agreement grants to Purdue certain rights of first negotiation and rights of
first refusal for Canadian rights to certain buprenorphine-based products that the Company may seek to out license or itself develop or commercialize in the future, and the parties have agreed to certain restrictions on their ability to
commercialize certain competing products in Canada. The License Agreement also contains customary confidentiality, indemnification and other provisions.
The License Agreement continues until the later of (a) the first date on which there is not a valid claim of the licensed patents
covering BELBUCA in Canada as set forth in the License Agreement or (b) a negotiated date in the calendar year immediately following the first complete calendar year following the a particular anniversary of the Launch in which a predetermined
amount of net sales of BELBUCA in Canada is not met. The License Agreement contains certain negotiated as well as customary early termination provisions including, among others, termination rights related to unexpected regulatory costs, a right by
either party to terminate the License Agreement upon the other partys uncured material breach of the License Agreement or Supply Agreement, insolvency, or bankruptcy, and a right by the Company to terminate in the event first commercial sale
in Canada does not occur within a certain period of marketing authorization transfer or license fees are not paid. Purdue may also terminate the License Agreement if Purdue determines, in its sole discretion, that BELBUCA is not economically viable
for Purdue in Canada or in the event BDSI is acquired by a company commercializing certain limited types of competing products in Canada.
The description of the License Agreement and Supply Agreement above is qualified in its entirety
by reference to the full agreements, which will be filed as exhibits to the Companys Quarterly Report on Form
10-Q
for the period ended September 30, 2017.