Item 1.01. Entry into a Material Definitive Agreement.
On March 5, 2018, Ligand Pharmaceuticals Incorporated (the “Company” or “Ligand”) entered into a License Agreement with Roivant Sciences GmbH (“Roivant”), pursuant to which, among other things, Ligand granted to Roivant an exclusive (even as to Ligand), royalty-bearing right and license under patents related to Ligand’s Glucagon Receptor Antagonist (“GRA”) program, including the lead compound LGD-6972, and related know-how (collectively, the “Licensed Technology”) to develop, make, have made, use, sell, have sold, import and export any product covered by the Licensed Technology in and for all uses in humans or animals. Roivant will be responsible for research, development, manufacturing and commercialization activities, including all regulatory filings, and has the right to sublicense its rights in certain circumstances.
The licensed products are inhibitors of glucagon receptors, which may provide an alternative approach to controlling blood glucose levels in patients with diabetes. Rights to the GRA program were acquired by Ligand pursuant its acquisition of Metabasis Therapeutics, Inc. (“Metabasis”) and since then Ligand has advanced development of the GRA program and conducted clinical trials related to the GRA program.
Under the terms of the License Agreement, Ligand is entitled to receive total potential license and milestone payments of up to $548.8 million, which is comprised of $20 million payable upon signing and an additional aggregate amount of up to $528.8 million of one-time, non-refundable milestone payments in connection with licensed products containing any Licensed Technology upon the achievement of certain development, regulatory and sales-based milestones. Roivant is also obligated to pay to Ligand royalties on aggregate annual worldwide net sales of licensed products at tiered percentage rates ranging from low double digits to the mid-teens, with the top tier applying to annual net sales above three billion dollars.
Unless earlier terminated, the term of the License Agreement shall continue until the later of, on a country-by-country basis, (i) the expiration of the patent that covers a licensed product in such country, (ii) the expiration of any market exclusivity or data exclusivity granted by the applicable regulatory authority in such country, and (iii) 12 years after the first commercial sale of the licensed product in such country.
Either party may terminate the License Agreement upon the other party's uncured material breach of the License Agreement, insolvency, or bankruptcy. In addition, Ligand has the right to terminate the License Agreement if Roivant challenges the validity of a licensed patent and Roivant has the right to terminate the License Agreement for convenience following a specified period after notice of termination.
In the event that the License Agreement is terminated for any reason: (i) all licenses granted to Roivant under the License Agreement will terminate and Roivant will, upon Ligand’s request, assign and transfer to Ligand, at no cost to Ligand, all regulatory documentation and all regulatory approvals to the extent related to the licensed products; and (ii) Roivant will enter into good faith negotiations with Ligand regarding the grant to Ligand of an exclusive, royalty-bearing, worldwide license under any Roivant-controlled patent rights, improvements, know-how and other intellectual property related to the licensed products.
The foregoing summary of the terms of the License Agreement does not purport to be complete and is qualified in its entirety by reference to the License Agreement, copies of which will be filed with the Securities and Exchange Commission by Ligand with its Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2018, requesting confidential treatment for certain portions.