0000764195 false VBI Vaccines Inc/BC 0000764195 2023-07-05 2023-07-05 iso4217:USD xbrli:shares iso4217:USD xbrli:shares

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): July 5, 2023

 

VBI VACCINES INC.

(Exact name of registrant as specified in its charter)

 

British Columbia, Canada   001-37769   N/A

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

160 Second Street, Floor 3

Cambridge, Massachusetts

  02142
(Address of principal executive offices)   (Zip Code)

 

(617) 830-3031

(Registrant’s telephone number, including area code)

 

N/A

(Former Name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of exchange on which registered
Common Shares, no par value per share   VBIV   The NASDAQ Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement

 

On July 5, 2023, VBI Vaccines Inc. (the “Company”) entered into (i) a Collaboration and License Agreement, (ii) an Amended & Restated Collaboration and License Agreement, (iii) a Supply Agreement, (iv) a Letter Agreement and (v) a Stock Purchase Agreement with Brii Biosciences Limited, an exempted company organized under the laws of the Cayman Islands (“Brii Bio”).

 

Collaboration and License Agreement

 

On July 5, 2023, the Company and Brii Bio entered into a Collaboration and License Agreement (the “Collaboration Agreement”), pursuant to which, among other things, subject to the terms and conditions set forth in the Collaboration Agreement, the Company and Brii Bio agreed to collaborate on the further development of PreHevbri, a three antigen vaccine for use in the field of the prevention of Hepatitis B in the licensed territory (“PreHevbri” or “Licensed Product”), which consists of the Asia Pacific region other than Japan (the “PreHevbri Licensed Territory”). In addition, the Company granted Brii Bio an exclusive royalty-bearing license, with the right to grant sublicenses through multiple tiers in accordance with the terms of the Collaboration Agreement, for Brii Bio, its affiliates and sublicensees to, among other things,: (I) perform, or have performed, studies and regulatory and other activities as may be required to obtain and maintain marketing approval of PreHevbri in the PreHevbri Licensed Territory, and (II) research, develop, make, have made, distribute, use, sell, offer for sale, have sold, import, export or otherwise commercialize PreHevbri in the field of the prevention of Hepatitis B in the PreHevbri Licensed Territory.

 

Further, pursuant to the Collaboration Agreement, Brii Bio agreed to, among other things: (i) use commercially reasonable efforts to obtain and maintain marketing approval for PreHevbri in the PreHevbri Licensed Territory, and (ii) bear 100% of all costs and expenses relating to requesting and maintaining marketing approval for PreHevbri in the PreHevbri Licensed Territory. The Company will supply quantities of PreHevbri for use by Brii Bio in the commercialization of PreHevbri and in the conduct of clinical trials in the PreHevbri Licensed Territory, either itself or through a secondary manufacturer, in accordance with the terms and conditions set forth in the Supply Agreement. The Company agreed to: (i) provide assistance, facilitation, and support including providing all documents and data reasonably requested by Brii Bio in a timely manner and at Brii Bio’s cost to obtain and maintain marketing approvals in the PreHevbri Licensed Territory and the applicable product importation licenses, (ii) provide Brii Bio copies of any communications received from or sent to any regulatory authority in the PreHevbri Licensed Territory regarding clinical trials, marketing approvals, or PreHevbri or the Licensed Products, and (iii) transfer to Brii Bio the currently existing global safety database for PreHevbri or the Licensed Products for the PreHevbri Licensed Territory.

 

The initial consideration of the Collaboration Agreement consisted of a $2,000,000 non-refundable upfront payment. In addition, the Company is also eligible to receive up to an additional $195 million in potential regulatory and sales milestone payments, along with up to double-digit royalties on commercial sales in the PreHevbri Licensed Territory.

 

 

 

 

The Collaboration Agreement will be in effect on a region-by-region and Licensed Product-by-Licensed Product basis until the last-to-expire of the latest of the following terms in each region of the Licensed Territory: (i) 10 years from the date of first commercial sale of such Licensed Product in the applicable region or (ii) termination or expiration of the Company’s obligation to pay third party royalties with respect to sales of such Licensed Product in such region. Upon expiration (but not an earlier termination) of the Collaboration Agreement in each region of the Licensed Territory, the Company will grant Brii Bio a perpetual, non-exclusive, fully paid-up, royalty free license under the Company’s technology related to the licensed compounds or Licensed Products pursuant to the Collaboration Agreement in such region to make and sell Licensed Products for the field of the prevention of Hepatitis B in such region.

 

Each party may terminate the Collaboration Agreement upon a material breach of the Collaboration Agreement which has not been cured within 60 days (or 30 days for a breach payment obligations) after notice from the terminating party requesting cure of the breach, or upon bankruptcy or insolvency, either voluntary or involuntary, dissolution or liquidation of a party. In addition, Brii Bio may terminate the Collaboration Agreement either with respect to a region or in its entirety, without cause, upon 180 days’ written notice or, if a Data and Safety Monitoring Board or any regulatory authority in the PreHevbri Licensed Territory imposes a clinical hold on any clinical trial for a Licensed Product for six consecutive months, immediately upon notice. The Company may terminate the Collaboration Agreement immediately upon written notice, if Brii Bio or its affiliates, distributor or sublicensees directly, or indirectly through any third party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any patents owned or controlled by the Company claiming the composition or the method of making or using licensed compounds or Licensed Products, or are otherwise necessary or useful to research, develop, make, or otherwise commercialize the licensed compounds or Licensed Products.

 

The Collaboration Agreement also contains mutual representation and warranties, confidentiality and indemnification provisions customary for transactions of this nature.

 

Amended & Restated Collaboration and License Agreement

 

As previously disclosed, on December 4, 2018, the Company and Brii Bio entered into a Collaboration and License Agreement (the “Original Collaboration Agreement”), pursuant to which the Company and Brii Bio agreed to collaborate on the development of a Hepatitis B recombinant protein-based immunotherapeutic in the licensed territory, which consists of China, Hong Kong, Taiwan, and Macau (collectively, the “VBI-2601 Licensed Territory”).

 

On July 5, 2023, the Company and Brii Bio agreed to amend and restate the Original Collaboration Agreement (the “A&R Collaboration Agreement”), to, among other things, subject to the terms and conditions set forth in the A&R Collaboration Agreement, expand the VBI-2601 Licensed Territory to the entire world (the “New Licensed Territory”) for Brii Bio’s exclusive rights and licenses to make, have made, use, sell, offer for sale, and import VBI-2601 (“VBI-2601 Licensed Product”).

 

Pursuant to the A&R Collaboration Agreement, the Company granted Brii Bio an exclusive royalty-bearing license, with the right to grant sublicenses through multiple tiers, to (i) perform studies, regulatory and other activities, as may be required to obtain and maintain marketing approval of the VBI-2601 Licensed Products in the New Licensed Territory; and (ii) research, develop, make, have made, distribute, use, sell, offer for sale, have sold, import, export or otherwise commercialize the VBI-2601 Licensed Products for the field of the diagnosis and treatment of Hepatitis B in the New Licensed Territory. Except for the rights and licenses expressly granted in the A&R Collaboration Agreement, the Company and Brii Bio retained all rights under their respective intellectual property.

 

Further, pursuant to the A&R Collaboration Agreement, Brii Bio agreed to, among other things: (i) use commercially reasonable efforts to obtain and maintain marketing approval for at least one (1) Licensed Product in at least the US and Greater China, and (ii) bear 100% of all costs and expenses relating to requesting and maintaining marketing approval for the VBI-2601 Licensed Products in the New Licensed Territory. The Company will supply quantities of VBI-2601 Licensed Products for use by Brii Bio in the commercialization of VBI-2601 Licensed Products and in the conduct of clinical trials in the New Licensed Territory, either itself or through a secondary manufacturer, in accordance with the terms and conditions set forth in the Supply Agreement. The Company agreed to: (i) provide assistance, facilitation and support including providing all documents and data reasonably requested by Brii Bio in a timely manner and at Brii Bio’s cost to obtain and maintain marketing approvals in the New Licensed Territory and the applicable product importation licenses, (ii) provide Brii Bio copies of any communications received from or sent to any regulatory authority in the New Licensed Territory regarding clinical trials, marketing approvals, or the VBI-2601 Licensed Products, and (iii) transfer to Brii Bio the currently existing global safety database for the VBI-2601 Licensed Products.

 

 

 

 

The initial consideration of the A&R Collaboration Agreement consisted of a $5,000,000 non-refundable upfront payment. In addition, the Company is also eligible to receive up to an additional $226 million in potential regulatory and net sales milestone payments, along with up to double-digit royalties on commercial sales in the New Licensed Territory.

 

The A&R Collaboration Agreement will be in effect on a region-by-region basis until the last-to-expire of the latest of the following terms in each region of the New Licensed Territory: (i) expiration, invalidation or lapse of the last Company patent claiming such VBI-2601 Licensed Product, (ii) 10 years from the date of first commercial sale of such VBI-2601 Licensed Product in the applicable region, or (iii) termination or expiration of the Company’s obligation to pay third party royalties with respect to sales of such VBI-2601 Licensed Product in such region. Upon expiration (but not an earlier termination) of the Collaboration Agreement in each region of the New Licensed Territory, the Company will grant Brii Bio a perpetual, non-exclusive, fully paid-up, royalty free license under the Company’s technology related to the licensed compounds or VBi-2601 Licensed Products pursuant to the A&R Collaboration Agreement in such region to make and sell VBI-2601 Licensed Products for the field of the diagnosis and treatment of Hepatitis B in such region.

 

Each party may terminate the A&R Collaboration Agreement upon a material breach of the A&R Collaboration Agreement which has not been cured within 60 days (or 30 days for a breach payment obligations) after notice from the terminating party requesting cure of the breach, or upon bankruptcy or insolvency, either voluntary or involuntary, dissolution or liquidation of a party. In addition, Brii Bio may terminate the A&R Collaboration Agreement either with respect to a region or in its entirety, without cause, upon 180 days’ written notice or, if a Data and Safety Monitoring Board or any regulatory authority in the New Licensed Territory imposes a clinical hold on any clinical trial for a VBI-2601 Licensed Product for six consecutive months, immediately upon notice. The Company may terminate the A&R Collaboration Agreement immediately upon written notice, if Brii Bio or its affiliates, distributor or sublicensees directly, or indirectly through any third party, commences any interference or opposition proceeding with respect to, challenges the validity or enforceability of, or opposes any extension of or the grant of a supplementary protection certificate with respect to, any patents owned or controlled by the Company claiming the composition or the method of making or using licensed compounds or VBI-2601 Licensed Products, or are otherwise necessary or useful to research, develop, make, or otherwise commercialize the licensed compounds or VBI-2601 Licensed Products.

 

The A&R Collaboration Agreement also contains mutual representation and warranties, confidentiality and indemnification provisions customary for transactions of this nature.

 

Supply Agreement

 

On July 5, 2023, in connection with the Collaboration Agreement and the A&R Collaboration Agreement (collectively, the “Collaboration Agreements”), the Company and Brii Bio entered into a Supply Agreement (the “Supply Agreement”) pursuant to which the Company agreed to manufacture and supply a furnished VBI-2601 Licensed Product or PreHevbri (collectively, the “Products”) to Brii Bio in accordance with the Collaboration Agreements. If the Company achieves a qualified underwritten public offering of Common Shares of the Company, subject to a minimum gross proceeds requirement, within 90 days of effective date of the Supply Agreement, Brii Bio has agreed to pay the Company $5,000,000 as an advance payment for the clinical and commercial manufacture and supply of the Products and any related expenditures. Pursuant to the Supply Agreement, the Company agreed to manufacture the Products exclusively for Brii Bio in the applicable licensed territory.

 

 

 

 

Amendment to Loan Agreement

 

As previously disclosed, the Company and its subsidiary Variation Biotechnologies Inc., a Canadian federal corporation, as borrowers, entered into a Loan and Guaranty Agreement dated as of May 22, 2020, as amended by the first amendment, dated as of May 17, 2021 and that second amendment, dated as of September 14, 2022, and as such agreement may be amended from time to time in the future (collectively, the “Loan Agreement”) with K2 HealthVentures LLC (“K2HV”) and any other lenders party thereto from time to time (collectively, the “Loan Parties”) with the obligations under the Loan Agreement secured on a senior basis by a lien on substantially all of the assets of the Company and its subsidiaries.

 

On July 5, 2023, the Loan Parties entered into (i) an amendment (the “Third Amendment”) to the Loan Agreement and (ii) an amendment to the Pledge and Security Agreement dated May 22, 2020, by and among the Company, VBI Vaccines (Delaware) Inc., a Delaware corporation, Variation Biotechnologies (US) Inc., a Delaware corporation, K2HV, and Ankura Trust Company, LLC, as collateral trustee for the lenders, pursuant to which the parties have agreed to permit the Collaboration Agreements, the Supply Agreement, and the Letter Agreement (as defined below). Pursuant to the Third Amendment, any breach of default by the Company under the Collaboration Agreements will cross default the Third Amendment. In addition, the Company granted to K2VH a security interest in, all of its respective right, title and interest in and to substantially all of the Company’s intellectual property.

 

Letter Agreement

 

On July 5, 2023 in connection with the Collaboration Agreements, the Supply Agreement, and the Loan Agreement, the Company, Brii Bio and SciVac Ltd., an Israeli corporation and a subsidiary of the Company, entered into a Letter Agreement (the “Letter Agreement”) pursuant to which the Company agreed, at any time the Company has less than $50 million of consolidated cash-on-hand available to fund ongoing operating activities (“Available Operating Cash”), to provide Brii Bio (A) within 30 business days of each calendar month, a calculation in reasonable detail of Company’s Available Operating Cash and (B) (i) copies of all manufacturing information, financial statements, notices and other related materials that it provides to its board of directors, (ii) at Brii Bio’s discretion, monthly or quarterly calls with Brii Bio’s CEO, CFO, and CTO, as necessary, (iii) copies of all notices of default, acceleration or the exercise of rights or remedies received or delivered by the Company under the Loan Agreement, and (iv) specified notice materials.

 

Pursuant to the Letter Agreement, the Company also granted to Brii Bio a security interest, subject to a Subordination Agreement between Brii Bio and K2HV, in, all of its respective right, title and interest in and to all intellectual property, know-how, and licenses to the extent related to PreHevbri and VBI-2601, and all proceeds of the foregoing (collectively, the “Collateral”), in order to secure performance of all of the Company’s obligations under the Collaboration Agreements, the Supply Agreement, and the Loan Agreement.

 

Brii Bio has agreed to release its lien in the Collateral, or the applicable portion thereof, upon (i) a merger, consolidation, or sale of all or substantially all the assets of the Company (including the Collateral) or a disposition of all or any part of the Collateral and, in each case, the acquiror is not an affiliate of the Company and assumes all of the Company’s obligations under the applicable collaboration agreement(s) and, to the extent applicable, the Collaboration Agreements, to the extent K2HV releases its liens thereon (except in such case if K2HV continues to be a holder of secured obligations to the purchaser or successor in such transaction), (ii) the Company’s debt and other obligations under the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), including all principal, accrued interest and fees and final payment, are paid in full (other than through a refinancing by a new lender(s)), (iii) with respect to PreHevbri, K2HV releases its lien in all or a part of the common Collateral in order to permit the Company to enter into an out-license to or other strategic transaction with a person that is not an affiliate of the Company and involving a region not subject to Brii Bio’s PreHevbri license agreement (as and to the extent then in effect), (iv) in the event of termination of the Collaboration Agreements.

 

 

 

 

Stock Purchase Agreement

 

On July 5, 2023, the Company entered into a Stock Purchase Agreement (the “SPA”) with Brii Bio, pursuant to which, subject to a minimum gross proceeds requirement, the Company will sell to Brii Bio common shares of the Company, no par value per share (the “Common Shares”), for an aggregate purchase price of $3,000,000 (the “Transaction”). The Transaction is contingent upon the closing of a concurrent underwritten public offering for aggregate gross proceeds of at least $5,000,000.

 

The SPA contains representations and warranties of the Company and Brii Bio that are typical for transactions of this type. The SPA also contains covenants on the part of the Company that are typical for transactions of this type.

 

The foregoing summary of the SPA is not complete and is qualified in its entirety by reference to the full text of the SPA attached hereto as Exhibit 10.1, to this Report.

 

The Company and Brii Bio have also agreed that if the consummation of the underwritten public offering has not occurred on or prior to July 11, 2023, either party shall have the right to revoke their signatures from each of the Collaboration Agreements, the Supply Agreement, and the Letter Agreements, and such revocation shall be deemed as if the agreements are null and void and as though they had never been made or entered into, and neither party will have any liability to the other under either the Collaboration Agreements and the Supply Agreement.

 

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference in this Item 2.03.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The information contained in Item 1.01 of this Report in relation to the Shares is incorporated herein by reference.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

The information required by this Item 3.03 is contained in Item 1.01 and is incorporated by reference herein.

 

Item 8.01 Other Events.

 

On July 5, 2023, the Company issued a press release announcing its entry into the Collaboration Agreements, the Supply Agreement, the Letter Agreement, the SPA, and the Third Amendment. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is hereby incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.   Description
10.1   Stock Purchase Agreement dated July 5, 2023 between the Company and Brii Biosciences Limited
99.1   Press Release dated July 5, 2023 (furnished pursuant to Item 7.01)
104   Cover Page Interactive Data File (formatted as Inline XBRL).

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  VBI Vaccines Inc.
     
Date: July 5, 2023 By: /s/ Jeffrey R. Baxter
    Jeffrey R. Baxter
    President and Chief Executive Officer

 

 

 

 

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of July 5, 2023, by and between VBI Vaccines Inc., a British Columbia corporation (the “Company”), and Brii Biosciences Limited, an exempted company organized under the laws of the Cayman Islands (“Investor”).

 

PREAMBLE

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement, the Company and the Investor are entering into Collaboration Documents (as defined below) relating to, among other things, the development and commercialization by the Company and Investor of the Company’s hepatitis B portfolio products;

 

WHEREAS, Subject to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to the Investor, and the Investor desires to purchase, upon the terms and conditions stated in this Agreement (including any adjustment under Section 2.1), common shares of the Company, no par value per share (the “Common Shares”) and accompanying common warrants, each warrant entitling the holder to purchase one Common Share at an exercise price determined based on the exercise price per share pursuant to the common warrants to be issued in the Company’s Qualified Offering (the “Warrants”; and together with Common Shares, the “Securities”) having an aggregate purchase price of $3,000,000 with the number of Securities purchased determined based on the price per Security paid in the (before commissions and expenses) in the Company’s Qualified Offering (the “Securities ”).

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:

 

Article 1
DEFINITIONS

 

In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

 

Affiliate” means, with respect to a Person, any Person that controls, is controlled by or is under common control with such first Person. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities, by contract relating to voting rights or corporate governance or otherwise, or (b) to own, directly or indirectly, fifty percent (50%) or more of the outstanding securities or other ownership interest of such Person. For the purposes of this Agreement, neither Party shall be considered an Affiliate of the other, and the Affiliates of each Party shall not be considered Affiliates of the other Party or of any of such other Party’s Affiliates.

 

Agreement” has the meaning set forth in the Preamble.

 

Business Day” means any day (other than a Saturday, Sunday or a legal holiday) on which banks are open for general business in New York, New York.

 

Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

 

 

 

Closing Date” means the date and time of the Closing which shall take place as set forth in Section 2.1.

 

Collaboration Documents” means agreements entered into on the date hereof (including the License Agreements, the related supply agreement and lender agreement) with respect to the development and commercialization by the Company and Investor of the Company’s hepatitis B portfolio products and the other agreements, schedules and exhibits referred to therein.

 

Common Shares” has the meaning set forth in the Preamble.

 

“Company” has the meaning set forth in the Preamble.

 

Company Intellectual Property” has the meaning set forth in Section 3.1(h).

 

Company Canadian Counsel” means Stikeman Elliott LLP, counsel to the Company.

 

Convertible Securities” means any share or securities (other than Options) convertible into or exercisable or exchangeable for Common Shares.

 

Equity Securities” means any all Common Shares and any securities of the Company convertible into, or exchangeable or exercisable for, such shares, and options, warrants or other rights to acquire such shares.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

GAAP” has the meaning set forth in Section 3.1(g).

 

Indemnified Party” has the meaning set forth in Section 5.2(a).

 

Indemnifying Party” has the meaning set forth in Section 5.2(a).

 

Intellectual Property” means patents, patent applications, trademarks, trademark applications, service marks, trade names, trade dress, trade secrets, inventions and discoveries and invention disclosures whether or not patented, copyrights in both published and unpublished works, including without limitation all compilations, data bases and computer programs, materials and other documentation, licenses, internet domain names and other intellectual property rights and similar rights.

 

Investor” has the meaning set forth in the Preamble.

 

Knowledge” of the Company means with respect to any statement made to the knowledge of the Company, that the statement is based upon the actual knowledge, after reasonable due inquiry, of any executive officer of the Company as of the date of this Agreement.

 

“License Agreements” that certain Collaboration and License Agreementand an Amended & Restated Collaboration and License Agreement, each dated as of the date hereof.

 

Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction.

 

Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation, reasonable attorneys’ fees.

 

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Options” means any outstanding rights, warrants, or options to subscribe for or purchase Common Shares or Convertible Securities.

 

Outstanding Share Ownership Percentage” has the meaning set forth in Section 2.1.

 

Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, a government or any department or agency thereof and any other legal entity.

 

Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, a partial proceeding, such as a deposition), whether commenced or threatened in writing.

 

Prospectus” means the final base prospectus filed for the Registration Statement, including the documents incorporated or deemed to be incorporated by reference therein..

 

Prospectus Supplement” means the supplement to the Prospectus complying with Rule 424(b) of the Securities Act that is filed with the SEC and delivered by the Company to the Investor at the Closing.

 

Purchase Price” means Three Million U.S. Dollars ($3,000,000), subject to adjustment as provided in Section 2.1.

 

Qualified Offering” means the concurrent SEC registered underwritten public offering by VBI of Securities resulting in a minimum of aggregate gross proceeds of five million U.S. Dollars (US$5,000,000), before commissions and expenses (for avoidance of doubt excluding the Investor’s purchase pursuant to this Agreement).

 

Registration Statement” means that certain registration statement on Form S-3 filed by the Company with the SEC on August 26, 2022.

 

Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

 

“SEC” means the United States Securities and Exchange Commission.

 

SEC Reports” has the meaning set forth in Section 3.1(g).

 

Securities” has the meaning set forth in the preamble.

 

Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps, derivatives and similar arrangements.

 

Subsidiary” means any entity in which the Company, directly or indirectly, owns capital stock or holds an equity or similar interest.

 

Trading Day” means (i) a day on which the Common Shares are traded on a Trading Market (other than the OTCQB or OTCQX), or (ii) if the Common Shares are not listed or quoted on a Trading Market (other than the OTCQB or OTCQX), a day on which the Common Shares are traded in the over-the-counter market, as reported by the OTCQB or OTCQX, or (iii) if the Common Shares are not listed or quoted on any Trading Market, a day on which the Common Shares are quoted in the over-the-counter market as reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Shares are not listed or quoted as set forth in (i), (ii) and (iii) hereof, then a Trading Day shall mean a Business Day.

 

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Trading Market” means whichever of the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTCQB or OTCQX on which the Common Shares are listed or quoted for trading on the date in question.

 

Transaction” has the meaning set forth in Section 3.2(h).

 

“Transaction Documents” means this Agreement, the Warrants, the Collaboration Documents, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

Transfer Agent” means Computershare, or any successor transfer agent for the Company.

 

Warrant Shares” means the Common Shares acquired on the exercise of the Warrants.

 

Warrants” has the meaning set forth in the Preamble.

 

Article 2
PURCHASE AND SALE

 

2.1 Closing; Securities and Purchase Price Adjustment. Subject to the terms and conditions set forth in this Agreement, at the Closing, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, the Common Shares and Warrants for the Purchase Price. The date and time of the Closing shall be July 10th, 2023 at the offices of the Company Canadian Counsel or such other time or location as the parties shall mutually agree; provided that this Agreement shall automatically terminate if the Closing does not occur on or prior to July 11th, 2023. To the extent Investor’s purchase hereunder would result in the Investor owning more than 9.9% of the Company’s outstanding Common Shares (after giving effect to Investor’s purchase under this Agreement and the Qualified Financing and excluding, for avoidance of doubt, Warrants purchased hereunder) (“Outstanding Share Ownership Percentage”), then number of Securities purchased hereunder by Investor shall be reduced (rounded to the nearest whole share) such that Investor’s Ownership Percentage equals 9.9% and the Purchase Price shall be correspondingly reduced.

 

2.2 Closing Deliveries and other Deliveries.

 

(a) At the Closing, the Company shall deliver or cause to be delivered to the Investor (i) a copy of the Company’s irrevocable instructions to the Transfer Agent instructing the Transfer Agent to register the Common Shares, free and clear of all restrictive and other legends, in book-entry form in the name of the Investor; and (ii) a Warrant registered in the name of the Investor.

 

(b) At the Closing, the Investor shall deliver or cause to be delivered to the Company the Purchase Price in United States dollars by wire transfer to an account designated in writing to the Investor by the Company for such purpose.

 

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(c) At the Closing, the Investor shall deliver a letter pursuant to which the Investor is prohibited from exercising any Warrant until the six-month anniversary of the Closing Date;

 

(d) On or prior to the Closing Date, the Company shall deliver the Prospectus and Prospectus Supplement (which may be delivered in accordance with Rule 172 under the Securities Act).

 

(e) The Company shall, by 5:30 p.m. Eastern time on the second Trading Day immediately following the Closing Date, issue a Current Report on Form 8-K including the form of this Agreement and an opinion of the Company Canadian Counsel as to the validity of the Securities as exhibits thereto.

 

2.3 Closing Conditions.

 

(a) The Company’s obligation to issue and sell the Securities to Investor and the Investors’s obligation to purchase the Securities from the Company shall be subject to: (i) the execution of the other Collaboration Documents prior to or substantially concurrently with this Agreement; (ii) no stop order suspending the effectiveness of the Registration Statement or any part thereof, or preventing or suspending the use of the Prospectus or the Prospectus Supplement or any part thereof, shall have been issued and no proceedings for that purpose or pursuant to Section 8A under the Securities Act shall have been initiated or threatened by the SEC; and (iii) no objection shall have been raised by the Nasdaq Stock Market LLC and unresolved with respect to the consummation of the transactions contemplated by this Agreement or in connection with the Qualified Offering.

 

(b) The Company’s obligation to issue and sell the Securities s to Investor and the Investors’s obligation to purchase the Securities s from the Company shall be subject:

 

(i) the Investor’s representations and warranties contained herein shall be true and correct in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) as of the date hereof and as of the Closing Date as if made as of the Closing Date (unless such representation or warranty was made as of a specific date, in which case such representation and warranty shall be true and correct as of such date);

 

(ii) all obligations, covenants and agreements to be performed or complied with by the Investor on or prior to the Closing shall have been performed or complied with by it; and

 

(iii) the delivery by the Investor of the items to be delivered to the Company as set forth in Section 2.2 above.

 

(c) The Investor’s obligation to purchase the Securities from the Company shall be subject to:

 

(i) the closing of the Company’s Qualified Offering concurrently with the Closing hereunder;

 

(ii) the Company’s representations and warranties contained herein shall be true and correct in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) as of the date hereof and as of the Closing Date as if made as of the Closing Date (unless such representation or warranty was made as of a specific date, in which case such representation and warranty shall be true and correct in all material respects (or, to the extent representations or warranties are qualified by materiality, in all respects) as of such date);

 

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(iii) all obligations, covenants and agreements to be performed or complied with by the Company on or prior to the Closing shall have been performed or complied with by it;

 

(iv) the delivery by the Company of the items to be delivered to the Investor as set forth in Section 2.2 above; and

 

(v) the Company shall have filed with Nasdaq Capital Market a Notification Form: Listing of Additional Shares for the listing of the Common Shares and the Warrant Shares.

 

Article 3
REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except as set forth in the SEC Reports or in the schedules delivered concurrently herewith:

 

(a) Organization and Qualification. The Company is an entity duly organized, validly existing and in good standing under the laws of British Columbia, Canada, with the requisite legal authority to own and use its properties and assets and to carry on its business as currently conducted. Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, formation, bylaws or other organizational or charter documents. The Company and each Subsidiary is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, reasonably be expected to result in a material liability to the Company and its Subsidiaries, taken as a whole.

 

(b) Subsidiaries. The Company owns or controls, directly or indirectly, all of the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien except as described in Section 3.1(b), and all issued and outstanding shares of capital stock or comparable equity interest of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights; and the Company has no Subsidiaries other than the corporations, partnerships, limited liability partnerships, limited liability companies, associations or other entities set forth on Schedule I.

 

(c) Authorization; Enforcement. The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder including the issuance and sale of the Securities. The execution and delivery by the Company of the Transaction Documents to which it is party and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which the Company is a party has been duly executed by the Company and is the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

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(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement, and the other Transaction Documents to which it is a party to and the consummation by the Company of the transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) in any material respect, conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound, or affected, or (iii) in any material respect, result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including, assuming the accuracy of the representations and warranties of the Investor set forth in Section 3.2 hereof, federal, state and provincial securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company is bound or affected.

 

(e) Issuance of the Securities; Registration. The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investor). The Warrant Shares, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital stock the maximum number of Shares issuable pursuant to this Agreement and the Warrants. The Company has prepared and filed the Registration Statement, including the Prospectus, and such amendments and supplements thereto as may have been required to the date of this Agreement. The Company was at the time of the filing of the Registration Statement eligible to use Form S-3. The Company is eligible to use Form S-3 under the Securities Act and it meets the transaction requirements as set forth in General Instruction I.B.1 of Form S-3. The Registration Statement is effective under the Securities Act and no stop order preventing or suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Prospectus has been issued by the SEC and no proceedings for that purpose have been instituted or are pending or, to the knowledge of the Company, are threatened by the SEC. The Company, if required by the rules and regulations of the SEC, shall file the Prospectus Supplement with the SEC pursuant to Rule 424(b). At the time the Registration Statement and any amendments thereto became effective, at the date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment or supplement thereto was issued, at the time of any filing with the SEC pursuant to Rule 424(b) and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, at the time the Registration Statement became effective or when such documents incorporated by reference were filed with the SEC, as the case may be, when read together with the other information in the Registration Statement or the Prospectus, as the case may be, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.

 

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(f) Capitalization. The aggregate number of shares and type of all authorized, issued and outstanding classes of capital stock, Options and other securities of the Company (whether or not presently convertible into or exercisable or exchangeable for shares of capital stock of the Company) is set forth on Schedule 3.1(f). All outstanding shares of capital stock are duly authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all material respects with all applicable securities laws. Except as set forth on Schedule 3.1(f), the Company does not have outstanding any Options, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, nor has it entered into any agreement giving any Person any right to subscribe for or acquire, any Common Shares, or securities or rights convertible or exchangeable into Common Shares. Except for customary adjustments as a result of stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or other similar events, there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) and the issuance and sale of the Securities will not obligate the Company to issue Common Shares, Warrants or other securities to any Person (other than the Investor) and will not result in a right of any holder of securities to adjust the exercise, conversion, exchange or reset price under such securities.

 

(g) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. Such reports required to be filed by the Company under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, together with the exhibits thereto and the documents incorporated by reference therein, together with the Prospectus and the Prospectus Supplement and any freewriting prospectus, being collectively referred to herein as the “SEC Reports”. As of their respective dates (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing), the SEC Reports filed by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed (or, if amended or superseded by a filing prior to the date hereof, then on the date of such filing) by the Company, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing (or, if amended or superseded by a filing prior to the Closing Date, then on the date of such filing). Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements, the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or may be condensed or summary statements, and fairly present in all material respects the consolidated financial position of the Company and the Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC.

 

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(h) Intellectual Property. Except as described in Schedule 3.1(h), the Company owns, or has the right pursuant to a valid, written license agreement to use and exploit, all Intellectual Property used in or necessary for the conduct of the business of the Company and that is material to the business of the Company as conducted as of the Closing (the “Company Intellectual Property”). To the knowledge of the Company, (i) all issued patents and registered trademarks that are Company Intellectual Property and that are owned by the Company are valid and enforceable and are currently in compliance with formal legal requirements (including without limitation, as applicable, payment of filing, examination and maintenance fees, proofs of working or use, timely post registration filing of affidavits of use and incontestability and renewal applications), and (ii) there is no existing infringement or misappropriation by another Person of any of the Company Intellectual Property. Except as disclosed in the SEC Reports, no claims have been asserted by a third party in writing (a) alleging that the conduct of the business of the Company has infringed or misappropriated any Intellectual Property rights of such third party, or (b) challenging or questioning the validity or effectiveness of any Intellectual Property right of the Company, and, to the knowledge of the Company, there is no valid basis for any such claim. No loss or early expiration of any of the Company’s material Intellectual Property is pending, or, to the knowledge of the Company, threatened. The Company has taken reasonable steps in accordance with standard industry practices to protect its rights in the Company Intellectual Property and at all times has maintained the confidentiality of all information used in connection with the business that constitutes or constituted a trade secret of the Company.

 

(i) CFIUS. The Company does not engage in (a) the design, fabrication, development, testing, production or manufacture of one (1) or more “critical technologies” within the meaning of the Defense Production Act of 1950, as amended, including all mplementing regulations thereof (the “DPA”); (b) the ownership, operation, maintenance, supply,manufacture, or servicing of “covered investment critical infrastructure” within the meaning of the DPA (where such activities are covered by column 2 of Appendix A to 31 C.F.R. Part 800); or (c) the maintenance or collection, directly or indirectly, of “sensitive personal data” of U.S. citizens within the meaning of the DPA. The Company has no current intention of engaging in such activities in the future.

 

(j) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents (other than any fee payable by the Company for Securities sold in the concurrent Qualified Offering). The Investor shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type hereby that may be due in connection with the transactions contemplated by this Agreement.

 

3.2 Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company as follows:

 

(a) Organization; Authority. The Investor is a corporation duly organized, validly existing and in good standing under the laws of the Cayman Islands with the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The purchase by the Investor of the Securities hereunder has been duly authorized by all necessary corporate action on the part of the Investor. Each Transaction Document to which it is a party has been duly executed and delivered by the Investor and constitutes the valid and binding obligation of the Investor, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

 

(b) Investor Status. At the time the Investor was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. The Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a broker dealer.

 

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(c) Investor Experience of the Investor. The Investor, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Investor understands that it must bear the economic risk of this investment in the Securities indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment.

 

(d) No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the other Transaction Documents and the consummation by the Investor of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal, state and provincial securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of the Investor to consummate the transactions contemplated hereby.

 

(e) Prohibited Transactions. The Investor has not, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with the Investor has, engaged in any purchases or sales in the securities, including derivatives, of the Company (including, without limitation, any Short Sales (a “Transaction”) involving any of the Company’s securities) since the time that the Investor was first contacted by the Company or any other Person regarding an investment in the Company. The Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with the Investor will engage, directly or indirectly, in any Transactions in the securities of the Company (including Short Sales) prior to the time the transactions contemplated by the Transaction Documents are publicly disclosed.

 

Article 4
OTHER AGREEMENTS OF THE PARTIES

 

4.1 Use of Proceeds. The Company will use the net proceeds from the sale of the Securities for working capital and general corporate purposes.

 

4.2 Public Statements. Except as required by applicable law or regulation, neither party hereto shall issue any press release or other public announcement concerning the existence of or terms of the Transction Documents without the prior written consent of the other Party, which consent shall not be unreasonably withheld. Each Party agrees to provide to the other Party a copy of any proposed press release or other public announcement as soon as reasonably practicable under the circumstances prior to the proposed date of dissemination thereof. The party proposing such press release or other public announcement shall consider in good faith any changes to such proposed press release or public announcement that are requested by the other party.

 

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Article 5
INDEMNIFICATION

 

5.1 Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless the Investor, its officers, directors, partners, members, agents and employees, each Person who controls the Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions hereby (which, for the avoidance of doubt, shall not include the Collaboration Agreements or any agreements, certificates, instruments or documents ancillary thereto), (ii) any breach of any covenant, agreement or obligation of the Company contained in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the License Agreements or any agreements, certificates, instruments or documents ancillary thereto), or (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section 5.2(a) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) the execution, delivery, performance or enforcement of this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the Collaboration Agreements or any agreements, certificates, instruments or documents ancillary thereto), or (y) the status of Indemnified Party as a holder of the Securities (unless, and only to the extent that, such action, suit or claim is based, including in part, upon a breach of the Investor’s representations, warranties or covenants in this Agreement or any other agreement, certificate, instrument or document delivered in connection with the consummation of the transactions contemplated hereby (which, for the avoidance of doubt, shall not include the Collaboration Agreements or any agreements, certificates, instruments or documents ancillary thereto), or any conduct by the Investor that constitutes fraud, gross negligence or willful misconduct).

 

5.2 Conduct of Indemnification Proceedings.

 

(a) If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

(b) An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It shall be understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

 

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(c) All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

 

The indemnity and agreements contained in this Article 6 are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

Article 6
GENERAL PROVISIONS

 

6.1 Fees and Expenses. Except as expressly set forth in this Agreement and/or the Prospectus Supplement, to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and issuance of theSecurities.

 

6.2 Entire Agreement. This Agreement, together with the exhibits and schedules hereto, the Prospectus and the Prospectus Supplement, contains the entire understanding of the parties with respect to the purchase of the Securities and supersedes all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.

 

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6.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

6.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

6.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.

 

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Indemnified Party is an intended third party beneficiary of Section 5.1, as applicable, and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder.

 

6.8 Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND THE INVESTOR HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR THE INVESTOR HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR THE INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND THE INVESTOR HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

6.9 Survival. The representations and warranties, agreements and covenants contained herein shall survive the Closing.

 

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6.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.

 

6.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12 Replacement of Certificates. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and the execution by the holder thereof of a customary lost certificate affidavit of that fact, an agreement to indemnify and hold harmless the Company for any Losses in connection therewith and the posting by the Investor of any bonds as may be required by the Transfer Agent.

 

6.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investor and the Company will be entitled to seek specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree to waive in any action for specific performance of any such obligation (other than in connection with any action for a temporary restraining order) the defense that a remedy at law would be adequate.

 

[SIGNATURE PAGES TO FOLLOW]

 

14

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

  VBI Vaccines Inc.
     
  By: /s/ Jeff R. Baxter
  Name: Jeff R. Baxter
  Title: Chief Executive Officer

 

  Address for Notice:
   
  VBI Vaccines Inc.
 

160 Second Street, Floor 3

  Cambridge, MA 02142
  Attn: Chief Executive Officer
   
  With a copy (which shall not constitute notice) to:
   
  Haynes and Boone, LLP
 

30 Rockefeller Plaza, 26th Floor

  New York, NY 10112
  Attention: Rick A. Werner

 

  Brii Biosciences limited
     
  By: /s/Zhi Hong
  Name: Zhi Hong
  Title: Chief Executive Officer

 

  Address for Notice:
   
 

Brii Biosciences Limited

  Vistra (Cayman) Limited
  PO Box 3119
  Grand Pavilion Hibiscus Way
  802 West Bay Road Grand Cayman KYI-1205
 

Attn: Zhi Hong

  Email: zhi.hong@briibio.com

 

 

 

 

Schedule 3.1(b)

 

Liens granted pursuant to that certain Loan and Guaranty Agreement, by and among the Company and VBI Cda, as borrowers, and K2 HealthVentures LLC and other lenders from time-to-time party thereto, as lenders, dated May 22, 2020, as amended by the First Amendment, dated May 7, 2021, the Second Amendment, dated September 14, 2022, and as further amended, restated, amended and restated, supplemented or otherwise modified from that time to time.

 

 

 

 

Schedule 3.1(f)

 

The following table lists the number and type of securities outstanding:

 

Type of Security   Amount
Shares   8,608,539
Warrants   103,930
Beneficial Conversion   205,396
Stock Options   785,628
Total Diluted   9,703,493

 

 

 

 

Schedule 3.1(h)

 

The patent family covering the VBI-1501 vaccine candidate for cytomegalovirus is co-owned by Universite Sorbonne.

 

 

 

 

Schedule I

 

Subsidiaries

 

Name of Subsidiary  Country of Incorporation 

Ownership Interest

(direct or indirect)

 
VBI Vaccines (Delaware) Inc.  Delaware (U.S.A)   100%
SciVac Ltd.  Rehovot (Israel)   100%
Variation Biotechnologies (US), Inc.  Delaware (U.S.A)   100%
Variation Biotechnologies Inc.  Ottawa, Ontario (Canada)   100%
SciVac Hong Kong Limited  Hong Kong   100%
VBI Vaccines B.V.  Netherlands   100%

 

 

 

 

Exhibit 99.1

 

 

VBI Vaccines and Brii Biosciences Expand Hepatitis B Partnership To Address Both Prevention and Treatment in License and Collaboration Agreements for up to $437 Million Plus Royalties

 

Brii Biosciences has acquired worldwide exclusive license to VBI-2601 and an exclusive license for PreHevbri® in the Asia Pacific region
VBI will receive gross proceeds of $15 million in upfront payments, subject to near-term milestone achievements, including an equity investment of approximately $3 million
VBI is eligible to receive up to $422 million in additional potential regulatory and commercial milestone payments, plus double-digit royalties

 

CAMBRIDGE, Mass. (July 5, 2023) – VBI Vaccines Inc. (Nasdaq: VBIV) (“VBI” or the “Company”), a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease, today announced the expansion of its hepatitis B (HBV) partnership with Brii Biosciences (“Brii Bio”) (Stock code: 2137.HK). Through two license and collaboration agreements, Brii Bio expanded its exclusive license to VBI-2601 (BRII-179), VBI’s HBV immunotherapeutic candidate, to global rights and acquired an exclusive license for PreHevbri, VBI’s 3-antigen hepatitis B vaccine, in the Asia Pacific region (APAC).

 

Jeff Baxter, President and CEO of VBI, stated: “This expanded partnership with Brii Bio is a strong endorsement for our HBV programs and our contribution to the fight against hepatitis B. Through a variety of partnerships, Brii Bio is at the forefront of development for an HBV functional cure, bringing together a diverse HBV portfolio with the potential to gain immunologic control over the hepatitis B virus and, with VBI-2601, achieve HBV-specific immune restoration. With over 150 million HBV infected people in APAC, improvements in prevention and treatment strategies in this region are essential. Brii Bio’s proven ability to move quickly and execute clinical programs, coupled with their strategic investments in the HBV field, accelerates the potential for long-term value creation for both VBI-2601 and for PreHevbri in this partnership.”

 

Zhi Hong, President and CEO of Brii Bio, stated: “We are excited to substantially strengthen our partnership with VBI, expanding our HBV pipeline and reinforcing our commitment to public health by combatting HBV. By exploring combination cure strategies across our portfolio, we aim to produce the most durable curative treatment in the broadest population of HBV-infected patients. The addition of the APAC rights for PreHevbri enables us to address HBV burdens from prevention to cure and jump-start our commercialization efforts in China and Asia Pacific.”

 

As part of the collaborations, Brii Bio will pay VBI an upfront payment of $15 million, including an equity investment of approximately $3 million, contingent on achievement of near-term milestones. VBI is also eligible to receive up to an additional $422 million in potential regulatory, and commercial milestone payments, and potential double-digit royalties in the licensed territories, which is worldwide for VBI-2601 and APAC, excluding Japan, for PreHevbri. Brii Bio will be responsible for all development, regulatory, and commercialization activities and costs for the two programs in their respective licensed territories. VBI will retain global rights to PreHevbri outside of APAC. The transaction is subject to certain closing conditions including the satisfactory completion of a financing.

 

 

 

 

About VBI-2601 and the Ongoing Phase 2 Clinical Studies

 

VBI-2601 (BRII-179) is a novel recombinant, protein-based HBV immunotherapeutic candidate that builds upon the 3-antigen conformation of VBI’s prophylactic 3-antigen HBV vaccine candidate and is designed to target enhanced B-cell and T-cell immunity. VBI-2601 (BRII-179) is currently being evaluated in two Phase 2 clinical studies with Brii Biosciences as part of a potential functional cure for chronic hepatitis B infection.

 

Interim data from the Phase 2 study evaluating the combination of VBI-2601 and VIR-2218 (BRII-835), an HBV-targeting siRNA candidate, in chronically infected HBV patients were announced in February 2023 at the Annual Conference of the Asian Pacific Association for the Study of the Liver (APASL). These data highlighted the potential of VBI-2601 as a valuable immunomodulatory component within a functional cure regimen-. Brii Bio intends to further evaluate VBI-2601 as part of a combination cure strategy in upcoming studies, with a goal to substantially improve upon cure rates achieved with PEG-IFN- α alone and to expand the population of chronic HBV patients eligible for a potential functional cure.

 

About PreHevbri®

 

PreHevbri is the only 3-antigen hepatitis B vaccine, comprised of the three hepatitis B surface antigens of the hepatitis B virus – S, pre-S1, and pre-S2. It is approved for use in the United States, European Union/European Economic Area, United Kingdom, Canada, and Israel. The brand names for this vaccine are: PreHevbrio® (US/Canada), PreHevbri® (EU/EEA/UK), and Sci-B-Vac® (Israel).

 

Please visit www.PreHevbrio.com for U.S. Important Safety Information for PreHevbrio® [Hepatitis B Vaccine (Recombinant)], or please see U.S. Full Prescribing Information.

 

U.S. Indication

 

PreHevbrio is indicated for prevention of infection caused by all known subtypes of hepatitis B virus. PreHevbrio is approved for use in adults 18 years of age and older.

 

U.S. Important Safety Information (ISI)

 

Do not administer PreHevbrio to individuals with a history of severe allergic reaction (e.g. anaphylaxis) after a previous dose of any hepatitis B vaccine or to any component of PreHevbrio.

 

Appropriate medical treatment and supervision must be available to manage possible anaphylactic reactions following administration of PreHevbrio.

 

Immunocompromised persons, including those on immunosuppressant therapy, may have a diminished immune response to PreHevbrio.

 

PreHevbrio may not prevent hepatitis B infection, which has a long incubation period, in individuals who have an unrecognized hepatitis B infection at the time of vaccine administration.

 

The most common side effects (> 10%) in adults age 18-44, adults age 45-64, and adults age 65+ were pain and tenderness at the injection site, myalgia, fatigue, and headache.

 

There is a pregnancy exposure registry that monitors pregnancy outcomes in women who received PreHevbrio during pregnancy. Women who receive PreHevbrio during pregnancy are encouraged to contact 1-888-421-8808 (toll-free).

 

To report SUSPECTED ADVERSE REACTIONS, contact VBI Vaccines at 1-888-421-8808 (toll-free) or VAERS at 1-800-822-7967 or www.vaers.hhs.gov.

 

Please see Full Prescribing Information.

 

 

 

 

About VBI Vaccines Inc.

 

VBI Vaccines Inc. (“VBI”) is a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease. Through its innovative approach to virus-like particles (“VLPs”), including a proprietary enveloped VLP (“eVLP”) platform technology, VBI develops vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. VBI is committed to targeting and overcoming significant infectious diseases, including hepatitis B, coronaviruses, and cytomegalovirus (CMV), as well as aggressive cancers including glioblastoma (GBM). VBI is headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel.

 

Website Home: http://www.vbivaccines.com/

News and Resources: http://www.vbivaccines.com/news-and-resources/

Investors: http://www.vbivaccines.com/investors/

 

Cautionary Statement on Forward-looking Information

 

Certain statements in this press release that are forward-looking and not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are forward-looking information within the meaning of Canadian securities laws (collectively, “forward-looking statements”). The Company cautions that such forward-looking statements involve risks and uncertainties that may materially affect the Company’s results of operations. Such forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, including but not limited to, the impact of general economic, industry or political conditions in the United States or internationally; the impact of the COVID-19 pandemic and the continuing effects of the COVID-19 pandemic on our clinical studies, manufacturing, business plan, and the global economy; the ability to successfully manufacture and commercialize PreHevbrio/PreHevbri; the ability to establish that potential products are efficacious or safe in preclinical or clinical trials; the ability to establish or maintain collaborations on the development of pipeline candidates and the commercialization of PreHevbrio/PreHevbri; the ability to obtain appropriate or necessary regulatory approvals to market potential products; the ability to obtain future funding for developmental products and working capital and to obtain such funding on commercially reasonable terms; the Company’s ability to manufacture product candidates on a commercial scale or in collaborations with third parties; changes in the size and nature of competitors; the ability to retain key executives and scientists; and the ability to secure and enforce legal rights related to the Company’s products. A discussion of these and other factors, including risks and uncertainties with respect to the Company, is set forth in the Company’s filings with the SEC and the Canadian securities authorities, including its Annual Report on Form 10-K filed with the SEC on March 13, 2023, and filed with the Canadian security authorities at sedar.com on March 13, 2023, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q. Given these risks, uncertainties and factors, you are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. All such forward-looking statements made herein are based on our current expectations and we undertake no duty or obligation to update or revise any forward-looking statements for any reason, except as required by law.

 

VBI Contact

 

Nicole Anderson

Director, Corporate Communications & IR

Phone: (617) 830-3031 x124

Email: IR@vbivaccines.com

 

 

 

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