Item
1.01. Entry into a Material Definitive Agreement
Entry
into Antares License Agreement
On
October 14, 2021, Lipocine Inc. (the “Company”) entered into a License Agreement (the “License Agreement”) with
Antares Pharma, Inc. ( “Antares”), pursuant to which the Company granted to Antares an exclusive, royalty-bearing, sublicensable
right and license to develop and commercialize, upon final approval of TLANDO® from the U.S. Food and Drug Administration (“FDA”),
the Company’s TLANDO product with respect to testosterone replacement therapy in males for conditions associated with a deficiency
or absence of endogenous testosterone, as indicated in NDA No. 208088, treatment of Klinefelter syndrome, and pediatric indications relating
to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone (the “Field”),
in each case within the United States. As previously announced, the FDA granted tentative approval of TLANDO in December 2020. TLANDO
will be eligible for final approval upon the expiration of the exclusivity period previously granted to Clarus Therapeutics, Inc. with
respect to its drug JATENZO®, which expires on March 27, 2022. The FDA has affirmed the resubmission for final approval
will be a Class 1 resubmission which includes a two-month FDA review goal period. The License Agreement also provides Antares with an
option, exercisable on or before March 31, 2022, to license TLANDO XR, the Company’s potential once-daily oral product candidate
for testosterone replacement therapy. The Company retains development and commercialization rights in the rest of the world, and with
respect to applications outside of the Field inside or outside the United States. Antares will also purchase certain existing inventory
of licensed products from the Company, subject to testing and acceptance procedures.
Upon
execution of the License Agreement, Antares paid to the Company an initial payment of $11 million. Antares will also make additional
payments of $5 million to the Company on each of January 1, 2025 and January 1, 2026, provided that certain conditions are satisfied,
including that no generic competing product has been commercially launched as of such date. The Company is also eligible to receive milestone
payments of up to $160 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with
respect to all products licensed by Antares under the License Agreement. In addition, upon commercialization, the Company will receive
tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net sales of TLANDO in the United States,
subject to certain minimum royalty obligations. If Antares exercises its option to license TLANDO XR, the Company will be entitled to
an additional payment of $4 million, as well as development milestone payments of up to $35 million in the aggregate and tiered royalty
payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the United States.
Pursuant
to the terms of the License Agreement, Antares is generally responsible for expenses relating to the development (including the conduct
of any clinical trials) and commercialization of licensed products in the Field in the United States, while the Company is generally
responsible for expenses relating to development activities outside of the Field and/or the United States.
The
License Agreement will remain in effect until the expiration of the last royalty term under the License Agreement, unless terminated
earlier. Following Antares’ exercise of the option to license TLANDO XR or the commercial launch of TLANDO, Antares may generally
terminate the License Agreement on a product-by-product basis for convenience upon a certain number of days’ written notice, provided
that, with respect to any license by Antares of TLANDO XR, Antares will be required to pay a termination fee if Antares provides notice
of termination of the TLANDO XR license before dosing of the first patient in the Phase 3 trial of TLANDO XR. Each party has the right
to terminate the License Agreement for the other party’s material breach of its obligations under the License Agreement, subject
to cure rights. Either party may terminate the License Agreement if the other party declares bankruptcy. The Company may also terminate
the License Agreement upon thirty (30) days’ written notice if Antares, its affiliates, or a sublicensee of Antares challenges
the enforceability, validity or scope of any patent rights belonging to the Company, subject to the exceptions set forth in the License
Agreement. The Company may also terminate if Antares fails to develop or commercialize TLANDO or, if applicable, TLANDO XR, subject to
certain conditions set forth in the License Agreement. Upon termination, any license granted by the Company to Antares will terminate.
The
License Agreement includes customary representations and warranties on behalf of the Company and Antares as are customarily found in
transactions of this nature, including representations and operative provisions as to the licensed intellectual property, regulatory
matters and compliance with applicable laws. The License Agreement also provides for certain mutual indemnities for breaches of representations,
warranties and covenants.
The
foregoing description of the License Agreement is qualified in its entirety by reference to the full text of the License Agreement, a
copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending September 30, 2021.
The
License Agreement and the above description have been included to provide investors and security holders with information regarding the
terms of the License Agreement. They are not intended to provide any other factual information about the Company or Antares or their
respective subsidiaries or affiliates or stockholders. The representations, warranties and covenants contained in the License Agreement
were made only for purposes of the License Agreement and as of specific dates; were solely for the benefit of the parties to the License
Agreement; and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by
each contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to
investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations
of the actual state of facts or condition of the Company or Antares or any of their respective subsidiaries, affiliates, businesses or
stockholders. Moreover, information concerning the subject matter of the representations, warranties and covenants may change after the
date of the License Agreement, which subsequent information may or may not be fully reflected in public disclosures or statements by
the Company or Antares. Accordingly, investors should read the representations and warranties in the License Agreement not in isolation
but only in conjunction with the other information about the Company or Antares and their respective subsidiaries that the respective
companies include in reports, statements and other filings made with the U.S. Securities and Exchange Commission.
Amendment
to Encap Agreement
On
October 13, 2021, the Company entered into an amendment (the “Amendment”) to the Commercial Manufacturing Services and Supply
Agreement (the “Manufacturing Agreement”) dated March 2, 2016 with MW Encap Ltd. (“Encap”).
The
amendment, among things, (i) provides that no later than one hundred and fifty (150) days prior to FDA approval of TLANDO, a twelve-month
rolling forecast must be provided to Encap with the first ninety (90) days of such forecast considered a firm order for product within
the first six (6) months of executing this amendment, and for each forecast provided following such six-month period the first one hundred
and twenty (120) days of such forecast shall be considered a firm order for product, (ii) reduces Encap’s monthly and annual unit
capacity requirements, (iii) eliminates any minimum monthly or annual purchase requirement by the Company, (iv) adjusts the current pricing
on capsules manufactured by Encap and adds provisions relating to the process for adjusting supply prices for product under the Encap
Agreement, including a cap on the aggregate price increase in a given calendar year, (v) revises Encap’s termination rights to
provide that Encap may terminate the Encap Agreement only (a) if the Company has breached its payment obligations and failed to cure
such breach or (b) without cause upon the provision of written notice with a twenty-four (24) month advance written notice which cannot
be provided within the first two years of the FDA approving TLANDO, and (vi) to provide that the Company may assign the Encap Agreement
without Encap’s prior written consent.
The
foregoing does not purport to be a complete description of the agreement, and is qualified by reference to the full text of such document,
which the Company will file in a subsequent filing with the Securities and Exchange Commission.