UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of |
(I.R.S. Employer |
Incorporation or Organization) |
Identification No.) |
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(Address of Principal Executive Offices) |
(Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each Class |
Trade Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The number of shares outstanding of the registrant’s common stock as of April 28, 2022:
2
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Balance Sheets (unaudited)
(Amounts in thousands except share and per share data)
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March 31, |
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December 31, |
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ASSETS |
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Current Assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable ($ |
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Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities - noncurrent |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Equity method investment |
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Investments and other assets ($ |
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Total Assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses ($ |
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Current portion of operating lease liability |
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Current portion of deferred revenue ($ |
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Total current liabilities |
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Deferred revenue, net of current portion ($ |
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Long-term operating lease liability |
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Other long-term liabilities |
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- |
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Stockholders’ Equity: |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total Liabilities and Stockholders’ Equity |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
3
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)
(Amounts in thousands except per share data)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Collaboration (1) |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Total operating expenses |
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Operating loss |
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( |
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Other (expense) income, net: |
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Interest income |
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Loss from equity method investment |
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( |
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Change in fair value of contingent consideration |
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( |
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Total other (expense) income, net |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
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Weighted average shares outstanding, basic and |
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Other comprehensive loss: |
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Unrealized loss on marketable securities |
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( |
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( |
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Other comprehensive loss from equity method investment |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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(1) Including the following revenue from related party (see Notes 7 and 8): |
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$ |
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$ |
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See notes to condensed consolidated financial statements.
4
INTELLIA THERAPEUTICS, INC.
Condensed Consolidated Statements of Cash Flows (unaudited)
(Amounts in thousands)
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March 31, |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Equity-based compensation |
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Amortization of investment premiums |
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Loss from equity method investment |
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Deferral of equity method investment intra-entity profit on sales |
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Change in fair value of contingent consideration |
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In-process research and development charge |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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Prepaid expenses and other current assets |
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( |
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Operating lease right-of-use assets |
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Other assets |
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( |
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( |
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Accounts payable |
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( |
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( |
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Accrued expenses |
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( |
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( |
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Deferred revenue |
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( |
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( |
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Operating lease liabilities |
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( |
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( |
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Net cash used in operating activities |
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( |
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( |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
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( |
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( |
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Purchases of marketable securities |
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( |
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Maturities of marketable securities |
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Acquired in-process research and development, net of cash acquired of $ |
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( |
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Net cash provided by (used in) investing activities |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from issuance of common stock through at-the-market offerings, |
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Proceeds from options exercised |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents and restricted cash equivalents |
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( |
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Cash and cash equivalents and restricted cash equivalents, beginning of |
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Cash and cash equivalents and restricted cash equivalents, end of period |
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$ |
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$ |
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Reconciliation of cash and cash equivalents and restricted cash |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash equivalents, included in investments and other assets |
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Total cash and cash equivalents and restricted cash equivalents |
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$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
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Purchases of property and equipment unpaid at period end |
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$ |
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$ |
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Right-of-use assets acquired under operating leases |
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Contingent consideration liability assumed in asset acquisition |
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See notes to condensed consolidated financial statements.
5
INTELLIA THERAPEUTICS, INC.
Notes to Condensed Consolidated Financial Statements (unaudited)
1. Overview and Basis of Presentation
Intellia Therapeutics, Inc. (“Intellia” or the “Company”) is a leading clinical-stage genome editing company, focused on developing novel, potentially curative CRISPR/Cas9-based therapeutics. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To realize the transformative potential of CRISPR/Cas9-based technologies, Intellia is building a full-spectrum genome editing company, by leveraging its modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need. For the Company's in vivo programs to address genetic diseases, intravenously administered CRISPR is used as the therapy, in which the Company's proprietary delivery technology enables highly precise editing of disease-causing genes directly within specific target tissues. For the Company's ex vivo programs to address immuno-oncology and autoimmune diseases, CRISPR is used to create the therapy by engineering cells outside of the body. The Company's deep scientific, technical and clinical development experience, along with its robust intellectual property (“IP”) portfolio, enables it to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine.
The condensed consolidated financial statements of the Company included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2021.
On February 2, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with RW Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), Rewrite Therapeutics, Inc., a Delaware corporation (“Rewrite”) and Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the representative of the Rewrite Holders (as defined below). On the effective date of the Merger Agreement, Merger Sub merged with and into Rewrite, with Rewrite surviving as a wholly-owned subsidiary of the Company. Pursuant to the Merger Agreement, and subject to the terms and conditions thereof, the Company paid Rewrite’s former stockholders and optionholders (the “Rewrite Holders”) upfront consideration in an aggregate amount of approximately $
The unaudited condensed consolidated financial statements include the accounts of Intellia Therapeutics, Inc. and its wholly- owned subsidiaries, Intellia Securities Corp. and Rewrite Therapeutics, Inc. All intercompany balances and transactions have been eliminated in consolidation. Comprehensive loss is comprised of net loss, unrealized gain/loss on marketable securities and other comprehensive loss from equity method investment.
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, research and development expenses, valuation of equity and fair value method investments, contingent consideration and equity-based compensation expense. The Company bases its estimates on historical experience and various other assumptions that management believes to be reasonable under the circumstances at the time such estimates are made. Actual results could differ from those estimates. The Company periodically reviews its estimates in light of changes in circumstances, facts and experience. The extent of the impact of the coronavirus disease 19 (“COVID-19”) pandemic on the Company’s operational and financial performance will depend on certain developments, including the length and severity of this pandemic, as well as its effect on the
6
Company’s employees, collaborators and vendors, all of which are uncertain and cannot be predicted. The Company cannot reasonably estimate the extent to which the disruption may materially impact its consolidated results of operations or financial position.
The effects of material revisions in estimates are reflected in the condensed consolidated financial statements prospectively from the date of the change in estimate.
In the opinion of management, the information furnished reflects all adjustments, all of which are of a normal and recurring nature, necessary for a fair presentation of the results for the reported interim periods. The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. The results of operations for interim periods are not necessarily indicative of results to be expected for the full year or any other interim period.
Liquidity
Since its inception through March 31, 2022, the Company has raised an aggregate of approximately $
2. Summary of Significant Accounting Policies
The Company’s significant accounting policies are described in Note 2, “Summary of Significant Accounting Policies” to the consolidated financial statements included in the Annual Report for the year ended December 31, 2021. There have been no material changes during the three months ended March 31, 2022 except for the following.
Asset acquisitions
At the time of acquisition, the Company determines if a transaction should be accounted for as a business combination or acquisition of assets. The Company measures and recognizes asset acquisitions that are not deemed to be business combinations based on the cost to acquire the assets, which includes transaction costs, and the consideration is allocated to the items acquired based on a relative fair value methodology. Goodwill is not recognized in asset acquisitions. In an asset acquisition, the cost allocated to acquire in-process research and development with no alternative future use is charged to research and development expense at the acquisition date.
Contingent consideration
The Company accounts for contingent consideration identified in an asset acquisition, that is payable in cash and does not meet the definition of a derivative under Accounting Standard Codification (“ASC”) 815, Derivatives and Hedging, when the contingency is resolved and the consideration is paid or becomes payable.
The Company accounts for contingent consideration identified in an asset acquisition that is settled in shares of common stock under ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The contingent consideration liability will be recorded at fair value at the end of each reporting period with changes in estimated fair values recorded in other (expense) income in the condensed consolidated statements of operations and comprehensive loss.
The estimated fair value of the contingent consideration liability related to the Rewrite acquisition (see Notes 4 and 9) is determined based on a probability adjusted discounted cash flow model that includes significant estimates and assumptions pertaining to research and development. Significant changes in any of the probabilities of success or in the probabilities as to the periods in which the milestone would be achieved would result in a significantly higher or lower fair value measurement. The Company will continue to adjust the liability for changes in fair value until the obligation is settled or the research is abandoned.
7
3. Marketable Securities
The following table summarizes the Company’s available-for-sale marketable securities as of March 31, 2022 and December 31, 2021 at net book value:
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March 31, 2022 |
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Amortized |
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Gross Unrealized |
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Gross Unrealized |
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Estimated Fair |
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(In thousands) |
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Marketable securities: |
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U.S. Treasury and other government securities |
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$ |
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$ |
- |
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$ |
( |
) |
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$ |
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Financial institution debt securities |
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- |
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( |
) |
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Corporate debt securities |
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- |
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( |
) |
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Other asset-backed securities |
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- |
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( |
) |
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Total |
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$ |
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$ |
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$ |
( |
) |
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$ |
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December 31, 2021 |
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Amortized |
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Gross Unrealized |
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Gross Unrealized |
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Estimated Fair |
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(In thousands) |
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Marketable securities: |
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U.S. Treasury and other government securities |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Financial institution debt securities |
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( |
) |
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Corporate debt securities |
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( |
) |
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Other asset-backed securities |
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( |
) |
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Total |
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$ |
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$ |
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$ |
( |
) |
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$ |
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The amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. At March 31, 2022 and December 31, 2021, the balance in the Company’s accumulated other comprehensive loss was composed of activity related to the Company’s available-for-sale marketable securities and equity method investment. There were
The Company's available-for-sale securities that are classified as short-term marketable securities in the condensed consolidated balance sheet mature within one year or less as of the balance sheet date. Available-for-sale securities that are classified as noncurrent in the condensed consolidated balance sheet are those that mature after
8
4. Fair Value Measurements
The Company classifies fair value-based measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices (unadjusted) in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
As of March 31, 2022 and December 31, 2021, the Company’s financial assets and liabilities recognized at fair value on a recurring basis consisted of the following:
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Fair Value as of March 31, 2022 |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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(In thousands) |
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Assets |
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Cash equivalents and restricted cash equivalents |
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$ |
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$ |
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$ |
- |
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$ |
- |
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||
Marketable securities: |
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U.S. Treasury and other government securities |
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- |
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Financial institution debt securities |
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- |
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- |
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Corporate debt securities |
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- |
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- |
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Other asset-backed securities |
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- |
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- |
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Total marketable securities |
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- |
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Total Assets |
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$ |
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$ |
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$ |
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$ |
- |
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Liabilities |
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Contingent consideration liability - research |
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$ |
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$ |
- |
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$ |
- |
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$ |
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||
Total Liabilities |
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$ |
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|
$ |
- |
|
|
$ |
- |
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$ |
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Fair Value as of December 31, 2021 |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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(In thousands) |
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Assets |
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Cash equivalents and restricted cash equivalents |
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$ |
|
|
$ |
|
|
$ |
- |
|
|
$ |
- |
|
||
Marketable securities: |
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||||
U.S. Treasury and other government securities |
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- |
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Financial institution debt securities |
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- |
|
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- |
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||
Corporate debt securities |
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- |
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- |
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Other asset-backed securities |
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- |
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|
- |
|
||
Total marketable securities |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|||
Total Assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
- |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Certain of the Company’s financial assets, including cash equivalents, restricted cash equivalents and marketable securities, have been initially valued at the transaction price, and subsequently revalued at the end of each reporting period, utilizing third party pricing services or other observable market data. The pricing services utilize industry standard valuation models and observable market inputs to determine value. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2022 or December 31, 2021.
Other financial instruments, including accounts receivable, accounts payable and accrued expense, are carried at cost, which approximates fair value due to the short duration and term to maturity.
The Company's investment in AvenCell Therapeutics, Inc. (“AvenCell”) was recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. Refer to Note 8 for further details.
9
The Company's investment in SparingVision SAS (“SparingVision”) was recorded at fair value, determined according to Level 3 inputs in the fair value hierarchy described above. The Company's investment in Kyverna Therapeutics, Inc. (“Kyverna”) was recorded at cost, which is representative of fair value. Refer to Note 8 for further details. The SparingVision and Kyverna investments (the “investments”) are included in “Investments and other assets” on the condensed consolidated balance sheet. There were no changes in observable prices of these investments as of March 31, 2022.
As discussed further in Note 9, Rewrite Acquisition, under the Merger Agreement, the Rewrite Holders are eligible to receive up to an additional $
The following table reconciles the change in fair value of the contingent consideration liability based on the level 3 inputs listed below (in thousands):
|
For the quarter ended March 31, 2022 |
|
|
Balance at February 2, 2022 (at inception) |
$ |
|
|
Change in fair value |
|
|
|
Balance at March 31, 2022 |
$ |
|
|
|
As of inception (February 2, 2022) |
For the quarter ended March 31, 2022 |
Discount rate |
||
Probability of achievement |
||
Projected year of achievement |
5. Accrued Expenses
Accrued expenses consisted of the following:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2022 |
|
|
2021 |
|
||
|
|
(In thousands) |
|
|||||
Accrued research and development |
|
$ |
|
|
$ |
|
||
Employee compensation and benefits |
|
|
|
|
|
|
||
Accrued legal and professional expenses |
|
|
|
|
|
|
||
Accrued other |
|
|
|
|
|
|
||
Total accrued expenses |
|
$ |
|
|
$ |
|
||
6. Commitments and Contingencies
Litigation
There have been no material changes to any of the outstanding litigation, nor is the Company a party to any new litigation, since December 31, 2021, except as described below. For further information please see the notes to the consolidated financial statements included in the Company’s Annual Report for the year ended December 31, 2021.
License Agreements
The Company is party to license agreements, which include contingent payments. These payments will become payable if and when certain development, regulatory and commercial milestones are achieved. As of March 31, 2022, the satisfaction and timing of the contingent payments is uncertain and not reasonably estimable.
10
7. Collaborations and Other Arrangements
To accelerate the development and commercialization of CRISPR/Cas9-based products in multiple therapeutic areas, the Company has formed, and intends to seek other opportunities to form, strategic alliances with collaborators who can augment its leadership in CRISPR/Cas9 therapeutic development. As of March 31, 2022, the Company’s accounts receivable were related to its collaboration with Regeneron Pharmaceuticals, Inc. (“Regeneron”), and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna. As of December 31, 2021, the Company’s accounts receivable were related to its collaborations with Regeneron and AvenCell and the Company's contract liabilities were related to its collaborations with Regeneron, AvenCell, SparingVision and Kyverna.
The following table presents changes in the Company’s accounts receivable and contract liabilities during the three months ended March 31, 2022 and 2021 (in thousands):
|
|
Balance at |
|
|
Additions |
|
|
Deductions |
|
|
Balance at End |
|
||||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Contract liabilities - Deferred revenue |
|
$ |
|
|
$ |
- |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Balance at |
|
|
Additions |
|
|
Deductions |
|
|
Balance at End |
|
||||
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accounts receivable |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Contract liabilities - Deferred revenue |
|
$ |
|
|
$ |
- |
|
|
$ |
( |
) |
|
$ |
|
||
During the three months ended March 31, 2022 and 2021, the Company recognized the following revenues as a result of changes in the contract liability balance (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
Revenue recognized in the period from: |
|
2022 |
|
|
2021 |
|
||
Amounts included in the contract liability at the beginning of the period |
|
$ |
|
|
$ |
|
||
Costs to obtain and fulfill a contract
The Company did not incur any expenses to obtain collaboration agreements and costs to fulfill those contracts do not generate or enhance resources of the Company. As such,
Regeneron Pharmaceuticals, Inc.
License and Collaboration Agreement
In April 2016, the Company entered into a license and collaboration agreement with Regeneron (the “2016 Regeneron Agreement”). The 2016 Regeneron Agreement has two principal components: i) a product development component under which the parties will research, develop and commercialize CRISPR/Cas-based therapeutic products primarily focused on genome editing in the liver, and ii) a technology collaboration component, pursuant to which the Company and Regeneron will engage in research-related activities aimed at discovering and developing novel technologies and improvements to CRISPR/Cas technology to enhance the Company’s genome editing platform. Under this agreement, the Company also may access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of the Company’s liver programs. At the inception of the 2016 Regeneron Agreement, Regeneron selected the first of its 10 targets, transthyretin (“ATTR”) amyloidosis, which is subject to a co-development and co-promotion agreement between the Company and Regeneron (the “ATTR Co/Co”).
On May 30, 2020, the Company entered into (i) amendment no. 1 (the “2020 Regeneron Amendment”) to the 2016 Regeneron Agreement, (ii) co-development and co-funding agreements for the treatment of hemophilia A and hemophilia B (the “Hemophilia Co/Co”) agreements and (iii) a stock purchase agreement. The collaboration expansion builds upon the jointly developed targeted transgene insertion capabilities designed to durably restore missing therapeutic protein, and to overcome the limitations of traditional gene therapy. The collaboration was extended until April 2024, at which point Regeneron has an option
11
to renew for an additional two years. The 2020 Regeneron Amendment also grants Regeneron exclusive rights to develop products for five additional in vivo CRISPR/Cas-based therapeutic liver targets and non-exclusive rights to independently develop and commercialize up to 10 ex vivo gene edited products made using certain defined cell types.
Since December 31, 2021, there have been no material changes to the key terms of the 2016 Regeneron Agreement and the 2020 Regeneron Amendment (the “Amended Agreements”). For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Revenue Recognition – Collaboration Revenue. Through March 31, 2022, excluding amounts allocated to Regeneron’s purchase of the Company’s common stock, the Company recorded $
As of March 31, 2022, there was approximately $
As of March 31, 2022 and December 31, 2021, the Company had accounts receivable of $
AvenCell Therapeutics, Inc.
On July 30, 2021 (the “Effective Date”), the Company entered into two agreements with AvenCell, a privately held CAR-T cell therapy company formed on that date in a joint venture between the Company, Cellex Cell Professionals GmbH (“Cellex”) and funds managed by Blackstone Life Sciences Advisors L.L.C. (“BXLS”): (i) a license and collaboration agreement (the “LCA”), under which the Company will collaborate to develop allogeneic universal CAR-T cell therapies and which granted AvenCell a license to develop and commercialize genome edited universal CAR-T cell therapies (limited to its use with their switchable, universal CAR-T cell UniCAR and RevCAR platforms); and (ii) a co-development and co-funding agreement (the “AvenCell Co/Co”), under which the Company will co-develop and co-commercialize allogeneic universal CAR-T cell products for an immuno-oncology indication.
Since December 31, 2021, there have been no material changes to the key terms of the LCA and AvenCell Co/Co agreements. For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
Revenue Recognition – Collaboration Revenue. The Company recognized $
As of March 31, 2022, there was approximately $
As of March 31, 2022, the Company did not have accounts receivable related to the AvenCell Co/Co or AvenCell LCA agreements. As of December 31, 2021, the Company had $
12
SparingVision SAS
In October 2021, the Company and SparingVision, a genomic medicine company developing vision saving treatments for ocular diseases, entered into a license and collaboration agreement (the “SparingVision LCA”) to develop novel genomic medicines utilizing CRISPR/Cas9 technology for the treatment of ocular diseases.
Since December 31, 2021, there have been no material changes to the key terms of the SparingVision LCA agreement. For further information on the terms and conditions of these agreements, please see the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
The Company did
Kyverna Therapeutics, Inc.
In December 2021, the Company and Kyverna, a cell therapy company engineering a new class of therapies for autoimmune and inflammatory diseases, entered into a licensing and collaboration agreement (the “Kyverna LCA”), for the development of an allogeneic CD19 chimeric antigen receptor T (“CAR-T”) cell therapy for the treatment of a variety of B cell-mediated autoimmune diseases.
Since December 31, 2021, there have been no material changes to the key terms of the Kyverna LCA agreement. For further information on the terms and conditions of this agreement, please see the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
There was
ONK Therapeutics, Ltd.
On February 12, 2022 the Company entered into a license, collaboration and option agreement (the “ONK LCA”) with ONK Therapeutics, Ltd. (“ONK”), an innovative company dedicated to developing optimally engineered natural killer (“NK”) cell therapies to cure patients with cancer.
Scope: The agreement grants ONK a non-exclusive license to the Company's proprietary ex vivo CRISPR/Cas9-based genome editing platform and its Lipid Nanoparticle (“LNP”)-based delivery technologies for development of up to five allogeneic NK cell therapy products, which license is exclusive with respect to certain guide RNAs (“gRNAs”).
Responsibilities in the earlier stage of the license and collaboration agreement (the “evaluation program”) will be shared between the two parties, with each party bearing their own cost burden. Upon completion of the evaluation program, ONK will identify up to five allogeneic targets for further development under a development program. Once these allogeneic targets have been selected by ONK, any further development costs incurred by the Company are eligible for reimbursement. ONK will be responsible for preclinical and clinical development for the engineered NK cell therapies enabled by the agreement.
Financial Terms: The Company will be eligible to receive up to $
Governance: The parties formed a joint steering committee, which is responsible for monitoring and managing the collaboration prior to program completion.
ONK LCA – Accounting Analysis: The Company determined that the accounting for the ONK LCA is within the scope of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) and its related amendments (collectively known as Accounting Standard Codification (“ASC”) 606 (“ASC 606”)). The Company identified one
13
combined performance obligation related to the license, evaluation and development programs. The LCA did not include an exchange of upfront consideration between the parties. As the ONK LCA progresses, the Company will incur certain expenses. Expenses incurred under the evaluation program will be accounted for under ASC 730, Research and Development. Reimbursements under the development programs represent variable constrained consideration, whereas the Company is acting as the principal, and revenue will be recognized as expenses are incurred. Milestone payments and royalties are constrained consideration and will be recorded as revenue upon achievement. There was no revenue recognized in the three months ended March 31, 2022 related to the ONK LCA.
Novartis Institutes for BioMedical Research, Inc.
In December 2014, the Company entered into a strategic collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the research of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and hematopoietic stem cells (“HSCs”). The agreement was amended in
Revenue Recognition – Milestone: No milestones under the 2014 Novartis Agreement and the Novartis Amendments were achieved during the three months ended March 31, 2022 and 2021. The Company is eligible to receive additional downstream success-based milestones and royalties.
As of March 31, 2022 and December 31, 2021, the Company had
8. Equity-Method Investment and Other Investments
On July 30, 2021, the Company finalized a transaction in which the Company, Cellex and BXLS established AvenCell, a joint venture and privately held company. In exchange for contributing an exclusive license to the joint venture, the Company entered into a Preferred Stock Purchase Agreement with AvenCell for a
The Company has significant influence over, but does not control, AvenCell through its noncontrolling representation on AvenCell’s Board of Directors and the Company’s equity interest in AvenCell. The Company has determined that the preferred stock it owns is in-substance common stock. The Company is not the primary beneficiary as it does not have the power to direct the activities of AvenCell that most significantly impact AvenCell’s economic performance. Accordingly, the Company does not consolidate the financial statements of AvenCell and accounts for its investment using the equity method of accounting.
As of the closing date, the fair value of the Company’s investment in AvenCell was $
The Company recorded the initial investment in AvenCell of $
14
share of losses from AvenCell on a quarterly basis on a one-quarter lag. During the first quarter of 2022, the Company recorded its share of the three months of AvenCell's losses generated in the fourth quarter of 2021 in the Company's operating results and other comprehensive loss, resulting in a reduction of the Company's investment by $
At March 31, 2022, the maximum exposure to loss is limited to the Company’s equity investment in the joint venture.
SparingVision SAS
In connection with the SparingVision LCA (See Note 7), the Company received
Kyverna Therapeutics, Inc.
In connection with the Kyverna LCA (See Note 7), the Company received
9. Rewrite Acquisition
On February 2, 2022, the Company entered into the Rewrite Merger Agreement. Under the Rewrite Merger Agreement, the Company paid the Rewrite Holders upfront consideration in an aggregate amount of $
In addition, the Rewrite Holders are eligible to receive up to an additional $
The Company determined that the research milestone settled in the Company’s common stock is classified as a contingent consideration liability under ASC 480 and therefore the Company recorded a liability for this milestone payment as of the Rewrite Merger Agreement Date at its fair value of $
15
financial reporting period, with the resulting impact reflected in the Company’s condensed consolidated statements of operations and other comprehensive loss, presented within other (expense) income. The milestones that will be settled in cash will be recorded when the contingency is resolved and the consideration is paid or becomes payable. As of March 31, 2022,
The transaction price was determined and allocated as follows (in thousands):
Transaction Price |
|
|
|
Upfront cash consideration |
$ |
|
|
Research contingent consideration liabilities |
|
|
|
Transaction costs |
|
|
|
Total transaction price |
$ |
|
|
Transaction Price Allocated |
|
|
|
In-process research and development |
$ |
|
|
Cash acquired |
|
|
|
Other current assets acquired |
|
|
|
Other liabilities assumed |
|
( |
) |
Total transaction price |
$ |
|
|
10. Leases
16
11. Equity-Based Compensation
Equity-based compensation expense is classified in the condensed consolidated statements of operations and comprehensive loss as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(In thousands) |
|
|||||
Research and development |
|
$ |
|
|
$ |
|
||
General and administrative |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Amended and Restated 2015 Stock Option and Incentive Plan
In April 2016, the Company adopted the Amended and Restated 2015 Stock Option and Incentive Plan (the “2015 Plan”). The 2015 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and other stock-based awards. Recipients of incentive stock options and non-qualified stock options are eligible to purchase shares of the Company’s common stock at an exercise price equal to the fair value of such stock on the grant date.
As of March 31, 2022, there were
Restricted Stock Units
RSUs are measured at fair value based on the quoted price of the Company’s common stock.
The following table summarizes the Company’s restricted stock activity for the three months ended March 31, 2022:
|
|
Number of |
|
|
Weighted |
|
||
Unvested restricted stock units as of December 31, 2021 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Cancelled |
|
|
( |
) |
|
|
|
|
Unvested restricted stock units as of March 31, 2022 |
|
|
|
|
$ |
|
||
In March 2022, the Company granted
Also in March 2022,
The Company also granted
17
The weighted-average grant date fair value of RSUs granted for the three months ended March 31, 2022 and 2021 was $
As of March 31, 2022, there was $
Stock Options
The weighted average grant date fair value of options, estimated as of the grant date using the Black-Scholes option pricing model, was $
|
|
Three Months Ended March 31, |
||
|
|
2022 |
|
2021 |
Risk-free interest rate |
|
|
||
Expected life of options |
|
|
||
Expected volatility of underlying stock |
|
|
||
Expected dividend yield |
|
|
||
Risk-free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant with maturities approximately equal to the option’s expected term.
Expected Dividend Yield. The expected dividend yield assumption is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends.
Expected Volatility. The expected volatility was derived from a blend of the Company’s historical volatility and an average of the historical stock volatilities of several peer companies within the Company’s industry, both over a period equivalent to the expected term of the stock option grants.
Expected Term. The expected term represents the period that stock option awards are expected to be outstanding. For option grants that are considered to be “plain vanilla,” the Company determines the expected term using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate the expected term.
The Company uses the market closing price of its common stock as reported on the Nasdaq Global Select Market to determine the fair value of the shares of common stock underlying stock options.
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
|
|
|
|
|
|
|
|
(In years) |
|
|
(In thousands) |
|
||||
Outstanding at December 31, 2021 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Exercised |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Forfeited |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Outstanding at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable at March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
As of March 31, 2022, there was $
18
2016 Employee Stock Purchase Plan
In May 2016, the Company adopted the 2016 Employee Stock Purchase Plan (the “2016 Plan”).
As of March 31, 2022, there were
During the three months ended March 31, 2022 and 2021 the Company did
The fair value of the awards issued under the 2016 Plan to employees was estimated at the beginning of the offering period using a Black-Scholes option-pricing model with the following assumptions:
|
|
Three Months Ended March 31, |
||
|
|
2022 |
|
2021 |
Risk-free interest rate |
|
|
||
Expected term (in years) |
|
|
||
Expected volatility of underlying stock |
|
|
||
Expected dividend yield |
|
|
||
12. Loss Per Share
The Company calculates basic loss per share by dividing net loss for each respective period by the weighted average number of common shares outstanding for each respective period. The Company computes diluted loss per share after giving consideration to the dilutive effect of stock options and unvested restricted stock that are outstanding during the period, except where such securities would be anti-dilutive.
Basic and diluted loss per share was calculated as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(In thousands) |
|
|||||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted average shares outstanding, basic |
|
|
|
|
|
|
||
Net loss per share, basic and diluted |
|
$ |
( |
) |
|
$ |
( |
) |
The following common stock equivalents were excluded from the calculation of diluted loss per share because their inclusion would have been anti-dilutive:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
|
|
(In thousands) |
|
|||||
Unvested restricted stock units |
|
|
|
|
|
|
||
Stock options |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
19
13. Stockholders’ Equity
The following tables present changes in stockholders’ equity for the three-month periods ended March 31, 2022 and 2021 (in thousands, except share data):
|
|
|
|
|
|
|
Additional |
|
|
Accumulated Other |
|
|
|
|
|
Total |
|
||||||
|
Common |
|
|
Paid-In |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|||||||||
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
||||||
Balance at December 31, 2021 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
Issuance of common stock through |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||||
Exercise of stock options |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|||
Vesting of restricted stock units |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Equity-based compensation |
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Other comprehensive loss |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
Net loss |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Balance at March 31, 2022 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
Additional |
|
|
Accumulated Other |
|
|
|
|
|
Total |
|
||||||
|
Common |
|
|
Paid-In |
|
|
Comprehensive |
|
|
Accumulated |
|
|
Stockholders’ |
|
|||||||||
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
Deficit |
|
|
Equity |
|
||||||
Balance at December 31, 2020 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Issuance of common stock through |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
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Exercise of stock options |
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Equity-based compensation |
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Other comprehensive loss |
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Net loss |
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Balance at March 31, 2021 |
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Follow-on Offering
On June 29, 2021, the Company entered into an underwriting agreement related to a public offering of
At-the-Market Offering Programs
In August 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sale Agreement”) with Jefferies, under which Jefferies was able to offer and sell, from time to time in “at-the-market” offerings, common stock having aggregate gross proceeds of up to $
During the year ended December 31, 2019, the Company issued
During the three months ended March 31, 2022, the Company issued
20
In February 2022, the Company entered into an Open Market Sale Agreement (the “2022 Sale Agreement”) with Jefferies, under which Jefferies will be able to offer and sell, from time to time in “at-the-market” offerings, common stock having aggregate gross proceeds of up to $
14. Related Party Transactions
In the ordinary course of business, the Company may purchase materials or supplies from entities that are associated with a party that meets the criteria of a related party of the Company. These transactions are reviewed quarterly and to date have not been material to the Company’s condensed consolidated financial statements.
The Company and AvenCell are parties to the AvenCell LCA and AvenCell Co/Co, as described in Note 7. The Company’s relationship with AvenCell is considered to be as a related party due to the Company’s
The Company and Kyverna are parties to the Kyverna LCA and are considered to be related parties because they have a common board member (see Note 7). The Company owns preferred stock of Kyverna, the value of which is included in “Investments and other assets” in the condensed consolidated balance sheets. The value of this investment was $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Information
This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements may be identified by such forward-looking terminology as “may,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue” or the negative of these terms or other comparable terminology. Our forward-looking statements are based on a series of expectations, assumptions, estimates and projections about our company, are not guarantees of future results or performance and involve substantial risks and uncertainty. We may not actually achieve the plans, intentions or expectations disclosed in these forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in these forward-looking statements. Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including the risks and uncertainties inherent in our statements regarding:
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All of our express or implied forward-looking statements are as of the date of this Quarterly Report on Form 10-Q only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission (the “SEC”) could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report on Form 10-Q that modify or impact any of the forward-looking statements contained in this Quarterly Report on Form 10-Q will be deemed to modify or supersede such statements in this Quarterly Report on Form 10-Q.
Management Overview
Intellia Therapeutics, Inc. (“we,” “us,” “our,” “Intellia,” or the “Company”) is a leading clinical-stage genome editing company, focused on developing novel, potentially curative therapeutics using CRISPR/Cas9 technology. CRISPR/Cas9, an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats (“CRISPR”)/CRISPR associated 9 (“Cas9”), is a technology for genome editing, the process of altering selected sequences of genomic deoxyribonucleic acid (“DNA”). To realize the transformative potential of CRISPR/Cas9, we are building a full-spectrum genome editing company, by leveraging our modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need. For our in vivo programs to address genetic diseases, we use intravenously administered CRISPR as the therapy, in which our proprietary delivery technology enables highly precise editing of disease-causing genes directly within specific target tissues. For our ex vivo programs to address immuno-oncology and autoimmune diseases, we use CRISPR to create the therapy by engineering cells outside of the body. Our deep scientific, technical and clinical development experience, along with our robust intellectual property (“IP”) portfolio, enables us to unlock broad therapeutic applications of CRISPR/Cas9 and related technologies to create new classes of genetic medicine.
Our management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim periods and with Regulation S-X, promulgated under the Securities Exchange Act of 1934, as amended. This discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q as well as in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K (“Annual Report”) for the year ended December 31, 2021.
Treating—and potentially curing—a broad range of severe diseases will require multiple gene editing approaches. With proprietary CRISPR/Cas9-based technology at the core of our platform, we continue to add new capabilities to expand our current solutions for addressing a multitude of life-threatening diseases. These additions include our proprietary base editor, as well as novel CRISPR enzymes, which provide us with the capabilities to achieve multiple editing strategies.
We continue to advance our platform’s modular solutions and research efforts on genome editing technologies as well as delivery and cell engineering capabilities to generate additional development candidates.
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Our mission is to transform the lives of people with severe diseases by developing curative genome editing treatments. We believe we can deliver on our mission and provide long-term benefits for all of our stakeholders by focusing on four key elements:
Our strategy is to build a full-spectrum genome editing company, by leveraging our modular platform, to advance in vivo and ex vivo therapies for diseases with high unmet need. For in vivo applications to address genetic diseases, we deploy CRISPR/Cas9 as the therapy that targets cells within the body. In parallel, we are developing ex vivo applications to address immuno-oncology and autoimmune diseases, where CRISPR/Cas9 is the tool that creates the engineered cell therapy. All of our revenue to date has been collaboration revenue. Since our inception and through March 31, 2022, we have raised an aggregate of approximately $1,859.3 million to fund our operations, of which $281.3 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $1,086.9 million was from follow-on public offerings, $235.6 million was from at-the-market offerings and $85.0 million was from the sale of convertible preferred stock.
Our lead in vivo candidate, NTLA-2001 for the treatment of transthyretin (“ATTR”) amyloidosis, is the first CRISPR/Cas9-based therapy candidate to be administered systemically, via intravenous infusion, for precision editing of a gene in a target tissue in humans. In parallel, we are developing ex vivo applications to address immuno-oncology and autoimmune diseases, where CRISPR/Cas9 is the tool that creates the engineered cell therapy. Our most advanced ex vivo programs include a wholly-owned T cell receptor (“TCR”)-T cell candidate, NTLA-5001 for the treatment of acute myeloid leukemia (“AML”), and a program with Novartis Institutes for BioMedical Research, Inc. (“Novartis”) to engineer hematopoietic stem cells (“HSCs”) for the treatment of sickle cell disease.
Our Pipeline
In Vivo Programs
Our selection criteria include identifying diseases that originate in the liver; have well-defined mutations that can be addressed by a knockout or insertion approach; have readily measurable therapeutic endpoints with observable clinical responses; and for which effective treatments are absent, limited or unduly burdensome. Our initial in vivo indications target genetic liver diseases, including our ATTR amyloidosis, HAE and AATD development programs. Our current efforts on in vivo delivery focus on the use of lipid nanoparticles (“LNPs”) for delivery of the CRISPR/Cas9 complex to the liver.
Transthyretin (“ATTR”) Amyloidosis Program
NTLA-2001 is our candidate for the treatment of ATTR amyloidosis. In February 2022, we presented updated interim clinical data from 15 patients with hereditary ATTR amyloidosis with polyneuropathy (“ATTRv-PN”) treated across four single-ascending dose cohorts of the ongoing Phase 1 study. Treatment with NTLA-2001 led to dose-dependent reductions in serum TTR and achieved maximal reductions by day 28 with mean reductions of 86% (n=3) and 93% (n=6) in the 0.7 mg/kg and 1.0 mg/kg dose group, respectively. The maximum TTR reduction was 98% at 1.0 mg/kg. Mean serum TTR reductions were durable through the observation period, with patient follow-up ranging from two to 12 months following a single dose. NTLA-2001 was generally well tolerated at all dose levels. The most frequent adverse events include headache, infusion-related reactions, back pain, rash and nausea.
Based on these data, we are evaluating a fixed dose of 80 mg in Part 2 of the Phase 1 study, which is expected to deliver a similar exposure to the 1.0 mg/kg dose. On May 5, 2022, we announced the first patient has been dosed in Part 2, a single-dose expansion cohort, in the polyneuropathy arm. We plan to present additional interim data from Part 1, the single-ascending dose portion of the polyneuropathy arm, at the European Association for the Study of the Liver (“EASL”) International Liver Congress™ 2022, to be held June 22-26.
We also continue to dose patients in the cardiomyopathy arm of our expanded Phase 1 study, which is currently evaluating NTLA-2001 in dose-escalation cohorts of patients with ATTR amyloidosis with cardiomyopathy (“ATTR-CM”). Our goal is to present the first interim data from the cardiomyopathy arm in the second half of 2022. Enrollment across both ATTRv-PN and ATTR-CM patient populations is expected to be complete in 2022.
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NTLA-2001 is part of a co-development and co-promotion (“Co/Co”) agreement directed to our first collaboration target with Regeneron, ATTR (the “ATTR Co/Co”), for which we are the clinical and commercial lead party and Regeneron is the participating party. Regeneron shares in approximately 25% of worldwide development costs and commercial profits for the ATTR program. For more information regarding our collaboration with Regeneron, see the section below entitled “Collaborations - Regeneron”
Hereditary Angioedema (“HAE”) Program
NTLA-2002 is our wholly-owned candidate for the treatment of HAE. We are progressing the single-ascending dose portion of the Phase 1/2 study evaluating the safety, tolerability and activity of NTLA-2002 in adults with Type I or Type II HAE. We have completed dosing in the first dose-escalation cohort (25 mg fixed dose) and have begun enrolling patients in the second dose-escalation cohort (75 mg fixed dose).
We anticipate presenting interim data in the second half of 2022 from the first-in-human study, with initial results expected to characterize the emerging safety and activity profile of NTLA-2002, and potentially demonstrate preliminary proof-of-concept.
Alpha-1 Antitrypsin Deficiency (“AATD”) Program
NTLA-3001 for associated lung disease:
NTLA-3001 is our wholly-owned, first-in-class CRISPR-mediated in vivo targeted gene insertion development candidate for the treatment of AATD-associated lung disease. It is designed with the aim to precisely insert a functional copy of the SERPINA1 gene, which encodes the A1AT protein, with the potential to restore permanent expression of functional A1AT protein to therapeutic levels after a single dose. This approach seeks to improve patient outcomes, including eliminating the need for weekly IV infusions of A1AT augmentation therapy or lung transplant in severe cases. We are conducting IND-enabling activities for NTLA-3001, with plans to file an IND or IND-equivalent in 2023.
NTLA-2003 for associated liver disease:
NTLA-2003 is our wholly-owned in vivo knockout development candidate for the treatment of AATD-associated liver disease. It is designed to inactivate the SERPINA1 gene responsible for the production of abnormal alpha-1 antitrypsin (“A1AT”) protein in the liver. This approach aims to halt the progression of liver disease and eliminate the need for liver transplant in severe cases. We are initiating IND-enabling activities for NTLA-2003.
In Vivo Research Programs
We continue to work on various liver-focused programs, such as hemophilia A and hemophilia B, which we are co-developing with Regeneron, primary hyperoxaluria type 1, as well as other liver targets, which are worked on both independently and in partnership with Regeneron, which leverage our capabilities to knockout, insert and make consecutive edits to the genome.
In the third quarter of 2021, we and Regeneron, the lead party for this program, nominated a Factor 9 (“F9”) gene insertion development candidate for our Hemophilia B (“Hem B”) program, leveraging our jointly developed targeted transgene insertion capabilities to insert F9. F9 is a gene that encodes for Factor IX (“FIX”), a blood-clotting protein that is missing or defective in Hem B patients. In preclinical studies, we and Regeneron demonstrated the first CRISPR/Cas9-mediated targeted transgene insertion in the liver of non-human primates (“NHPs”), which resulted in circulating FIX levels at or above those found in normal human plasma. At the 2019 American Society of Gene and Cell Therapy Annual Meeting, we presented data demonstrating the first CRISPR/Cas9-mediated, targeted transgene insertion in the liver of NHPs, using F9 as a model gene. Following a single dose to NHPs of the hybrid LNP-adeno-associated virus (“AAV”) delivery system containing an F9 DNA template, we demonstrated that the circulating human FIX protein levels achieved in NHPs were at or above normal levels. Additionally, the NHP data expands on the durability of clinically relevant human FIX protein levels achieved in mice for over 12 months.
In September 2020, we presented data that showed the persistence of in vivo CRISPR/Cas9 edits in regenerated liver tissue, both knockout and insertion, and corresponding durability of effect following a partial hepatectomy (“PHx”) and liver regrowth in a murine model. Unlike traditional gene therapy, for which a significant loss (over 80%) in transgene expression was observed in the insertion PHx model, our targeted gene insertion approach yielded durable edits, with no significant loss in expression.
We are further investigating delivery strategies that target tissues outside of the liver. For example, at the Keystone eSymposium: Precision Engineering of the Genome, Epigenome and Transcriptome in March 2021, we presented preclinical data establishing
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proof-of-concept for non-viral genome editing of bone marrow and HSCs in mice. This represented our first demonstration of systemic in vivo genome editing in bone marrow using our proprietary non-viral delivery platform. We believe these results extend our modular in vivo capabilities to treat inherited blood disorders such as sickle cell disease. In addition, we announced a collaboration with SparingVision to develop novel genomic medicines utilizing CRISPR/Cas9 technology for the treatment of ocular diseases.
With the continued progression of our in vivo research programs, we plan to advance at least one new in vivo development candidate by the end of 2022.
Ex Vivo Programs
We are independently researching and developing proprietary engineered cell therapies to treat various oncological and other disease indications, for example TCR-engineered T cells and chimeric antigen receptor T (“CAR-T”) cells for immuno-oncology applications and engineered regulatory T cells for autoimmune disorders. Our diverse product strategy includes multiple elements. In particular:
In addition, we strategically partner with others who possess complementary capabilities or technologies to bring forth innovative engineered cell therapies outside of our core areas of focus. This includes collaborations with AvenCell and Kyverna, who will be leveraging our ex vivo genome editing platform to develop novel cell therapies for a variety of therapeutic indications, as well as ONK Therapeutics, Ltd. (“ONK”) to advance CRISPR-edited natural killer (“NK”) cell therapies. Further, our partner Novartis is developing therapies directed to selected targets using CAR-T cells for oncology indications, as well as HSC and ocular stem cell (“OSC”)-based therapies.
Acute Myeloid Leukemia (“AML”) Program
NTLA-5001 is our autologous TCR-T cell therapy candidate engineered to target the WT1 antigen for the treatment of all genetic subtypes of AML. In March 2022, we dosed the first patient in our Phase 1/2a study evaluating NTLA-5001 for the treatment of AML. We continue to enroll patients in the ongoing study. In March, we announced that the U.S. Food and Drug Administration (“FDA”) granted orphan drug designation to NTLA-5001 for the treatment of AML.
CD30+ Lymphomas
NTLA-6001 is our wholly-owned, allogeneic CAR-T development candidate targeting CD30 for the treatment of CD30-expressing hematologic cancers, including relapsed or refractory classical Hodgkin lymphoma (“cHL”). NTLA-6001 is the first candidate developed using our proprietary allogeneic cell engineering platform, which leverages a novel combination of sequential gene edits to yield T cells shielded from immune rejection by both host T and NK cells. We are initiating IND-enabling activities for NTLA-6001.
At the Keystone Symposium on May 1, 2022 we presented preclinical data leading to the development of NTLA-6001. The data demonstrated that our proprietary allogeneic solution created T cells that not only avoid immune recognition by host CD4 and CD8 T cells, but also were protected from NK cell-mediated killing in in vitro and in vivo mouse models. Furthermore, allogeneic T cells engineered specifically with LNPs retained their viability, cell expansion, memory phenotype, cytotoxic and cytokine secretion characteristics.
Ex Vivo Research Programs
We are developing engineered cell therapies to treat a range of hematological and solid tumors. We are pursuing modalities, such as TCR, with broad potential in multiple indications. We continue to advance efforts to move from autologous to allogeneic therapies and from liquid to solid tumors. Our researchers are developing and improving cell-engineering manufacturing and
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delivery processes that, we believe, may allow us to deliver T cell therapies with high levels of editing, robust levels of cell expansion, desirable memory phenotypes, improved function and no translocations above background levels.
Our proprietary T cell engineering process using LNPs to engineer cell therapies enables multiple, sequential gene edits. We have shared preclinical data demonstrating that our LNP-based engineering technology is a significant improvement over electroporation, the standard engineering process used to introduce proteins and nucleic acids into cells. The resulting T cells engineered with LNPs had improved cell properties and performance both in vitro and in vivo as compared to electroporation. The data support the ability of our platform to be used for a variety of targeting modalities, including CAR and TCRs, and to support both autologous and allogeneic T cell candidates. The LNP-based approach is already being used for NTLA-5001.
In March 2021, we presented our first preclinical data set on our novel, proprietary cytosine deaminase base editor technology. We demonstrated the technology’s potential for enhanced cell engineering, with multiple simultaneous gene knockouts achieving >90% T cell editing efficiency and no detectable increase in translocation above background levels.
Novartis-Led Sickle Cell Disease and Other Research Programs
In December 2019, the research term under our collaboration agreement with Novartis entered into in 2014 (the “2014 Novartis Agreement”) ended, although the 2014 Novartis Agreement remains in effect. Under the 2014 Novartis Agreement, Novartis has selected particular CAR-T cell, HSC and OSC targets for continued development. Novartis has initiated clinical studies for OTQ923 and HIX763, two therapeutic candidates, based on CRISPR/Cas9 editing of HSCs that resulted from our research collaboration with Novartis. Novartis is currently recruiting patients for its Phase 1/2 study of these investigational candidates for treatment of sickle cell diseases. Novartis is developing several other product candidates arising from the 2014 Novartis Agreement. For more information regarding our collaboration with Novartis, see the section below entitled “Collaborations - Novartis”
Collaborations and Other Arrangements
To accelerate the development and commercialization of CRISPR/Cas9-based products in multiple therapeutic areas, we have formed, and intend to seek other opportunities to form, strategic alliances with collaborators who can augment our leadership in CRISPR/Cas9 therapeutic development.
Regeneron
In April 2016, we entered into a license and collaboration agreement with Regeneron (the “2016 Regeneron Agreement”). The 2016 Regeneron Agreement has two principal components: (i) a product development component under which the parties will research, develop and commercialize CRISPR/Cas-based therapeutic products primarily focused on genome editing in the liver; and (ii) a technology collaboration component, pursuant to which the parties will engage in research and development activities aimed at discovering and developing novel technologies and improvements to CRISPR/Cas technology to enhance our genome editing platform. We may also access the Regeneron Genetics Center and proprietary mouse models to be provided by Regeneron for a limited number of our liver programs. At the inception of the 2016 Regeneron Agreement, Regeneron selected the first of its 10 targets, ATTR, which is subject to a co-development and co-promotion agreement between us and Regeneron (the “ATTR Co/Co”).
On May 30, 2020, we entered into (i) amendment no. 1 (the “2020 Regeneron Amendment”) to the 2016 Regeneron Agreement, (ii) co-development and co-funding agreements for the treatment of hemophilia A and hemophilia B (the “Hemophilia Co/Co”) agreements and (iii) a stock purchase agreement. The collaboration expansion builds upon the jointly developed targeted transgene insertion capabilities designed to durably restore missing therapeutic protein, and to overcome the limitations of traditional gene therapy. The collaboration was extended until April 2024, at which point Regeneron has an option to renew for an additional two years. The 2020 Regeneron Amendment also grants Regeneron exclusive rights to develop products for five additional in vivo CRISPR/Cas-based therapeutic liver targets and non-exclusive rights to independently develop and commercialize up to 10 ex vivo gene edited products made using certain defined cell types. Refer to Note 7 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and Regeneron.
27
AvenCell Therapeutics, Inc. (“AvenCell”)
On July 30, 2021, we finalized a transaction in which we, Cellex Cell Professionals GmbH (“Cellex”) and funds managed by Blackstone Life Sciences Advisors L.L.C. (“BXLS”) established a new universal CAR-T cell therapy company, AvenCell, and entered into two agreements with AvenCell: (i) a license and collaboration agreement (the “LCA”), under which we will collaborate to develop allogeneic universal CAR-T cell therapies and granted AvenCell a license to develop and commercialize genome edited universal CAR-T cell therapies (limited to its use with their switchable, universal CAR-T cell UniCAR and RevCAR platforms); and (ii) a co-development and co-funding agreement (the “AvenCell Co/Co”) under which we will co-develop and co-commercialize allogeneic universal CAR-T cell products for an immuno-oncology indication. In addition to the license, we will collaborate with AvenCell on at least seven universal CAR-T cell products that combine our allogeneic T cell technology with AvenCell's switchable, universal CAR-T cell technology, referred to as the (“Allo Collaboration”). Additionally, AvenCell will pay us to provide supply and manufacturing services for them, including supplying good manufacturing practice (“GMP”) CRISPR reagents to support the research and development of all CRISPR Products (as defined in the LCA) under the Allo Collaboration until the completion of the first Pivotal Trial (as defined in the LCA) of the first such CRISPR Product. We will also have one additional option to enter into a second co-development and co-funding agreement from selected allogeneic universal CAR-T cell therapy products that the parties intend to develop under the Allo Collaboration for a payment of $30.0 million to AvenCell.
In exchange for the license, we received a 33.33% equity interest in AvenCell at the time of the initial closing. Refer to Notes 7 and 8 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and AvenCell.
SparingVision SAS (“SparingVision”)
In October 2021, we and SparingVision, a genomic medicine company developing vision saving treatments for ocular diseases, entered into a license and collaboration agreement (the “SparingVision LCA”), to develop novel genomic medicines utilizing CRISPR/Cas9 technology for the treatment of ocular diseases. We will grant SparingVision exclusive rights to our proprietary in vivo CRISPR/Cas9-based genome editing technology for up to three ocular targets addressing diseases with significant unmet medical need. In addition, the parties will research and develop novel self-inactivating adeno-associated virus (“AAV”) vectors and LNP-based approaches to address delivery of CRISPR/Cas9 genome editing reagents to the retina. SparingVision will lead and fund the preclinical and clinical development for the genome editing product candidates pursued under the collaboration.
In exchange for the license, we received an 11% equity ownership in SparingVision as of the closing date as well as three warrants attached to each share received for the right to purchase additional shares at designated prices that are subject to certain vesting conditions. We will also be eligible to receive certain research, development and commercial milestone cash payments (up to approximately $200 million per product) as well as royalties on potential future sales of products arising from the collaboration. We will have an option to obtain exclusive U.S. commercialization rights for product candidates arising from two of three collaboration targets. For product candidates we choose to option, we will pay an opt-in fee between $10.0 million and $20.0 million depending on the stage of development of the target, reimburse certain costs, share in 50% of development costs and pay royalties to SparingVision on U.S. sales. Refer to Notes 7 and 8 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and SparingVision.
Kyverna Therapeutics, Inc. (“Kyverna”)
In December 2021, we entered into a licensing and collaboration agreement with Kyverna, a cell therapy company engineering a new class of therapies for autoimmune and inflammatory diseases, for the development of an allogeneic CD19 CAR-T cell therapy for the treatment of a variety of B cell-mediated autoimmune diseases. We granted Kyverna rights to our proprietary ex vivo CRISPR/Cas9-based allogeneic platform for the development of KYV-201, an allogeneic CD19 CAR-T cell investigational candidate for the treatment of select autoimmune diseases. This is a novel approach aimed at targeting CD19 for inflammatory diseases as compared to traditional oncology indications. Kyverna will lead and fund preclinical and clinical development for KYV-201 and we will be eligible to receive certain development and commercial milestone payments, as well as low-to-mid-single-digit royalties on potential future sales. We may also exercise an option to lead U.S. commercialization for KYV-201 under a co-development and co-commercialization agreement. If we choose to co-develop and co-commercialize KYV-201, we will pay an opt-in fee of $5.0 million and share in 50% of development costs and future net profit and/or loss arising from commercializing KYV-201 in the U.S. Kyverna retains all rights outside of the U.S., and we will receive low-to-mid-single-digit royalties on net sales generated outside of the U.S.
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In exchange for the license, we received an equity ownership of preferred stock in Kyverna. We separately made an additional investment in Kyverna, purchasing incremental shares of Kyverna's preferred stock in exchange for $3.0 million in cash, bringing our investment to approximately 7% ownership in Kyverna at the time of closing. Refer to Notes 7 and 8 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and Kyverna.
ONK Therapeutics, Ltd (“ONK”)
In February 2022, we announced a license, collaboration and option agreement with ONK for the development of engineered NK cell therapies for the treatment of cancer. The agreement grants ONK a non-exclusive license to our proprietary ex vivo CRISPR/Cas9-based genome editing platform and our LNP-based delivery technologies for development of up to five allogeneic NK cell therapies. ONK will be responsible for preclinical and clinical development for the engineered NK cell therapies enabled by the agreement. We will be eligible to receive up to $184 million per product in development and commercial milestone payments, as well as up to mid-single digit royalties on potential future sales. In addition, the agreement grants us options to co-develop and co-commercialize up to two products worldwide with rights to lead commercialization in the U.S. Refer to Note 7 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and ONK.
Novartis
In December 2014, we entered into a license and collaboration agreement with Novartis (the “2014 Novartis Agreement”), primarily focused on the research of new ex vivo CRISPR/Cas9-edited therapies using CAR-T cells and HSCs. The agreement was amended in December 2018 to also include research on OSCs. In December 2019, per the terms of the 2014 Novartis Agreement, the research term ended, although the 2014 Novartis Agreement remains in effect, for which we will be eligible to receive milestone and royalty payments in the future. In June 2021, we entered into Amendment No. 3 (the “Amendment”) to the 2014 Novartis Agreement. The Amendment amends Novartis’ rights with respect to all of the CAR-T Therapeutic Targets (as defined in the 2014 Novartis Agreement) that Novartis selected under the 2014 Novartis Agreement, including (a) making Novartis’ license non-exclusive for such CAR-T Therapeutic Targets, (b) removing Novartis’ diligence and related reporting obligations for such CAR-T Therapeutic Targets, and (c) refining the scope of Novartis’ sublicense rights for such CAR-T Therapeutic Targets. We made a one-time payment to Novartis of $10.0 million within 30 days after the effective date of the Amendment, which was recorded as research and development expense in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2021. Since December 31, 2021, there have been no other material changes to the key terms of the 2014 Novartis Agreement and the Novartis Amendment. Refer to Note 7 to our condensed consolidated financial statements of this Quarterly Report on Form 10-Q for additional information related to the terms of the agreement between us and Novartis.
Financial Overview
Collaboration Revenue
Our revenue consists of collaboration revenue, including amounts recognized related to upfront technology access payments for licenses, technology access fees, research funding and milestone payments earned under our collaboration and license agreements.
Research and Development
Research and development expenses consist of expenses incurred in performing research and development activities, such as compensation and benefits, which includes equity-based compensation, for full-time research and development employees, allocated facility-related expenses, overhead expenses, license and milestone fees, contract research, development and manufacturing services, clinical trial costs and other related costs.
General and Administrative
General and administrative expenses consist primarily of compensation and benefits, including equity-based compensation, for our executive, finance, legal, human resources, business development and support functions. Also included in general and administrative expenses are allocated facility-related costs not otherwise included in research and development expenses, travel expenses and professional fees for auditing, tax and legal services, including IP-related legal services, and other consulting fees and expenses.
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Other (expense) income, net
Other (expense) income consists of interest income earned on our cash, cash equivalents, restricted cash equivalents and marketable securities, loss from equity method investment and change in fair value of the contingent consideration.
Results of Operations
The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related footnotes thereto.
Comparison of Three Months Ended March 31, 2022 and 2021
The following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:
|
|
Three Months Ended March 31, |
|
|
Period-to- |
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|
|
2022 |
|
|
2021 |
|
|
Period Change |
|
|||
|
|
(In thousands) |
|
|||||||||
Collaboration revenue |
|
$ |
11,252 |
|
|
$ |
6,445 |
|
|
$ |
4,807 |
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Operating expenses: |
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|
|
|
|
|
|
|
|
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Research and development |
|
|
133,095 |
|
|
|
39,276 |
|
|
|
93,819 |
|
General and administrative |
|
|
22,403 |
|
|
|
13,594 |
|
|
|
8,809 |
|
Total operating expenses |
|
|
155,498 |
|
|
|
52,870 |
|
|
|
102,628 |
|
Operating loss |
|
|
(144,246 |
) |
|
|
(46,425 |
) |
|
|
(97,821 |
) |
Other (expense) income, net: |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
540 |
|
|
|
220 |
|
|
|
320 |
|
Loss from equity method investment |
|
|
(2,745 |
) |
|
|
- |
|
|
|
(2,745 |
) |
Change in fair value of contingent consideration |
|
|
(421 |
) |
|
|
- |
|
|
|
(421 |
) |
Total other (expense) income, net |
|
|
(2,626 |
) |
|
|
220 |
|
|
|
(2,846 |
) |
Net loss |
|
$ |
(146,872 |
) |
|
$ |
(46,205 |
) |
|
$ |
(100,667 |
) |
Collaboration Revenue
Collaboration revenue increased by approximately $4.8 million to $11.3 million during the three months ended March 31, 2022, as compared to $6.4 million during the three months ended March 31, 2021. The increase in collaboration revenue during the three months ended March 31, 2022 is primarily due to our joint venture with AvenCell. Refer to Note 7 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for further details.
Research and Development
Research and development expenses increased by approximately $93.8 million to $133.1 million during the three months ended March 31, 2022, as compared to $39.3 million during the three months ended March 31, 2021.
30
The following table summarizes our research and development expenses for the three months ended March 31, 2022 and 2021, together with the changes in those items in dollars and the respective percentages of change:
|
|
|
Three Months Ended March 31, |
|
|
Period-to- |
|
|
Percent |
|
|||||||
|
|
|
2022 |
|
|
2021 |
|
|
Period Change |
|
|
Change |
|
||||
|
|
|
(In thousands) |
|
|||||||||||||
External development expenses by program: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NTLA-2001 |
|
|
$ |
8,572 |
|
|
$ |
2,322 |
|
|
$ |
6,250 |
|
|
|
269 |
% |
NTLA-2002 |
|
|
|
1,700 |
|
|
|
2,155 |
|
|
|
(455 |
) |
|
|
-21 |
% |
NTLA-5001 |
|
|
|
5,122 |
|
|
|
4,528 |
|
|
|
594 |
|
|
|
13 |
% |
Unallocated research and development expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Employee-related expenses |
|
|
|
24,712 |
|
|
|
13,667 |
|
|
|
11,045 |
|
|
|
81 |
% |
Research materials and contracted services |
|
|
|
17,629 |
|
|
|
6,977 |
|
|
|
10,652 |
|
|
|
153 |
% |
In-process research and development |
|
|
|
55,990 |
|
|
|
- |
|
|
|
55,990 |
|
|
|
0 |
% |
Facility-related expenses |
|
|
|
8,525 |
|
|
|
5,183 |
|
|
|
3,342 |
|
|
|
64 |
% |
Stock-based compensation |
|
|
|
10,274 |
|
|
|
3,491 |
|
|
|
6,783 |
|
|
|
194 |
% |
Other |
|
|
|
571 |
|
|
|
953 |
|
|
|
(382 |
) |
|
|
-40 |
% |
Total research and development expenses |
|
|
$ |
133,095 |
|
|
$ |
39,276 |
|
|
$ |
93,819 |
|
|
|
239 |
% |
The increase in research and development expenses for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily attributable to:
General and Administrative
General and administrative expenses increased by $8.8 million to $22.4 million during the three months ended March 31, 2022, compared to $13.6 million during the three months ended March 31, 2021. This increase was primarily related to employee-related expenses, including stock-based compensation of $5.3 million, driven by our larger workforce and higher stock prices.
31
Other (expense) income
The increase in other (expense) income of $2.8 million is primarily related to an increase in our share of three months of AvenCell's losses generated in the fourth quarter of 2021 of $2.7 million and the change in the fair value of our contingent consideration liability of $0.4 million, offset in part by a $0.3 million increase in interest income.
Liquidity and Capital Resources
Since our inception through March 31, 2022, we have raised an aggregate of approximately $1,859.3 million to fund our operations, of which $281.3 million was through our collaboration agreements, $170.5 million was from our initial public offering and concurrent private placements, $1,086.9 million was from follow-on public offerings, $235.6 million was from at-the-market offerings and $85.0 million was from the sale of convertible preferred stock.
As of March 31, 2022, we had $994.7 million in cash, cash equivalents and marketable securities.
We are eligible to earn a significant amount of milestone payments and royalties, in each case, on a per-product basis under our collaborations with Novartis, SparingVision and ONK, on a per-target basis under our collaboration with Regeneron and upon achievement of certain events under our collaboration with Kyverna. Our ability to earn these milestone payments and the timing of achieving these milestones is dependent upon the outcome of our research and development activities and is uncertain at this time. Our rights to payments under our collaboration agreements are our only committed external source of funds.
Follow-on Offerings
On June 1, 2020, we entered into an underwriting agreement related to a public offering of 6,301,370 shares of our common stock, par value $0.0001 per share, including the exercise in full by the underwriters of their option to purchase an additional 821,917 shares, at the public offering price of $18.25 per share. The offering closed on June 5, 2020 and we received net proceeds of $107.7 million, after deducting the underwriting discount, commissions and offering expenses.
On December 1, 2020, we entered into an underwriting agreement related to a public offering of 5,513,699 shares of our common stock, par value $0.0001 per share, including the exercise in full by the underwriters of their option to purchase an additional 719,178 shares, at the public offering price of $36.50 per share. The offering closed on December 4, 2020 and we received net proceeds of $188.9 million, after deducting the underwriting discount, commissions and offering expenses.
In July 2021, we closed an underwritten public offering of 4,758,620 shares of common stock, including the exercise in full of the underwriters’ option to purchase an additional 620,689 shares of common stock, at the public offering price of $145.00 per share, for aggregate net proceeds of $648.3 million, after deducting approximately $41.7 million in underwriting discounts and offering costs.
At-the-Market Offering Programs
In August 2019, we entered into an Open Market Sale Agreement (the “2019 Sale Agreement”) with Jefferies, under which Jefferies is able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $150.0 million. We agreed to pay to Jefferies cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2019 Sale Agreement.
During 2021, we issued 641,709 shares of our common stock in a series of sales at an average price of $72.79 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $45.3 million after payment of cash commissions to Jefferies and approximately $0.1 million related to legal, accounting and other fees in connection with the sales.
During the first quarter of 2022, we issued 579,788 shares of our common stock in a series of sales at an average price of $69.43 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $38.9 million after payment of cash commissions to Jefferies and approximately $0.2 million related to legal, accounting and other fees in connection with the sales.
As of March 31, 2022, $7.2 million in shares of our common stock remain eligible for sale under the 2019 Sale Agreement.
In March 2022, we entered into an Open Market Sale Agreement (the “2022 Sale Agreement”) with Jefferies, under which Jefferies is able to offer and sell, from time to time in “at-the-market” offerings, shares of our common stock having aggregate gross proceeds of up to $400.0 million. We agreed to pay to Jefferies cash commissions of 3.0% of the gross proceeds of sales
32
of common stock under the 2022 Sale Agreement. No shares have been issued under the 2022 Sale Agreement through March 31, 2022.
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, research and development contracted services, clinical trial costs, compensation and related expenses, laboratory and office facilities, research supplies, legal and regulatory expenses, patent prosecution filing and maintenance costs for our licensed IP, milestone and royalty payments and general overhead costs. During 2022, we expect our expenses to increase compared to prior periods in connection with our ongoing activities as we continue to grow our research and development team and clinical development in NTLA-2001, NTLA-2002, NTLA-2003, NTLA-3001, NTLA-5001 and NTLA-6001 and advance additional programs into clinical development.
Because our lead programs are still in the early clinical stage and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and commercialization of any future product candidates or whether, or when, we may achieve profitability. Until such time as we can generate substantial product revenues, if ever, we expect to finance our ongoing cash needs through equity financings and collaboration arrangements. We receive cost reimbursements from Regeneron for the transthyretin (“ATTR”) amyloidosis and hemophilia programs. Additionally, we are eligible to earn milestone payments and royalties, in each case, on a per-product basis under our collaborations with Novartis, SparingVision and ONK, on a per-target basis under our collaboration with Regeneron, and upon achievement of certain events with Kyverna, subject to the provisions of our agreements with each of them. Except for these sources of funding, we will not have any committed external source of liquidity. To the extent that we raise additional capital through the future sale of equity, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. If we raise additional funds through collaboration arrangements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Outlook
Based on our research and development plans and our expectations related to the progress of our programs, we expect that our cash, cash equivalents and marketable securities as of March 31, 2022, as well as research and cost reimbursement funding from Regeneron, AvenCell and SparingVision, will enable us to fund our ongoing operating expenses and capital expenditure requirements beyond the next 24 months, excluding any potential milestone payments or extension fees that could be earned and distributed under our collaboration agreements or any strategic use of capital not currently in the base case planning assumptions. We have based this estimate on current assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.
Our ability to generate revenue and achieve profitability depends significantly on our success in many areas, including: developing our delivery technologies and our CRISPR/Cas9 technology platform; selecting appropriate product candidates to develop; completing research and preclinical and clinical development of selected product candidates; obtaining regulatory approvals and marketing authorizations for product candidates for which we complete clinical trials; developing a sustainable and scalable manufacturing process for product candidates; launching and commercializing product candidates for which we obtain regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor; obtaining market acceptance of our product candidates; addressing any competing technological and market developments; negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter; maintaining good relationships with our collaborators and licensors; maintaining, protecting, and expanding our portfolio of IP rights, including patents, trade secrets, and know-how; and attracting, hiring, and retaining qualified personnel.
33
Cash Flows
The following is a summary of cash flows for the three months ended March 31, 2022 and 2021:
|
|
March 31, |
|
|
|||||
|
|
2022 |
|
|
2021 |
|
|
||
|
|
(In millions) |
|||||||
Net cash used in operating activities |
|
$ |
(79.8 |
) |
|
$ |
(52.4 |
) |
|
Net cash provided by (used in) investing activities |
|
|
47.5 |
|
|
|
(25.5 |
) |
|
Net cash provided by financing activities |
|
|
47.3 |
|
|
|
58.6 |
|
|
Net cash used in operating activities
Net cash used in operating activities of $79.8 million during the three months ended March 31, 2022 primarily reflects the increased spend in our research and development activities, offset in part by the receipt of $2.0 million in payments from our collaboration partners during that period. Net cash used in operating activities of $52.4 million during the three months ended March 31, 2021 primarily reflects the increased spend in our research and development activities, offset in part by the receipt of $2.4 million in payments from our collaboration partners during those periods.
Net cash provided by (used in) investing activities
During the three months ended March 31, 2022 and 2021, our investing activities provided cash of $47.5 million and used cash of $25.5 million, respectively. The increase in the three months ended March 31, 2022 is primarily due to $93.7 million in marketable securities maturing, offset in part by $44.8 million in net cash for the acquisition of Rewrite and $1.4 million in cash for the purchase of property and equipment. The decrease in the three months ended March 31, 2021 is primarily due to a decrease in marketable securities activity during the period, as $148.3 million in marketable securities were purchased and $125.2 million in marketable securities matured. The decrease in cash is also due to $2.4 million for the purchase of property and equipment during the period.
Net cash provided by financing activities
Net cash provided by financing activities of $47.3 million during the three months ended March 31, 2022 includes $38.9 million in net proceeds from at-the-market offerings and $8.4 million in cash received from the exercise of stock options. Net cash provided by financing activities of $58.6 million during the three months ended March 31, 2021 includes $45.3 million in net proceeds from at-the-market offerings and $13.3 million in cash received from the exercise of stock options.
Critical Accounting Policies
Our critical accounting policies require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. Management has determined that our most critical accounting policies are those relating to revenue recognition and equity-based compensation. There have been no changes to our critical accounting policies from those which were discussed in our Annual Report for the year ended December 31, 2021.
Recent Accounting Pronouncements
Please read Note 2, “Summary of Significant Accounting Policies”, to our condensed consolidated financial statements included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” of this Quarterly Report on Form 10-Q for a description of recent accounting pronouncements applicable to our business.
Contractual Obligations
There were no material changes to our contractual obligations during the three months ended March 31, 2022. For a complete discussion of our contractual obligations, please refer to our Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report for the year ended December 31, 2021.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2022, we had cash equivalents, restricted cash equivalents and marketable securities of $999.6 million consisting of interest-bearing money market accounts, commercial paper, asset-backed securities,
34
corporate and financial institution debt securities, and U.S. Treasury and other government securities. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are primarily in marketable securities. Due to the short-term duration of our investment portfolios and the low risk profile of our investments, we do not believe an immediate change of 100 basis points, or one percentage point, would have a material effect on the fair market value of our investment portfolio. Declines in interest rates, however, would reduce future investment income.
We do not have any foreign currency or derivative financial instruments. Inflation generally affects us by increasing our cost of labor and program costs. We do not believe that inflation had a material effect on our results of operations during the three months ended March 31, 2022.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2022.
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
35
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation related to intellectual property (“IP”), commercial arrangements and other matters. The outcome of any such legal proceedings, regardless of the merits, is inherently uncertain. In addition, litigation and related matters are costly and may divert the attention of our management and other resources that would otherwise be engaged in other activities. If we were unable to prevail in any such legal proceedings, our business, results of operations, liquidity and financial condition could be adversely affected.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. In evaluating us and our business, careful consideration should be given to the following risk factors, in addition to the other information set forth in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2021 and in other documents that we file with the SEC. If any of the following risks and uncertainties actually occurs, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized and described below are not intended to be exhaustive and are not the only risks facing us. New risk factors can emerge from time to time, and we cannot predict the impact that any factor or combination of factors may have on our business, prospects, financial condition and results of operations.
Summary of the Material Risks Associated with Our Business
36
Risks Related to Our Business
Risks Related to Preclinical and Clinical Development
CRISPR/Cas9 genome editing technology is not yet clinically validated for human therapeutic use. The approaches we are taking to discover and develop novel therapeutics using CRISPR/Cas9 systems are unproven and may never lead to marketable products. If we are unable to develop viable product candidates, achieve regulatory approval for any such product candidate or market and sell any product candidates, we may never achieve profitability.
We are focused on developing curative medicines utilizing CRISPR/Cas9 genome editing technology, including in vivo therapies and ex vivo engineered cell therapies. Although there have been significant advances in recent years in the fields of gene therapy and genome editing, in vivo CRISPR-based genome editing technologies are relatively new and their therapeutic utility is largely unproven. Our approach to developing therapies centers on using CRISPR/Cas9 technology to alter, introduce or remove genetic information in vivo to treat various disorders, or to engineer human cells ex vivo to create therapeutic cells that can be introduced into the human body to address the underlying disease.
Successful development of products by us will require solving a number of issues, including developing or obtaining technologies to safely deliver a therapeutic agent into target cells within the human body or engineer human cells while outside of the body
37
such that the modified cells can have a therapeutic effect when delivered to the patient, optimizing the efficacy and specificity of such products, and ensuring and demonstrating the therapeutic selectivity, efficacy, potency, purity and safety of such products. There can be no assurance we will be successful in solving any or all of these issues. Indeed, no genome editing in vivo therapy or genome-edited engineered cell therapy has been approved in the United States (“U.S.”), European Union (“EU”) countries or other key jurisdictions. With regards to CRISPR/Cas9-based therapies specifically, we are beginning to clinically test our in vivo and ex vivo product candidates. Further, we are unaware of any clinical trials validating safety and efficacy having been completed by any third parties. Accordingly, the potential to successfully obtain approval for any of our CRISPR/Cas9 product candidates remains unproven.
Our future success also is highly dependent on the successful development of CRISPR-based genome editing technologies, cellular delivery methods and therapeutic applications for the indications on which we have focused our on-going research and development efforts. We may decide to alter or abandon these programs as new data become available and we gain experience in developing CRISPR/Cas9-based therapeutics. We cannot be sure that our CRISPR/Cas9 efforts and technologies will yield satisfactory products that are safe and effective, sufficiently pure or potent, manufacturable, scalable or profitable in our selected indications or any other indication we pursue. We cannot guarantee that progress or success in developing any particular CRISPR/Cas9-based therapeutic product will translate to other CRISPR/Cas9-based products.
Public perception and related media coverage of potential therapy-related efficacy or safety issues, including adoption of new therapeutics or novel approaches to treatment, as well as ethical concerns related specifically to genome editing and CRISPR/Cas9, may adversely influence the willingness of subjects to participate in clinical trials, or if any therapeutic is approved, of physicians and patients to accept these novel and personalized treatments. Physicians, healthcare providers and third party payors often are slow to adopt new products, technologies and treatment practices, particularly those that may also require additional upfront costs and training. Physicians may not be willing to undergo training to adopt these novel and potentially personalized therapies, may decide the particular therapy is too complex or potentially risky to adopt without appropriate training, and may choose not to administer the therapy. Further, due to health conditions, genetic profile or other reasons, certain patients may not be candidates for the therapies. In addition, responses by federal and state agencies, congressional committees and foreign governments to negative public perception, ethical concerns or financial considerations may result in new legislation, regulations, or medical standards that could limit our ability to develop or commercialize any product candidates, obtain or maintain regulatory approval or otherwise achieve profitability. New government requirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossible to predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or what the impact of such changes, if any, may be. Based on these and other factors, healthcare providers and payors may decide that the benefits of these new therapies do not or will not outweigh their costs.
Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates.
All of our lead programs are still in the discovery, preclinical or early clinical stage. Our current and future product candidates will require preclinical and clinical activities and studies, regulatory review and approval in each jurisdiction in which we intend to market the products, substantial investment, establishing manufacturing capabilities, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales. Before obtaining marketing approval from regulatory authorities for the sale of a product candidate, we must conduct extensive clinical trials to demonstrate the safety, purity, potency and efficacy of the product in humans. It is impossible to predict when or if any of our programs will prove effective and safe in humans or will receive regulatory approval. Preclinical and clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to outcome. We may be unable to establish clinical endpoints that regulatory authorities consider clinically meaningful, and a clinical trial can fail at any stage. The outcome of preclinical testing and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain approval of their products.
Successful completion of clinical trials is a prerequisite to submitting a Biologics License Application (“BLA”) to the FDA, and similar applications to comparable foreign regulatory authorities, for each product candidate and, consequently, the ultimate approval and commercial marketing of any product candidates. We do not know whether any of our clinical trials will begin or be completed on schedule, if at all.
38
Because these are new therapeutic approaches, discovering, developing, manufacturing and commercializing our product candidates subject us to a number of challenges or delays in completing our preclinical studies and initiating or completing clinical trials. We also may experience numerous unforeseen events during, or as a result of, any current or future clinical trials that we conduct, which could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:
39
In addition, disruptions caused by the evolving COVID-19 pandemic may increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our ongoing and planned clinical trials. We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs of the institutions in which such trials are being conducted or the relevant ethics committee, the Data Monitoring Committee (“DMC”) for such trial, or the FDA or other relevant regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities, resulting in the imposition of a clinical hold, manufacturing or quality control issues, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Further, the FDA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.
Additionally, because our in vivo technology potentially involves genome editing across multiple cell and tissue types, we are subject to many of the challenges and risks that other genome editing therapeutics and gene therapies face, including:
40
Further, because our ex vivo product candidates involve editing human cells and then delivering modified cells to patients, we are subject to many of the challenges and risks that engineered cell therapies face. For example, clinical trials using engineered cell-based gene therapies may require unique products to be created for each patient and such individualistic manufacturing may be both inefficient and cost-prohibitive.
To date, human clinical trials utilizing either in vivo or ex vivo CRISPR/Cas9-based therapeutics, including our clinical trials for NTLA-2001 for transthyretin (“ATTR”) amyloidosis, NTLA-2002 for hereditary angioedema (“HAE”) and NTLA-5001 for acute myeloid leukemia (“AML”), are still at an early stage. In November 2021, we received MHRA approval for an amendment to our approved protocol for NTLA-2001 which enabled us to include patients with ATTR amyloidosis with cardiomyopathy. There is no certainty that the FDA or other similar agencies will continue to apply to all our CRISPR/Cas9 product candidates the same regulatory pathway and requirements it is applying to other in vivo therapies or ex vivo engineered therapeutics. In addition, if any product candidates encounter safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business could be significantly harmed. Further, competitors that are developing in vivo or ex vivo products with similar technology may experience problems with their product candidates or programs that could in turn cause us to identify problems with our product candidates and programs that would potentially harm our business.
We received IND authorization from the FDA for NTLA-5001 in September 2021 and CTA authorization from the MHRA in November 2021, and the first patient was dosed in the Phase 1/2a study. In addition, we received authorization in October 2021 from the U.K.’s MHRA and New Zealand’s MEDSAFE to initiate a Phase 1/2 study evaluating NTLA-2002 for the treatment of adults with HAE, and the first dose-escalation cohort of patients have been dosed in such clinical trial. We may experience manufacturing delays or other issues that prevent us from executing the first-in-human clinical trials for NTLA-5001 or NTLA-2002 on the timelines we expect. Moreover, we cannot guarantee that the FDA, MHRA, MEDSAFE, or other regulatory authorities will not change their requirements in the future or approve amendments to our INDs or equivalent regulatory filings, including for NTLA-2001, NTLA-2002, or NTLA-5001.
Negative public opinion and increased regulatory scrutiny of CRISPR/Cas9 use, genome editing or gene therapy generally may damage public perception of the safety of any product candidates that we develop and adversely affect our ability to conduct our business or obtain regulatory approvals for such product candidates.
Gene therapy in general, and genome editing in particular, remain novel technologies, with only a limited number of gene therapy products approved to date in the U.S. and EU. Public perception may be influenced by claims that gene therapy or genome editing, including the use of CRISPR/Cas9, is unsafe or unethical, or carries an undue risk of side effects, such as improper modification of a gene sequence in a patient’s chromosome that could lead to cancer, and gene therapy or genome editing may not gain the acceptance of the public or the medical community. In particular, our success will depend upon physicians who specialize in the treatment of diseases targeted by our product candidates prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. In addition, responses by the U.S., state or foreign governments to negative public perception or ethical concerns may result in new legislation or regulations that could limit our ability to develop or commercialize any product candidates, obtain or maintain regulatory approval or otherwise achieve profitability. More restrictive statutory regimes, government regulations or negative public opinion could have an adverse effect on our business, financial condition and results of operations and prospects, and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop. For example, certain gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death. Serious adverse events, such as these, in our clinical trials, or other clinical trials involving gene therapy or genome editing products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidate. In addition, the use of the technology by third parties in areas that are not being pursued by us, such as for targeting and editing of embryonic cells, could adversely impact public and governmental perceptions regarding the ethics and risks of the CRISPR/Cas9 technology and lead to social or legal changes that could limit our ability to apply the technology to develop human therapies addressing disease. For example, reports of the use of CRISPR/Cas9 in China and Russia to edit embryos in utero have generated and may continue to create negative public perception about the use of the technology in humans. Negative public and governmental perception of the technology, or additional
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governmental regulation of our technologies, could also adversely affect our stock price or our ability to enter into revenue generating collaborations or obtain additional funding from the public markets.
Risks Related to Competition
We face significant competition in an environment of rapid technological change. The possibility that our competitors may achieve regulatory approval before we do or develop therapies that are more advanced or effective than ours may harm our business and financial condition or our ability to successfully market or commercialize our product candidates.
The biotechnology and pharmaceutical industries are extremely competitive in the race to develop new products. While we believe we have significant competitive advantages with our industry-leading expertise in genome editing, clinical development expertise and dominant IP position, we currently face and will continue to face competition for our development programs from companies that use genome editing or gene therapy development platforms and from companies focused on more traditional therapeutic modalities such as small molecules and antibodies. The competition is likely to come from multiple sources, including large and specialty pharmaceutical and biotechnology companies, academic research institutions, government agencies and public and private research institutions. Many of these competitors may have access to greater capital and resources than us. For any products that we may ultimately commercialize, not only will we compete with any existing therapies and those therapies currently in development, but we will also have to compete with new therapies that may become available in the future.
Competitors in our efforts to provide genetic therapies to patients can be grouped into at least three sets based on their product discovery platforms:
Our platform and product foci are on the development of therapies using CRISPR/Cas9 gene-editing technology. Genome editing companies focused on CRISPR based technologies include: Beam Therapeutics Inc., Caribou Biosciences, Inc., CRISPR Therapeutics AG, Editas Medicine, Inc., Verve Therapeutics Inc. and ToolGen, Inc.
There are also companies developing therapies using additional gene-editing technologies, which include Allogene Therapeutics, Inc., bluebird bio, Inc., Cellectis S.A., Precision Biosciences, Inc., Sangamo Therapeutics, Inc., Homology Medicines, Inc., Poseida Therapeutics, Inc. and Prime Medicine, Inc.
We are also aware of companies developing therapies in various areas related to our specific ex vivo research and development programs. These companies include Allogene Therapeutics, Inc., Precision BioSciences, Inc., CRISPR Therapeutics AG, Cellectis S.A. and Editas Medicine, Inc. In in vivo, these companies include Editas Medicine, Inc., CRISPR Therapeutics AG, Locus Biosciences, Inc., Excision Biotherapeutics, Inc. and Precision Biosciences, Inc.
Specific to our NTLA-2001 program, we are aware of other companies that are currently commercializing or developing products and therapies used to treat TTR amyloidosis, including Pfizer, Inc., Alnylam Pharmaceuticals, Inc., Ionis Pharmaceuticals, Inc., BridgeBio Pharma Inc. and Novo Nordisk A/S.
Specific to our NTLA-2002 program, we are aware of other companies that are currently commercializing or developing products used to treat HAE including Takeda Pharmaceutical Company Limited, BioCryst Pharmaceuticals Inc., Pharming Group N.V. and CSL Limited.
Our competitors will also include companies that are or will be developing other genome editing methods as well as small molecules, biologics, in vivo gene therapies, engineered cell therapies (both autologous and allogeneic) and nucleic acid-based therapies for the same indications that we are targeting with our CRISPR/Cas9-based therapeutics.
Any advances in gene therapy, engineered cell therapies or genome editing technology made by a competitor may be used to develop therapies that could compete against any of our product candidates.
Many of these competitors have substantially greater research and development capabilities and financial, scientific, technical, intellectual property, manufacturing, marketing, distribution and other resources than we do, and we may not be able to successfully compete with them.
Even if we are successful in selecting and developing any product candidates, in order to compete successfully we may need to be first-to-market or demonstrate that our CRISPR/Cas9-based products are superior to therapies based on the same or different
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treatment methods. If we are not first-to-market or are unable to demonstrate such superiority, any products for which we are able to obtain approval may not be commercially successful. Furthermore, in certain jurisdictions, if a competitor has orphan drug status for a product and if our product candidate is determined to be contained within the scope of a competitor’s orphan drug exclusivity, then approval of our product for that indication or disease could potentially be blocked, for example, for up to seven years in the U.S. and 10 years in the EU.
We may never succeed in any or all of these activities and, even if we do, we may never generate revenues that are significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease our value and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations.
Risks Related to the Industry
Results, including data from our preclinical and clinical studies, are not necessarily predictive of our other ongoing and future preclinical and clinical studies, and they do not guarantee or indicate the likelihood of approval of any potential product candidate by the FDA or any other regulatory agency. If we cannot replicate positive results from any of our preclinical or clinical activities and studies, we may be unable to successfully develop, obtain regulatory approval for and commercialize any potential product candidate.
From time to time, we may disclose interim data from our clinical trials, such as the interim results of our ongoing Phase 1 study of NTLA-2001. Interim data from clinical trials that have not been completed are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available or as patients from our clinical trials continue other treatments for their disease. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. As a result, interim data should be viewed with caution until we make the final data and analysis available.
In addition, there is a high failure rate, as well as potential substantial and unanticipated delays, for product candidates progressing through preclinical and clinical studies. Even if we are able to successfully complete our ongoing and future preclinical and clinical activities and studies for any potential product candidate, we may not be able to replicate, or may have to engage in significant efforts and resource and time investments to replicate, any positive results from these or any other studies in any of our future preclinical and clinical trials, and they do not guarantee approval of any potential product candidate by the FDA or any other necessary regulatory authorities in a timely manner or at all. For more information regarding these risks, see also the above risk factor section entitled “Risks Related to Preclinical and Clinical Development.”
Inconclusive results, lack of efficacy, adverse events or additional safety concerns in clinical trials that we or others conduct may impede the regulatory approval process or overall market acceptance of our product candidates.
Therapeutic applications of genome editing technologies, and CRISPR/Cas9 in particular, for both in vivo products and ex vivo products, are unproven and must undergo rigorous clinical trials and regulatory review before receiving marketing authorization. If the results of our clinical studies or those of any other third parties, including with respect to genome editing technology or engineered cell therapies, are inconclusive, fail to show efficacy or if such clinical trials give rise to safety concerns or adverse events, we may:
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Additionally, our product candidates could potentially cause other adverse events that have not yet been predicted and the potentially permanent nature of genome editing effects, including CRISPR/Cas9’s effects, on genes or novel cell therapies in the organs of the human body may make these adverse events irreversible. The inclusion of critically ill patients in our clinical studies or those of our competitors may result in deaths or other adverse medical events, including those due to other therapies or medications that such patients may be using. Any of these events could prevent us from achieving or maintaining regulatory approval or market acceptance of our product candidates and impair our ability to achieve profitability.
Research and development of biopharmaceutical products is inherently risky. We may not be successful in our efforts to use and enhance our genome editing technology to create a pipeline of product candidates, establish the necessary manufacturing capabilities, obtain regulatory approval and develop commercially successful products, or we may expend our limited resources on programs that do not yield a successful product candidate and fail to capitalize on potential product candidates or diseases that may be more profitable or for which there is a greater likelihood of success. If we fail to develop product candidates, our commercial opportunity, if any, will be limited.
We are at an early stage of development and our technology and approach has not yet led, and may never lead, to the approval or commercialization of any of our product candidates, including NTLA-2001 for ATTR amyloidosis, NTLA-2002 for HAE or NTLA-5001 for AML, or for other product candidates being deemed appropriate for clinical development and ultimately approval, including NTLA-2003 and NTLA-3001 for alpha-1 antitrypsin deficiency (“AATD”) and NTLA-6001 for CD30+ lymphomas, by a regulatory agency. Even if we are successful in building our pipeline of product candidates, completing clinical development, establishing the necessary manufacturing processes and capabilities, obtaining regulatory approvals and commercializing product candidates will require substantial additional funding and are subject to the risks of failure inherent in therapeutic product development. Investment in biopharmaceutical product development involves significant risk that any potential product candidate will fail to demonstrate acceptable safety and efficacy profiles, gain regulatory approval, or become commercially viable.
We cannot provide any assurance that we will be able to successfully advance any of our product candidates, including NTLA-2001, NTLA-2002, NTLA-2003, NTLA-5001, NTLA-3001 or NTLA-6001, through the entire research and development process. Any of our other programs may show promise, yet fail to yield product candidates for clinical development or commercialization for many reasons. For more information regarding these risks, see the above risk factor section entitled “Risks Related to Clinical Development.”
Even if we obtain regulatory approval of any product candidates, such candidates may not gain market acceptance among physicians, patients, hospitals, third party payors and others in the medical community.
The use of the CRISPR/Cas9 system to create genome editing-based therapies is a recent development and may not become broadly accepted by patients, healthcare providers, third party payors and other stakeholders. A variety of factors will influence whether our product candidates are accepted in the market, including, for example:
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Even if our products achieve market acceptance, we may not be able to maintain that market acceptance over time if new products or technologies are introduced that are more favorably received than our products, are more cost effective or render our products obsolete. In addition, adverse publicity due to the ethical and social controversies surrounding the therapeutic in vivo use of CRISPR/Cas9, gene edited modified cells, or other therapeutics mediums, such as viral vectors that we may use in our clinical trials may limit market acceptance of our product candidates. If our product candidates are approved but fail to achieve market acceptance among physicians, patients, hospitals, third party payors or others in the medical community, we will not be able to generate significant revenue. Our efforts to educate the healthcare providers, patients and third party payors about our products may require significant resources and may never be successful.
Risks Related to Healthcare
Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates or therapies profitably.
The success of our product candidates, if approved, depends on the availability of adequate coverage and reimbursement from third party payors, including government agencies, private health insurers and health maintenance organizations. There is significant uncertainty related to the insurance coverage and reimbursement of any newly approved product, but in particular novel gene editing and engineered cell products. All the therapeutic indications approved by the relevant authorities may not be covered or reimbursed. In addition, we cannot be sure that coverage and reimbursement will be available for, or accurately estimate the potential revenue from, our product candidates because they are novel treatments for diseases using a new technology and delivery approaches.
In the U.S. and some other jurisdictions, patients generally rely on third party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid in the U.S., and commercial payors are critical to new product acceptance.
Government authorities and other third party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement. In the U.S., the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services (“CMS”), an agency within the U.S. Department of Health and Human Services. CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare, and private payors often follow CMS’s coverage decisions. Other jurisdictions have agencies, such as the National Institute for Health and Care Excellence (“NICE”) in the U.K., that evaluate the use and cost-effectiveness of therapies, which impact the utilization and price of the medicine in such jurisdiction.
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In the U.S., no uniform policy of coverage and reimbursement for products exists among third party payors. As a result, obtaining coverage and reimbursement approval of a product from a third party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to each potential payor, with no assurance that coverage and adequate reimbursement will be obtained from all or any of them. Even if we obtain coverage for a given product, the resulting reimbursement payment rates might be insufficient or may require co-payments that patients find unacceptably high, which may prevent us from achieving or sustaining profitability. Additionally, third party payors may not cover, or provide adequate reimbursement for, long-term follow-up evaluations required following the use of our gene-modifying products.
In addition, each country in which we seek approval to market our product candidates has unique laws and market practices regulating coverage and reimbursement for human therapeutics. Market acceptance and sales of our products in each country will depend on our ability to meet each of these jurisdiction’s requirements for coverage and reimbursement. Further, changes to the country’s existing requirements may also affect our ability to commercialize our products in the future, or achieve profitability from their sale.
We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, physician payment transparency laws, health information privacy and security laws and anti-corruption laws. If we are unable to comply, or have not fully complied, with such laws or their relevant foreign counterparts, we could face substantial penalties.
The sale, distribution and marketing of human therapeutics and the relationship with healthcare providers are strictly regulated by laws in the U.S. and most other jurisdictions in which we intend to seek approval for our product candidates. In addition, the collection and use of personally identifiable information, including health-related information, is regulated by federal, state and foreign privacy, data security and data protection laws. Failure to comply with these laws could impair our ability to properly sell our product candidates in particular jurisdictions and subject us to liability from private and governmental entities. In addition, addressing these diverse and sometimes contradictory requirements in myriad jurisdictions may necessitate that we expend significant resources on compliance efforts. Any failure to comply with these requirements may leave us exposed to possible enforcement actions and potential liability.
The laws that may affect our ability to operate include:
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The scope and enforcement of each of these laws is not always certain and is subject to legislative, judicial or prosecutorial changes. Further, because of the breadth of these laws, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Indeed, U.S. federal and state enforcement bodies have increasingly scrutinized healthcare companies and providers interactions, which has led to a number of investigations, prosecutions, convictions and settlements in the industry. Ensuring business arrangements comply with applicable laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from its business.
The increasingly global nature of our business operations, including clinical development efforts, subjects us to domestic and foreign anti-bribery and anti-corruption laws and regulations, such as the FCPA and the U.K. Bribery Act. These activities create the risk of unauthorized payments or offers of payments that are prohibited under the FCPA, the U.K. Bribery Act or similar laws. It is our policy to implement safeguards to discourage these practices by our employees and agents. However, these safeguards may ultimately prove ineffective, and our employees, consultants, and agents may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
Further, the U.S. federal and state government, as well as other jurisdictions, have myriad laws regulating the collection, storage, distribution and use of data of employees, patients, agents, and others. These different laws governing the privacy and security of health and other personal information often differ from each other in significant ways and may not have the same effective requirements, thus complicating efforts to comply with their respective provisions. For example:
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The costs associated with ensuring compliance with these laws, including in particular European Data Protection Law, may be onerous and adversely affect our business, financial condition, results of operations and prospects. Further, due to Brexit, we may have additional costs and operational challenges in complying with the U.K. GDPR and any other developments regulating the transfer of personal data between the U.K. and EU. We may also need to rely on multiple third parties to meet these legal requirements, which could result in additional liability for us if they do not comply.
Efforts to ensure that we comply with all applicable healthcare and data privacy laws and regulations, as well as other domestic and foreign legal requirements, will involve substantial costs. It is possible that governmental and enforcement authorities in the U.S. or outside the U.S. will conclude that our business practices do not comply with current or future legal requirements. If any noncompliance actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, individual imprisonment, exclusion from participation in federal healthcare programs (such as Medicare and Medicaid), contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, any of which could adversely affect our ability to operate our business and our results of operations. Any action for violation of these laws, even if successfully defended, could result in significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales (including importation or exportation) or withdrawal of future marketed products could materially affect business in an adverse way.
Healthcare cost control initiatives, including healthcare legislative and regulatory reform measures, may have a material adverse effect on our business and results of operations.
The U.S. and many other jurisdictions have enacted or proposed legal changes affecting the healthcare system that could prevent or delay marketing approval of our product candidates, affect our ability to profitably sell our product candidates once approved, and restrict or regulate post-approval activities. Changes in the legal requirements, or their interpretation, could impact our
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business by compelling, for example, modification to: our manufacturing arrangements; product labeling; pricing and reimbursement arrangements; private or governmental insurance coverage; the sale practices for, or availability of, our products; or record-keeping activities. If any such changes were to be imposed, they could adversely affect the operation of our business.
Third party payors, whether domestic or foreign, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In the U.S. and certain other jurisdictions, there have been, and are expected to continue to be, a number of legislative and regulatory changes to the healthcare system that could impact our ability to sell our products profitably. In the U.S., however, significant uncertainty exists regarding the provision and financing of healthcare because the newly elected administration and federal legislators have publicly declared their intention to review and potentially significantly modify the current legal and regulatory framework for the healthcare system.
Current legislation at the U.S. federal and state levels seeks to reduce healthcare costs and improve the quality of healthcare. For example, the U.S. Affordable Care Act, enacted in March 2010, subjected biologic products to potential competition by lower-cost biosimilars; introduced a new methodology to calculate manufacturers’ rebates under the Medicaid Drug Rebate Program for certain drugs, including infused or injected drugs; increased manufacturers’ minimum Medicaid rebates under the Medicaid Drug Rebate Program; extended the Medicaid Drug Rebate program to pharmaceutical prescriptions of individuals enrolled in Medicaid managed care organizations; imposed new annual fees and taxes for certain branded prescription drugs and biologic agents; created the Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts as of January 1, 2019, off negotiated prices on certain brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and provided incentives to programs that increase the federal government’s comparative effectiveness research. At this time, the full effect that the Affordable Care Act would have on our business remains unclear.
Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA and we expect there will be additional challenges and amendments to the ACA in the future. The Tax Cuts and Jobs Act of 2017 (“Tax Act”) includes a provision that decreased the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year, commonly referred to as the “individual mandate,” to $0, effective January 1, 2019. On December 14, 2018, a federal district court in Texas ruled the individual mandate is a critical and inseverable feature of the ACA and, therefore, because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals (“Fifth Circuit”) held that the individual mandate is unconstitutional, and remanded the case to the lower court to reconsider its earlier invalidation of the full ACA. Following an appeal by certain defendants, on June 17, 2021, the U.S. Supreme Court dismissed the plaintiffs’ challenge to the ACA for lack of standing without specifically ruling on the constitutionality of the ACA, and reversed the Fifth Circuit’s judgment and remanded the case with instructions to dismiss. It is unclear how other healthcare reform measures of the Biden administrations or other efforts, if any, to challenge, repeal or replace the ACA, will impact our business.
Other legislative changes relevant to the healthcare system have been adopted in the U.S. since the Affordable Care Act was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional Congressional action is taken. Pursuant to the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, as well as subsequent legislation, these reductions have been suspended from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic. Following the suspension, a 1% payment reduction will occur beginning April 1, 2022 through June 30, 2022, and the 2% payment reduction will resume on July 1, 2022. In January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers, cancer centers and other treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
Additionally, on July 9, 2021, President Biden issued an executive order directing the FDA to, among other things, work with states and tribes to safely import prescription drugs from Canada and to continue to clarify and improve the approval framework for generic drugs and biosimilars, including the standards for interchangeability of biological products, facilitate the development and approval of biosimilar and interchangeable products, clarify existing requirements and procedures related to the review and submission of BLAs, and identify and address any efforts to impede generic drug and biosimilar competition. It is unclear whether
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the FDA will make changes or additions to current requirements and procedures relating to BLAs and, if so, how such changes or additions could impact our business.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. As indicated previously, significant uncertainty exists regarding the future scope and effect of current healthcare legislation and regulations because of recent changes in U.S. executive and legislative branches, and elected officials’ public declarations of their intention to significantly modify or repeal the current legislative framework. We cannot predict the initiatives that may be adopted in the future, any of which could limit or modify the amounts that foreign, federal and state governments as well as private payors, including patients, will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.
Risks Related to Manufacturing and Supply
In vivo genome editing products and ex vivo engineered cell therapies based on CRISPR/Cas9 genome editing technology are novel and may be complex and difficult to manufacture. We could experience manufacturing problems that result in delays in the development, approval or commercialization of our product candidates or otherwise harm our business.
The manufacturing process used to produce CRISPR/Cas9-based in vivo and engineered cell therapy product candidates may be complex, as they are novel and have not been validated for late phase clinical and commercial production and may require components that are difficult to obtain or manufacture at the necessary quantities and in accordance with regulatory requirements. Several factors could cause production interruptions, including equipment malfunctions; facility unavailability or contamination; raw material cost, shortages or contamination; natural disasters, such as the COVID-19 pandemic; disruption in utility services; human error; insufficient personnel; inability to meet legal or regulatory requirements; or disruptions in the operations of our suppliers.
Because our product candidates likely will be regulated as biologics, their processing steps will be more complex than those of most small molecule drugs. Moreover, unlike small molecules, the physical and chemical properties of a complex product such as ours generally cannot be fully characterized. As a result, assays of the finished product or relevant components may not be sufficient to ensure that the product will perform in the intended manner. For this reason, we will employ multiple steps to control the manufacturing process to ensure that the process results in product candidates that meet their specifications, but complications at any one step could adversely impact our manufacturing of products. Further, we may encounter problems achieving adequate quantities and quality of clinical grade materials that meet the FDA or other relevant regulatory agency’s applicable standards or our specifications with consistent and acceptable production yields and costs. Manufacturing process irregularities, even minor deviations from the normal process, could result in product defects or manufacturing issues that cause lot failures, product recalls, product liability claims and litigation, insufficient inventory or production interruption. In addition, product manufacturing and supply could be delayed if the FDA and other regulatory authorities require us to submit lot samples, testing results and protocols, or if they require that we not distribute a lot until they authorize the product’s release.
Further, certain of our product candidates may require components that are unavailable or difficult to acquire or manufacture at the necessary scale and in compliance with regulatory requirements to support our clinical trials or, if approved, commercial efforts. We expect to continue to rely on third party contract manufacturing organizations (“CMOs”) to manufacture these components and the final product candidates for the foreseeable future. We may not have full control of these CMOs and they may prioritize other customers or be unable to provide us with enough manufacturing capacity to meet our objectives. Further, we may rely on CMOs outside the U.S. for certain components of our product candidates, and may be subject to importation regulations that may affect our ability to manufacture or increase the cost of our product candidates.
We also may encounter problems hiring and retaining the experienced scientific, quality-control and manufacturing personnel needed to operate or supervise the necessary manufacturing processes, which could result in delays in production or difficulties in maintaining compliance with applicable regulatory requirements.
Any of these manufacturing and supply issues or delays could restrict our ability to meet clinical or market demand for our products, and be costly to us and otherwise harm our business, financial condition, results of operations and prospects. Further, any problems in manufacturing processes or facilities could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs.
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Risks Related to Data and Privacy
Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our operations and development efforts.
We are increasingly dependent upon information technology systems, infrastructure, and data to operate our business. In the ordinary course of business, we collect, store, and transmit large amounts of confidential information (including but not limited to intellectual property, such as trade secrets, proprietary business information, and personal information). It is critical that we do so in a secure manner to maintain the confidentiality and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result we manage a number of third party vendors who may or could have access to our confidential information. Our third party collaborators, vendors and service providers (including our CMOs and CROs) also have access to large amounts of confidential information relating to our operations, including our research and development efforts. The size and complexity of our information technology systems, and those of third party vendors, service providers and collaborators, and the large amounts of confidential information stored on those systems, make such systems potentially vulnerable to service interruptions or systems failures, or to security breaches from inadvertent or intentional actions by our employees, third party vendors, service providers, collaborators, and/or business partners, or from cyber-attacks by malicious third parties.
In addition to such risks, the adoption of new technologies may also increase our exposure to cybersecurity breaches and failures. Further, having a significant portion of our workforce working from home for extended periods of time due to the COVID-19 pandemic puts us at greater risk of cybersecurity attacks. Cyber-attacks are increasing in their frequency, sophistication, and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, denial-of-service attacks, social engineering, “phishing” scams, ransomware, network security breaches, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information. Certain of our service providers have been subject to such attacks and our company or our service providers may be impacted by such attacks in the future. Significant disruptions of these information technology systems or security breaches could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including but not limited to trade secrets or other intellectual property, proprietary business information, and personal information), and could result in financial, legal, business, and reputational harm to us and would adversely affect our operations, including our discovery and research and development programs. For example, any such event that leads to unauthorized access, use, or disclosure of personal information, including personal information regarding our employees or current or future clinical trial participants, could harm our reputation, require us to comply with federal and/or state breach notification laws and foreign law equivalents (such as the GDPR or the U.K.’s Data Protection Act), and otherwise subject us to liability, including financial penalties and fines, under laws and regulations that protect the privacy and security of personal information. Also, the loss of preclinical or clinical trial data from completed or future preclinical or clinical trials, respectively, could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed. Security breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type summarized and described above. While we have implemented security measures to protect our information technology systems and infrastructure, there is no assurance that such measures will prevent service interruptions or security breaches that could adversely affect our business.
Interruptions in the availability of server systems or communications with internet or cloud-based services, or failure to maintain the security, confidentiality, accessibility or integrity of data stored on such systems, could harm our business.
We rely upon a variety of internet service providers, third party web hosting facilities and cloud computing platform providers and Software as a Service vendors to support our business. Failure to maintain the security, confidentiality, accessibility or integrity of data stored on such systems could result in interruptions in our operations, damage our reputation in the market, increase our service costs, cause us to incur substantial costs, subject us to liability for damages and/or fines, and divert our resources from other tasks, any one of which could materially adversely affect our business, financial condition, results of operations and prospects. If our security measures or those of our third party data center hosting facilities, cloud computing
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platform providers, or third party service partners, are breached, and unauthorized access is obtained to our data or our information technology systems, we may incur significant legal and financial exposure and liabilities.
We also do not have control over the operations of the facilities of our cloud service providers, software as a service vendors or our third party web hosting providers, and they also may be vulnerable to damage or interruption from natural disasters, cybersecurity attacks, terrorist attacks, power outages and similar events or acts of misconduct. In addition, any changes in these providers’ service levels may adversely affect our ability to meet our requirements and operate our business.
Social media platforms present new risks and challenges to our business.
As social media continues to expand, it also presents us with new risks and challenges. Social media is increasingly being used to communicate information about us, our programs and the diseases our therapeutics are being developed to treat. Social media practices in the pharmaceutical and biotechnology industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media platforms to comment on the effectiveness of, or adverse experiences with, a product or a product candidate, which could result in reporting obligations or other consequences. Further, the accidental or intentional disclosure of non-public information by our workforce or others through media channels could lead to information loss. In addition, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us, our products, or our product candidates on any social media platform. The nature of social media prevents us from having real-time control over postings about us on social media. We may not be able to reverse damage to our reputation from negative publicity or adverse information posted on social media platforms or similar mediums. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face restrictive regulatory actions or incur other harm to our business including quick and irreversible damage to our reputation, brand image and goodwill.
Risks Related to the COVID-19 Pandemic
Business interruptions resulting from the COVID-19 outbreak or similar public health crises could delay or cause a disruption of the development of our product candidates and adversely impact our business.
Public health crises, such as pandemics or similar outbreaks, could adversely impact our business. The current COVID-19 pandemic has continuously evolved, and to date has led to the implementation of various responses, including government-imposed quarantines, travel restrictions and other public health safety measures, as well as reported adverse impacts on healthcare resources, facilities and providers, in Massachusetts, across the U.S. and in other countries. The U.S. government, as well as certain foreign governments, have imposed restrictions on travel to or from the U.S. and other jurisdictions, which may delay or prevent us from conducting our business in a timely and efficient manner. The extent to which COVID-19 impacts our operations or those of our third party partners will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, the identification of new variants of the virus, additional or modified government actions, new information that will emerge concerning the severity and impact of COVID-19 and the actions to contain COVID-19 or address its impact in the short and long term, among others.
Additionally, completion of our clinical trials for NTLA-2001 for ATTR amyloidosis, NTLA-2002 for HAE and NTLA-5001 for AML as well as timely completion of preclinical activities and initiation of planned clinical trials for other product candidates, such as NTLA-2003 and NTLA-3001 for AATD or NTLA-6001 for CD30+ lymphomas, is dependent upon the availability of, for example, preclinical and clinical trial sites, researchers and investigators, regulatory agency personnel, and materials, which may be adversely affected by global health matters, such as pandemics. We plan to conduct preclinical activities and clinical trials for our investigational drug product candidates in geographies that are currently being affected by COVID-19.
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Further, in response to the pandemic and in accordance with direction from state and local government authorities, we have restricted and may continue to restrict access to our facilities mostly to personnel and third parties who must perform critical activities that must be completed on-site, limited the number of such personnel that can be present at our facilities at any one time, and requested that personnel work remotely, as appropriate. In the event that governmental authorities were to further modify current restrictions, our employees conducting research and development or manufacturing activities may not be able to access our laboratory or manufacturing space, and our core activities may be significantly limited or curtailed, possibly for an extended period of time.
Some factors from the COVID-19 pandemic that could delay or otherwise adversely affect the completion of our preclinical activities and our ongoing and planned clinical trials for our investigational drug product candidates, as well as our business generally, include:
These and other factors arising from COVID-19 could worsen in countries that are already afflicted with coronavirus or could continue to spread to additional countries, each of which could further adversely impact our ability to conduct clinical trials and our business generally, and could have a material adverse impact on our operations and financial condition and results.
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In addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. As a result, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms. The COVID-19 outbreak continues to rapidly evolve. The extent to which the outbreak may impact our business, preclinical studies and ongoing and planned clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and other actions to contain the outbreak or address its impact, such as social distancing and quarantines or lock-downs in the U.S. and other countries, business closures or business disruptions and the effectiveness of actions taken in the U.S. and other countries to contain and address the disease.
Risks Related to Commercialization
If, in the future, we are unable to establish sales, marketing and distribution capabilities or enter into agreements with third parties to sell, market and distribute products based on our technologies, we may not be successful in commercializing our products if and when any product candidates or therapies are approved and we may not be able to generate any revenue.
We do not currently have a sales, marketing or distribution infrastructure and, as a company, have no experience in the sale, marketing or distribution of therapeutic products. To achieve commercial success for any approved product candidate for which we retain sales and marketing responsibilities, we must build our sales, marketing, managerial and other non-technical capabilities or make arrangements with third parties to perform these services. There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services.
Factors that may inhibit our efforts to commercialize our product candidates include:
If we enter into arrangements with third parties to perform sales, marketing and distribution services, we would likely have lower product revenue or profitability than if we ourselves were to market and sell our product candidates. In addition, we may be unable to enter into sales and marketing arrangements with third parties, or into arrangements with terms that are favorable to us. We likely will have little control over such third parties and any of them may fail to devote the necessary resources and attention to sell and market our product candidates effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or through third parties, we may not be successful in commercializing our product candidates, and our business, results of operations, financial condition and prospects will be materially adversely affected.
Risks Related to Our Financial Position and Need for Additional Capital
Risks Related to Past Financial Condition
We have never generated any revenue from product sales and our ability to generate revenue from product sales and become profitable depends significantly on our success in a number of areas.
We have no products approved for commercial sale, have not generated any revenue from product sales, and do not anticipate generating any revenue from product sales until we have received regulatory approval for the commercial sale of one of our product candidates. Our ability to generate revenue, and achieve and retain profitability, depends significantly on our success in many areas, including:
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Even if one or more product candidates that we discover and develop are approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate and the timing of such costs may be out of our control. If we are not able to generate revenue from the sale of any approved products, we may never become profitable.
Our limited operating history may make difficult the evaluation of our business’s success to date and assessment of our future viability.
We are an early clinical-stage company. We were founded and commenced operations in mid-2014. All of our product candidates are still in the preclinical development or early clinical stage. We have not yet demonstrated our ability to successfully complete any clinical trials, including large-scale, pivotal clinical trials, obtain marketing approvals, manufacture clinical and commercial scale therapeutics, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful commercialization. Our ability to generate product revenue or profits, which we do not expect will occur for many years, if ever, will depend heavily on the successful development and eventual commercialization of our product candidates, which may never occur. We may never be able to develop or commercialize a marketable product.
Each of our programs may require additional discovery research and then preclinical and clinical development, regulatory approval in multiple jurisdictions, obtaining manufacturing supply, capacity and expertise, building of a commercial organization, substantial investment and significant marketing efforts before we generate any revenue from product sales. In addition, our product candidates must be approved for marketing by the FDA, or certain other foreign regulatory agencies, before we may commercialize any product.
Our limited operating history, particularly in light of the rapidly evolving genome editing field, may make it difficult to evaluate our current business and predict our future performance. Our relatively short history as an operating company makes any assessment of our future success or viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by very early-stage companies in rapidly evolving fields. If we do not address these risks successfully, our business will suffer.
We have incurred net losses in each period since our inception, anticipate that we will continue to incur net losses in the future and may never achieve profitability.
We are not profitable and have incurred losses in each period since our inception. Our net loss was $146.9 million for the three months ended March 31, 2022. As of March 31, 2022, we had an accumulated deficit of $849.9 million. We expect these losses
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to increase as we continue to incur significant research and development and other expenses related to our ongoing operations, seek regulatory approvals for our future product candidates, scale-up manufacturing capabilities, maintain, expand and protect our intellectual property portfolio and hire additional personnel to support the development of our product candidates and to enhance our operational, financial and information management systems. Although we believe that our cash, cash equivalents, and marketable securities will enable us to fund our operating and capital expenditure requirements at least through the next twenty four months, we cannot predict the impact of the COVID-19 pandemic on future results of operations and financial condition due to a variety of factors, including the health of our employees, the ability of suppliers to continue to operate and deliver, the ability of Intellia to maintain operations, continued access to transportation resources, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic. We expect to finance our operations through a combination of collaboration revenue, equity or debt financings or other sources, which may include collaborations with third parties. Given the impact of COVID-19 on the U.S. and global financial markets, we may be unable to access further equity or debt financing when needed.
A critical aspect of our strategy is to invest significantly in our technology to improve the efficacy and safety of potential product candidates that we discover. Even if we succeed in discovering, developing and ultimately commercializing one or more of these product candidates, we will continue to incur losses for the foreseeable future relating to our substantial research and development expenditures to develop our technologies. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business, such as the COVID-19 pandemic. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital. Further, the net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.
Risks Related to Future Financial Condition
We may need to raise substantial additional funding to fund our operations. If we fail to obtain additional financing, we may be unable to complete the development and commercialization of any product candidates.
Our operations have required substantial amounts of cash since inception, and we expect to spend substantial amounts of our financial resources on our discovery programs going forward and future development efforts. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete preclinical development, manufacture (or have manufactured) product candidates and components, and then conduct extensive clinical trials to demonstrate the safety and efficacy of any of our future product candidates in humans. Because preclinical and clinical testing is expensive and can take many years to complete, we may require additional funding to complete these undertakings. Further, if we are able to identify product candidates that are eventually approved, we will require significant additional amounts in order to launch and commercialize our product candidates. For the foreseeable future, we expect to continue to rely on additional financing to achieve our business objectives. Our future capital requirements will depend on and could increase significantly as a result of many factors, including the scope, progress, results and costs of drug discovery, preclinical development, laboratory testing and clinical trials for our current or future product candidates, including additional expenses attributable to adjusting our development plans (including any supply related matters).
We will require additional capital for the further development and commercialization of any product candidates and may need to raise additional funds sooner if we choose to expand more rapidly than we presently anticipate or due to other unanticipated factors. Disruptions in the financial markets in general and, more recently, due to the COVID-19 pandemic have made equity and debt financing more difficult to obtain, and may have a material adverse effect on our ability to meet our fundraising needs.
We cannot be certain that additional funding will be available on acceptable terms, or at all. We have no committed source of additional capital and if we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development, manufacture or commercialization of our product candidates or other research and development initiatives. Our collaboration and license agreements may also be terminated if we are unable to meet the payment or other obligations under the agreements. We could be required to seek collaborators for product candidates at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available or relinquish or license on unfavorable terms our rights to product candidates in markets where we otherwise would seek to pursue development or commercialization ourselves.
Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.
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Raising additional capital may cause dilution to our stockholders and restrict our operations.
We will need additional capital in the future to continue our planned operations. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. In addition, the impact on the economic and financial markets of the COVID-19 pandemic has depressed the valuation of public companies, which could require selling equity at lower prices to ensure appropriate capitalization. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Unfavorable national or global economic conditions or political developments could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the national or global economy and financial markets. For example, governmental statements, actions or policies, political unrest and global financial crises can cause extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, political unrest or additional global financial crises, including those resulting from the current COVID-19 pandemic, could result in a variety of risks to our business, including weakened demand for our products, if approved, or our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate, further political developments and financial market conditions could adversely impact our business.
Inadequate funding for, or change of priorities or disruptions at, the FDA and other government agencies in or outside the U.S. could hinder their ability to hire, retain, or deploy key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.
The ability of the FDA and other similar regulatory agencies to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and authorization to accept the payment of user fees, reallocation of resources to address unique or new healthcare issues (such as the COVID-19 pandemic), and statutory, regulatory, and policy changes. For example, the FDA’s average review times at the agency have fluctuated in recent years as a result of these factors in the U.S. In addition, government funding of other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other similar agencies may also slow the time necessary for new product applications to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including beginning on December 22, 2018, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities.
If a prolonged government shutdown occurs (or if the COVID-19 pandemic continues to disrupt or prevent regular inspections, reviews, or other regulatory activities conducted by regulatory agencies) in the U.S. or other jurisdictions where we plan to conduct our clinical trials, manufacturing, or other operations, it could significantly impact the ability of the relevant agency, such as the FDA, to timely review and process our regulatory submissions, which could have a material adverse effect on our business.
Risks Related to Our Reliance on Third Parties
Risks Related to Our Reliance on Collaboration Partners
Our technological advancements and any potential for revenue may be derived in part from our collaborations, including, for example, with Regeneron and AvenCell, and if the collaboration or co-development agreements related to a material collaboration were to be terminated or materially altered in an adverse manner, our business, financial condition, results of operations and prospects would be harmed.
We rely on strategic collaborations to advance our technology and co-develop products that we plan to co-commercialize. If our collaboration partner in a material collaboration fails to develop, obtain regulatory approval for or ultimately commercialize any product candidate from the development programs governed by the respective collaboration agreements, including, e.g., a
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co-development or co-commercialization agreement, or breaches or terminates our collaboration with it, our business, financial condition, results of operations and prospects could be harmed. In addition, any material alteration, in an adverse manner, of any material collaboration agreement, or dispute or litigation proceedings we may have related to a material collaboration in the future could delay development programs, create uncertainty as to ownership of or access to intellectual property rights, distract management from other business activities and generate substantial expense.
As described within the “Collaborations and Other Arrangements” section of our Annual Report on Form 10-K, we have entered into co-development and co-promotion (“Co/Co”) arrangements with Regeneron and AvenCell. Either Regeneron or AvenCell may change its strategic focus or pursue alternative technologies in a manner that results in reduced, delayed or no revenue to us under these arrangements. For example, Regeneron has a variety of marketed products and product candidates either by itself or with other companies, including some of our competitors. In addition, the corporate objectives of our collaborators, such as Regeneron or AvenCell, may not be consistent with our best interests. Regeneron or AvenCell may change its position regarding its participation and funding of our joint activities, which may impact our ability to successfully pursue those programs.
Our existing and future collaborations will be important to our business. If we are unable to maintain any of these collaborations, or if these collaborations are not successful, our business could be adversely affected.
We have limited capabilities for product discovery and development and do not yet have any capability for sales, marketing or distribution. Accordingly, we have entered, and plan to enter, into collaborations with other companies, including our therapeutic-focused collaboration agreements with Novartis and Regeneron, that we believe can provide such capabilities. These current and future therapeutic-focused collaborations could provide us with important technologies and/or funding for our programs and technology. Our existing and future therapeutic collaborations may have a number of risks, including that collaborators:
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If our therapeutic collaborations do not result in the successful discovery, development and commercialization of products or if a collaborator terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. All of the risks relating to product discovery, development, regulatory approval and commercialization summarized and described in this report also apply to the activities of our therapeutic collaborators.
Additionally, if one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be adversely affected.
As part of our business strategy, we may pursue acquisitions or licenses of assets or acquisitions of businesses, or disposition of assets or technologies. For example, in February 2022, we announced the acquisition of Rewrite Therapeutics, Inc. (“Rewrite”) in order to add additional capabilities to our growing platform. We also may pursue strategic alliances and joint ventures that leverage our core technology and industry experience. If we decide to collaborate with other companies to discover, develop and commercialize therapeutic products, we face significant competition in seeking appropriate collaborators because, for example, third-parties have comparable rights to the CRISPR/Cas9 system or similar genome editing technologies. In addition, we have limited experience with acquiring, disposing of or licensing assets or forming strategic alliances and joint ventures. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail, delay or abandon discovery efforts or development programs, and the development, manufacture or commercialization of a product candidate, or increase our expenditures and undertake these activities at our own expense. If we elect to fund and undertake discovery, development, manufacturing or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into collaborations and do not have sufficient funds or expertise to undertake the necessary discovery, development, manufacturing and commercialization activities, we may not be able to further develop our product candidates, manufacture the product candidates, bring them to market or continue to develop our technology and our business may be materially and adversely affected. Furthermore, we may not identify or complete these transactions in a timely manner, on a cost-effective basis, or at all, and we may not realize the anticipated benefits of any acquisition, license, strategic alliance or joint venture.
Risks Related to AvenCell
We launched a new company, AvenCell, alongside Cellex Cell Professionals GmbH and Blackstone Life Sciences Advisors L.L.C. We are exposed to risks associated with the launch of the new company and may not realize the advantages we expect from it.
In July 2021, we launched AvenCell alongside Cellex Cell Professionals GmbH (“Cellex”) and Blackstone Life Sciences Advisors L.L.C. (“BXLS”) (the “AvenCell Launch”). AvenCell acquired GEMoaB GmbH (“GEMoaB”), a wholly-owned subsidiary of Cellex. AvenCell combines GEMoaB’s clinical-stage universal CAR-T program and platforms with our allogeneic universal cell engineering platform. In connection with the AvenCell Launch, we entered into a license and collaboration agreement with AvenCell (the “AvenCell License”), under which we will collaborate to develop allogeneic universal CAR-T cell therapies, as well as a co-development and co-funding agreement (the “AvenCell Co/Co Agreement”) to develop allogeneic universal CAR-T cell products targeted to a particular undisclosed immuno-oncology therapeutic target. AvenCell may not be successful in the timeframe we expect, or at all. In addition, if AvenCell fails to develop, obtain regulatory approval for or ultimately commercialize any product candidate from its development programs, including those governed by the respective AvenCell License or AvenCell Co/Co Agreement, or breaches or terminates such agreements, our business, financial condition, results of operations and prospects could be harmed.
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Additionally, we, BXLS, and Cellex (and certain related entities) each have equal ownership of AvenCell and, therefore, share control over portions of the operations of AvenCell. Because of our minority ownership in AvenCell, we have a lesser degree of control over its business operations, thereby potentially increasing the financial, legal, operational and compliance risks Intellia may face in the future. In addition, we may be dependent on controlling shareholders or management of AvenCell who may have business interests, strategies or goals that are inconsistent with ours. These risks include the possibility that AvenCell, BXLS or Cellex has economic or business interests or goals that are or become inconsistent with our economic or business interests or goals; is in a position to take action contrary to our instructions, requests, policies or objectives; subjects us to unexpected liabilities or risks; takes actions that reduce our return on investment; acts in a manner that compromises our key licensed rights, or important IP or other rights that we own or license; or takes actions that harm our reputation or restrict our ability to run our business. Furthermore, as a result of our ownership in AvenCell, we may be required to include AvenCell’s financial information in our consolidated financial results. We have not previously included a minority-owned subsidiary in our financial statements and therefore are subject to increased risk in accurately representing and incorporating AvenCell’s financial statements into our own, which could result in delayed filings with the SEC and the finding of a material or significant weakness, among others. This could result in harmful consequences to our business, including an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
Risks Related to Our Reliance on Other Third Parties
We currently rely, and expect to continue to rely in part on, third parties to manufacture our clinical product supplies, and we intend to rely on third parties for at least a portion of the manufacturing process of our product candidates, if approved. Our business could be harmed if the third parties fail to provide us with sufficient quantities of product inputs or fail to do so at acceptable quality levels or prices or fail to meet legal and regulatory requirements.
We are in the early stages of establishing our own manufacturing facility to provide preclinical, clinical and commercial supply of our product candidates and must rely on outside vendors, such as CMOs, to manufacture supplies and process our product candidates. We have only recently begun to manufacture and process product candidate components on a clinical scale and may not be able to successfully complete or continue to do so. We will make changes to optimize the manufacturing process, and cannot be sure that even minor changes in the process will result in therapies that are safe, potent, pure or effective.
Any facility that we may have in the future and the facilities used by our CMOs to manufacture our product candidates must be inspected and approved by, as applicable, the FDA or other foreign regulatory agencies after we apply for approval or marketing authorization. For the foreseeable future, we will be dependent on our CMO partners to properly manufacture adequate supply of our product candidates and components in a timely manner and in accordance with our specification. We also will depend on these entities for compliance with relevant legal and regulatory requirements for manufacture of our product candidates, including current good manufacturing practice (“cGMP”), and in certain cases, current good tissue practice (“cGTP”), requirements. If we or our CMOs cannot successfully manufacture material that conforms to our specifications and the strict relevant regulatory requirements, we and our CMOs will not be able to secure or maintain regulatory approval for our respective manufacturing facilities. In addition, we have no control over the ability of our CMOs to maintain adequate quality control, quality assurance and qualified personnel, particularly as we increase the scale of our manufactured material. If the FDA or relevant foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates.
If any CMO with whom we contract fails to perform its obligations, we may be forced to manufacture the materials ourselves, for which we may not have the capabilities or resources, or enter into an agreement with a different CMO, which we may not be able to do on reasonable terms, if at all. In such scenario, our clinical trials supply could be delayed significantly as we establish alternative supply sources. In some cases, the technical skills required to manufacture our product candidates may be unique to the original CMO and we may have difficulty transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change CMOs for any reason, we will be required to verify that the new CMO maintains facilities and procedures that comply with quality standards and with all applicable regulations. We will also need to verify, such as through a comparability study, that any new manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority. The delays associated with the verification of a new CMO could negatively affect our ability to develop product candidates or commercialize our products in a timely manner. In addition, changes in manufacturers often involve changes in manufacturing procedures and processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of any new manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials.
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Events such as the ongoing COVID-19 pandemic could adversely impact the ability of our vendors, including CMOs, to manufacture supplies, process and deliver our product candidates, or to otherwise meet our requirements or those of the applicable regulatory agencies. For example, since the beginning of the COVID-19 pandemic, three vaccines for COVID-19 have been granted Emergency Use Authorization by the FDA, and two of those later received marketing approval. Additional vaccines may be authorized or approved in the future. The resultant demand for vaccines and potential for manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, may make it more difficult to obtain materials or manufacturing capacity for the products needed for our clinical trials, which could lead to delays in these trials. Additionally, these events could also impact the regulatory agencies’ ability to inspect and approve our vendors, including CMOs, within our currently expected timeframe.
We currently rely, and expect to continue to rely on, third parties to conduct our preclinical studies and clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with legal and regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any potential product candidates.
We currently depend, and expect to continue to depend, upon third parties, including independent investigators, to conduct our clinical trials under agreements with universities, medical institutions, CROs, strategic partners and others. We expect to have to negotiate budgets and contracts with CROs, trial sites and other service and goods providers, which may result in delays to our development timelines and increased costs.
We currently rely, and expect to continue to rely heavily on third parties over the course of our preclinical studies and clinical trials, and, as a result, will have limited control over the clinical investigators and other service providers, and limited visibility into their day-to-day activities, including with respect to their compliance with the approved clinical protocol and other legal, regulatory and scientific standards. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on third parties does not relieve us of our legal responsibilities. We and these third parties are required to comply with good clinical practice (“GCP”), which are regulations and guidelines enforced by the FDA, EMA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical investigators and trial sites. If we or any of these third parties fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the relevant regulatory authorities may require us to suspend or terminate these trials or perform additional preclinical studies or clinical trials before approving our marketing applications. We cannot be certain that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the GCP requirements. In addition, our clinical trials must be conducted with product produced under cGMP, and in certain cases, cGTP, requirements and may require a large number of test patients.
Our or these third parties’ failure to comply with these requirements or to recruit a sufficient number of patients may require us to delay, suspend, repeat or terminate clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of these third parties violates applicable federal, state or local, as well as foreign, laws and regulations, such as the fraud and abuse or false claims laws and regulations or privacy and security laws. In jurisdictions such as the U.K. and EU, penalties for violations of privacy laws and other regulations can be financially significant. Further, if any of our CROs, clinical investigators or others involved in our clinical trials fail to comply with such laws and regulations, we could be held responsible for its actions or omissions and be negatively impacted. In the event of non-compliance with European Data Protection Law, we could be subject to substantial fines and other penalties, including fines of up to 10,000,000 Euros or up to 2% of our total worldwide annual turnover for certain comparatively minor offenses, or up to 20,000,000 Euros or up to 4% of our total worldwide annual turnover for more serious offenses.
Any third parties conducting our current or future clinical trials will not be our employees and, except for remedies that may be available to us under our agreements with such third parties, we cannot control whether they devote sufficient time and resources to our ongoing preclinical, clinical, and nonclinical programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could affect their performance on our behalf. If these third parties fail to meet their contractual obligations, legal requirements or expected deadlines, need to be replaced, or generate inaccurate or substandard clinical data by failing to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates. In addition, the COVID-19 pandemic or similar events, and responsive governmental actions, could divert healthcare resources, including necessary materials and clinical trial personnel, away from our clinical trial
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sites to focus on pandemic concerns. As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.
A resurgence of the COVID-19 pandemic (or a similar event) and measures taken in response by U.S. or other governments may have a significant impact on our CROs, clinical sites and other service and goods providers, which may affect our ability to initiate and complete preclinical studies and clinical trials.
If any of our relationships with these third party CROs, clinical sites or other third parties terminate, we may not be able to enter into arrangements with alternative CROs, clinical sites or other third parties or to do so on commercially reasonable terms. Switching or adding additional CROs, clinical sites or other providers involves additional cost and requires management time and focus. In addition, the transition to a new CRO may result in delays, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with these parties, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.
Risks Related to Employee Matters and Managing Our Growth
Risks Related to Hiring and Retention
We expect to expand our research, development, manufacturing, clinical and regulatory capabilities, and, as a result, we may encounter difficulties in hiring capable personnel and otherwise managing our growth, which could disrupt our operations.
We expect growth in the number of our employees and the scope of our operations, including the areas of technology research, product development and manufacturing, clinical, regulatory and quality affairs and, if any product candidates receive marketing approval, sales, marketing and distribution. To manage our anticipated growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and recruit and train additional qualified personnel. Due to our limited financial resources, the significant competition for employees in our market and industry, and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to recruit and train additional qualified personnel or otherwise effectively manage the expansion of our operations, which may lead to significant costs and divert our management and business resources. Any inability to manage growth could delay or disrupt the execution of our business and operational plans.
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on the research and development, clinical, legal, financial and business development expertise of John M. Leonard, M.D., our President and Chief Executive Officer, Glenn Goddard, our Executive Vice President, Chief Financial Officer and Treasurer, David Lebwohl, our Executive Vice President and Chief Medical Officer, James Basta, our Executive Vice President, General Counsel and Corporate Secretary, Laura Sepp-Lorenzino, our Executive Vice President and Chief Scientific Officer, Eliana Clark, our Executive Vice President and Chief Technical Officer and Derek Hicks, our Executive Vice President and Chief Business Officer, as well as the other principal members of our management, scientific and clinical teams. Although we have entered into employment arrangements with our executive officers, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be important for our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives, and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products using our technology. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies, universities and research institutions for similar personnel. The market for qualified personnel in the biotechnology space generally, and genome editing and gene therapy fields in particular, in and around the Cambridge, Massachusetts area is especially competitive. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategies. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. Further, some of the qualified personnel that we hire and recruit are not U.S. citizens, and there is uncertainty with regard to their future employment status due to the current U.S. administration’s announced intention of modifying the legal framework for non-U.S.
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citizens to be employed in the U.S. Finally, events such as the COVID-19 pandemic and government restrictions and directives, including immigration policy changes, could adversely impact our ability to recruit, retain or replace key employees necessary to achieve our objectives and strategic imperatives, If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
Risks Related to Government Regulation
Risks Related to Obtaining Regulatory Approval
While the regulatory framework for approval of gene therapy including genome editing products exists, the limited specific guidance and precedent for genome-edited products makes the regulatory approval process potentially more unpredictable and we may experience significant delays in the clinical development and regulatory approval, if any, of our product candidates.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products, including genome editing therapeutics and engineered cell therapies, are subject to extensive regulation by the FDA in the U.S. and other regulatory authorities in other jurisdictions. For example, we are not permitted to market any drug or biological product, including in vivo products or engineered cell therapies, until we receive regulatory approval from the relevant regulatory agency, such as the FDA in the U.S. or EMA in the EU. We expect the novel nature of our product candidates to create challenges or raise questions from regulatory agencies in obtaining regulatory approval. For example, in the U.S., the FDA has approved neither any in vivo gene editing-based therapeutic nor any nuclease edited cell therapy for human therapeutic use. The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support approval. The Advisory Committee’s opinion, although not binding, may significantly impact our ability to obtain approval of our product candidates. Moreover, while we are not aware of any specific genetic or biomarker tests for which regulatory approval would be necessary to advance any of our product candidates to clinical trials or commercialization, regulatory agencies could require the development and approval of such tests. Accordingly, the regulatory approval pathway for such product candidates may be uncertain, complex, expensive and lengthy, as well as different in each jurisdiction, and approval may not be obtained in any, some or all jurisdictions.
Other non-regulatory entities may impact the regulatory agencies and ethics committees’ evaluation and approval decision regarding our product candidates. For example, in December 2018, the World Health Organization (“WHO”) established the Expert Advisory Committee on Developing Global Standards for Governance and Oversight of Human Genome Editing. While the standards are expected to focus primarily on germline modifications, the guidelines could impact somatic cell editing research programs, such as ours. In March 2019, the WHO Expert Advisory Committee recommended initiating the first phase of a new global registry (the “Registry”) to track research on human genome editing. Accepting this recommendation, the WHO announced plans in August 2019 for an initial phase of the registry using the International Clinical Trials Registry Platform (“ICTRP”). This phase will include worldwide registries for both somatic cell editing and germline editing clinical trials. Although registration of these clinical trials in the WHO’s Registry currently is voluntary, failure to register could impact the evaluation by the regulators and ethics committees. In July 2021, the WHO Expert Advisory Committee issued recommendations and a governance framework for human genome editing research intended for the international, regional, national and institutional level. For example, the WHO recommended that: clinical trials using somatic human genome editing technologies be reviewed and approved by the appropriate research ethics committee before inclusion in its Registry; basic and preclinical gene editing research also be included in a registry; somatic or germline human genome editing research should only take place in jurisdictions with domestic policy and oversight mechanisms; and relevant patent holders help ensure equitable access to human genome editing interventions. We cannot predict the impact of the WHO’s current and future recommendations, or any policies or actions that ethics committees or regulatory agencies may take in response to such recommendations, on our research, clinical and business plans and results.
Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including willingness of physicians to use an experimental therapy, the availability of existing treatments, the trial’s geographic locations and the number of patients in each geographic location. In addition, our ability to enroll and dose patients may be delayed by the regulatory authority as well as, the IRB or another ethics committee (whether local or national). For example, as set forth in the National Institutes of Health (“NIH”) Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules (“NIH Guidelines”), gene therapy clinical trials are also subject to review and oversight by an institutional biosafety committee (“IBC”), a local institutional committee that reviews and oversees research utilizing recombinant or synthetic nucleic acid molecules at that institution. Before a clinical trial can begin at any institution, that institution’s IRB and its IBC assesses the safety of the research and identifies any potential risk to public health or the environment. While the NIH Guidelines are not mandatory unless
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the research in question is being conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Further, a clinical trial may be suspended or terminated by us, the relevant IRBs or ethics committees of the trial’s DMC, or the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we experience termination of, or delays in the completion of, any clinical trial of product candidates, the commercial prospects for our product candidates will be harmed, and our ability to generate product revenue will be impaired. In addition, any delays in completing any clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenue.
We have received orphan drug designation for NTLA-2001 and NTLA-5001 and may in the future seek orphan drug designation for some of our other product candidates, but we may be unable to obtain such designations or to maintain the benefits associated with orphan drug status, including market exclusivity, which may cause our revenue, if any, to be reduced.
Regulatory authorities in some jurisdictions, including the U.S. and Europe, may in response to a request from the sponsor designate products for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may grant orphan drug designation to a product intended to treat a rare disease or condition, defined as a disease or condition with a patient population of fewer than 200,000 in the U.S., or a patient population of 200,000 or more in the U.S. when there is no reasonable expectation that the cost of developing and making available the product in the U.S. will be recovered from sales in the U.S. for that product. Orphan drug designation must be requested before submitting a BLA. In the U.S., orphan drug designation entitles a party to financial incentives such as opportunities for grant funding towards clinical trial costs, tax advantages and user-fee waivers. After the FDA grants orphan drug designation, the generic identity of the product and its potential orphan use are disclosed publicly by the FDA. In the EU, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) it is unlikely that the product, without the benefits derived from orphan status, would generate sufficient return in the EU to justify the necessary investment in its development; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the approval of another marketing application for the same drug for the same indication for that time period. The applicable period is seven years in the U.S. and ten years in the EU. Orphan drug exclusivity may be lost if the FDA or the EMA determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition. In addition, the FDA can subsequently approve a marketing application for the same drug, or a product with the same active moiety, for treatment of the same disease or condition if it concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. Similarly, the EMA may grant a marketing authorization to a similar medicinal product for the same indication as an authorized orphan product at any time if it is established that the second product, although similar, is safer, more effective or otherwise clinically superior to the authorized product. The FDA and EMA also can approve a different drug for the same orphan indication, or the same drug for a different indication, during the orphan exclusivity period.
We have received orphan drug designation for NTLA-2001 for the treatment of TTR amyloidosis and NTLA-5001 for the treatment of AML. We may seek orphan drug designation for some of our other product candidates in orphan indications in which there is a medically plausible basis for the use of these product candidates. Even where we obtain orphan drug designation, exclusive marketing rights in the U.S. may be limited if we seek approval for an indication broader than the orphan designated indication and may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition. In addition, although we intend to seek orphan drug designation for other product candidates, we may never receive such designations.
The FDA may reevaluate the Orphan Drug Act and its regulations and policies. We do not know if, when, or how the FDA may change the orphan drug regulations and policies in the future, and it is uncertain how any changes might affect our
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business. Depending on what changes the FDA may make to its orphan drug regulations and policies, our business could be adversely impacted.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA approves a product candidate, comparable regulatory authorities in foreign jurisdictions must also authorize the marketing and sale of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and review periods different from those in the U.S., including additional preclinical studies or clinical trials as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the U.S., a product candidate must be approved for reimbursement before it can be sold in that jurisdiction. In some cases, the price that we are allowed to charge for our products is also subject to approval or to other legal restrictions.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the relevant regulatory requirements or to receive applicable marketing approvals, our target markets will be reduced and our ability to realize the full market potential of our product candidates will be harmed.
Risks Related to Ongoing Regulatory Obligations
Even if we receive regulatory approval of any product candidates or therapies, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates.
If any of our product candidates are approved, they may be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, distribution, storage, advertising, promotion, sampling, record-keeping, and submission of safety and efficacy data, and other post-market information and potential obligations (such as post-marketing studies), including both federal and state requirements in the U.S. and requirements of comparable foreign regulatory authorities. In addition, we will be subject to continued compliance with cGMP and GCP, and in certain cases, cGTP, requirements for any clinical trials that we conduct post-approval.
Manufacturers and manufacturers’ facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements, as applicable, including ensuring that quality control and manufacturing procedures conform to cGMP and, in certain cases, cGTP requirements, and applicable product tracking and tracing requirements. As such, we and our CMOs will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any BLA, other marketing applications, and previous responses to inspection observations. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production and quality control.
Any regulatory approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials and surveillance to monitor the safety and efficacy of the product candidate. For example, the FDA or other regulatory agency may also require a REMS or similar program as a condition of approval of our product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates, we will have to comply with their respective legal or regulatory requirements including submissions of safety and other post-marketing information and reports and registration.
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The FDA or other regulatory agencies may seek to impose consent decrees, withdraw approval or prohibit the export or import of a product if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:
The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the U.S. market, and the relevant foreign regulatory agencies do the same in their respective jurisdictions. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and a company that is found to have improperly promoted off-label uses may be subject to significant liability.
The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we or our collaborators are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we or our collaborators are not able to maintain regulatory compliance, we or our collaborators may lose any marketing approval that we or our collaborators may have obtained, which would adversely affect our business, prospects and ability to achieve or sustain profitability.
Our employees, independent contractors, clinical investigators, CMOs, CROs, consultants, commercial partners and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our business.
We are exposed to the risk of non-compliance, fraud, misconduct or other illegal activity by our employees, independent contractors, clinical investigators, CMOs, CROs, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to: comply with federal and state laws and those of other applicable jurisdictions; provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies; comply with manufacturing standards; comply with federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the U.S. and similar foreign privacy or fraudulent misconduct laws; or report financial information or data accurately; or disclose unauthorized activities to us. If we obtain FDA approval of any of our product candidates and begin commercializing those products in the U.S., our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with clinical investigators and research patients, as well as proposed and future sales, marketing and education programs. In particular, the promotion, sales and marketing of healthcare products and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, including promotion and marketing of off-label uses of our products, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical trials, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any
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such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
Legal, political and economic uncertainty surrounding the exit of the United Kingdom from the EU is a source of instability and uncertainty.
The U.K.’s withdrawal from the EU, or Brexit, became effective on January 31, 2020. EU laws, including pharmaceutical laws, continued to apply in the U.K. during a transitional period, which ended on December 31, 2020. On December 24, 2020, the U.K. and EU signed an EU-U.K. Trade and Cooperation Agreement (“TCA”), which became provisionally applicable on January 1, 2021 and has been formally applicable since May 1, 2021. The TCA includes specific provisions concerning pharmaceuticals, which include the mutual recognition of cGMP, inspections of manufacturing facilities for medicinal products and cGMP documents issued, but does not foresee wholesale mutual recognition of U.K. and EU pharmaceutical regulations. At present, Great Britain has implemented EU legislation on the marketing, promotion and sale of medicinal products through the Human Medicines Regulations 2012 (as amended) (under the Northern Ireland Protocol, the EU regulatory framework will continue to apply in Northern Ireland). The regulatory regime in Great Britain therefore currently aligns in the most part with EU regulations, however it is possible that these regimes will diverge in the future now that Great Britain’s regulatory system is independent from the EU and the TCA does not provide for mutual recognition of U.K. and EU pharmaceutical legislation. This lack of clarity on future U.K. laws and regulations and their interaction with the EU laws and regulations increases our regulatory burden of operating in and doing business with both the U.K. and the EU.
The long-term effects of Brexit will depend in part on how the EU-U.K. TCA, and any future agreements signed by the U.K. and the EU, take effect in practice. Such a withdrawal from the EU is unprecedented, and it is unclear how the restrictions on the U.K.’s access to the European single market for goods, capital, services and labor within the EU and the wider commercial, legal and regulatory environment, could impact our current and future operations and clinical activities in the U.K.
We may also face new regulatory costs and challenges that could have an adverse effect on our operations as a result of Brexit. Since the regulatory framework in the U.K. covering quality, safety and efficacy of medicinal products, clinical trials, marketing authorization, commercial sales and distribution of medicinal products is derived from EU directives and regulations, Brexit could materially impact the future regulatory regime with respect to the approval of any of our future product candidates in the U.K., because U.K. legislation has the potential to diverge from EU legislation. For instance, the new Clinical Trials Regulation which became effective in the EU on January 31, 2022 and provides for a streamlined clinical trial application and assessment procedure covering multiple EU Member States has not been implemented into U.K. law, and a separate application will need to be submitted for clinical trial authorization in the U.K. In addition, Great Britain is no longer covered by the centralized procedure for obtaining EEA-wide marketing authorizations from the EMA for medicinal products and a separate process for authorization of drug products is required in Great Britain. For a period of two years from January 1, 2021, the U.K.’s MHRA may rely on a decision taken by the European Commission on the approval of a new marketing authorization in the centralized procedure, in order to more quickly grant a new Great Britain marketing authorization, however a separate application will still be required. Any delay in obtaining, or an inability to obtain, any regulatory approvals, as a result of Brexit or otherwise, would delay or prevent us from commercializing our current or future product candidates in the U.K. and could restrict our ability to generate revenue from that market.
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Failure to comply with health and data protection laws and regulations could lead to government enforcement actions (which could include civil or criminal penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business.
We and any potential collaborators, clinical investigators, CMOs, CROs, consultants or vendors may be subject to federal, state, and foreign data protection laws and regulations (i.e., laws and regulations that address privacy and data security). In the U.S., numerous federal and state laws and regulations, including federal health information privacy laws, state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our collaborators. In addition, we may obtain health information from third parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security requirements under HIPAA, as amended by HITECH, or by comparable laws in other jurisdictions. Depending on the facts and circumstances, we could be subject to civil, criminal, and administrative penalties if we knowingly obtain, use, or disclose individually identifiable health information maintained by a covered entity in a manner that is not authorized or permitted by laws or regulations.
Compliance with U.S., both state and national, and international data protection laws and regulations could require us to take on more onerous obligations in our contracts, restrict our ability to collect, use and disclose data, or in some cases, impact our ability to operate in certain jurisdictions. Failure to comply with these laws and regulations could result in government enforcement actions (which could include civil, criminal and administrative penalties), private litigation, and/or adverse publicity and could negatively affect our operating results and business. Moreover, clinical trial subjects, employees and other individuals about whom we or our potential collaborators obtain personal information, as well as the providers who share this information with us, may limit our ability to collect, use and disclose the information. Claims that we have violated individuals’ privacy rights, failed to comply with data protection laws, or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
If we fail to comply with environmental, health and safety, and laboratory animal welfare laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We are subject to numerous federal, state and local environmental, health and safety, and laboratory animal welfare laws and regulations. These legal requirements include those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes as well as those which regulate the care and use of animals in research. Our operations will involve research using research animals and the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also may produce hazardous waste products. We generally anticipate contracting with third parties for the disposal of these materials and wastes. We will not be able to eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from any use by us of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety, and laboratory animal welfare laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Failure to comply with labor and employment laws and regulations could subject us to legal liability and costs, including fines or penalties, as well as reputational damage that could harm our business.
We are subject to numerous federal, state and local laws and regulations relating to the recruiting, hiring, compensation and treatment of employees and contractors. These laws and regulations cover financial compensation (including wage and hour standards), benefits (including insurance and 401K plans), discrimination, workplace safety and health, benefits, and workers’ compensation.
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The Commonwealth of Massachusetts also has laws that expand on federal laws or create additional rights for employees or obligations for employers. For example, on July 1, 2018, the Massachusetts Equal Pay Act went into effect, which added protections employers must comply with regarding pay equity for “comparable work”. There is currently uncertainty regarding the exact scope of these new legal limits and such uncertainty may remain for the foreseeable future. We may face increased employment and legal costs to ensure we are complying with this law. In addition, on October 1, 2018, a new Massachusetts non-compete law went into effect, placing additional restrictions on employers seeking to enter into non-competition agreements with employees. This law may negatively impact our ability to prevent employees from working with direct or indirect competitors in the future and may affect our ability to retain key talent in a competitive market.
Our failure to comply with these and other related laws could expose us to civil and, in some cases, criminal liability, including fines and penalties. Further, government or employee claims that we have violated any of these laws, even if ultimately disproven, could result in increased expense and management distraction, as well as have an adverse reputational impact on us.
Risks Related to Intellectual Property
Risks Related to Third Party and Licensed Intellectual Property
Third party claims of intellectual property infringement against us, our licensors or our collaborators may prevent or delay our product discovery and development efforts.
Our commercial success depends in part on our avoiding infringement of the valid patents and proprietary rights of third parties.
Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are developing our product candidates and in areas potentially related to components and methods we use or may use in our research and development efforts. As industry, government, academia and other biotechnology and pharmaceutical research expands and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others. Our development candidates are complex and may include multiple components such as Cas9 protein or messenger RNA encoding Cas9 protein, guide RNAs (“gRNA”), targeting molecules, or formulation components such as lipids. We cannot guarantee that any of these components of our technology, processes, future product candidates or the use of such product candidates do not infringe third party patents. It is also possible that we have failed to identify relevant third party patents or applications. Because patent rights are granted jurisdiction-by-jurisdiction, our freedom to practice certain technologies, including our ability to research, develop and commercialize our product candidates, may differ by country.
Third parties may assert that we infringe their patents or that we are otherwise employing their proprietary technology without authorization, and may sue us. There may be third party patents of which we are currently unaware with claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover product candidates we discover and develop. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies or the manufacture, use or sale of our product candidates infringes upon these patents. If any such third party patents were held by a court of competent jurisdiction to cover our technologies or product candidates, the holders of any such patents may be able to block our ability to commercialize the applicable product candidate unless we obtain a license under the applicable patents, or until such patents expire or are finally determined to be held invalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing, manufacturing or importing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing one or more of our product candidates, force us to redesign our infringing products or force us to cease some or all of our business operations, any of which could materially harm our business and could prevent us from further developing and commercializing our proposed future product candidates thereby causing us significant harm. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. If we are unable to obtain a necessary license to a third party patent on commercially reasonable terms, our ability to commercialize our product candidates may be impaired or delayed, which could in turn significantly harm our business.
Third parties may seek to claim intellectual property rights that encompass or overlap with intellectual property that we own or license from them or others. Legal proceedings may be initiated to determine the scope and ownership of these rights, and could result in our loss of rights, including injunctions or other equitable relief that could effectively block our ability to further develop
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and commercialize our product candidates. For example, through the Caribou License, we sublicense the rights of the Regents of the University of California and the University of Vienna (collectively, “UC/Vienna”) to a worldwide patent portfolio that covers methods of use and compositions relating to engineered CRISPR/Cas9 systems for, among other things, cleaving or editing DNA and altering gene product expression in various organisms, including eukaryotic cells. We sublicense the UC/Vienna rights to this portfolio for human therapeutic, prophylactic and palliative uses, including companion diagnostics, except for anti-fungal and anti-microbial uses. This patent portfolio to-date includes, for example, multiple granted, allowed, and/or allowable patent applications in the U.S., as well as granted patents from the European Patent Office, the United Kingdom’s Intellectual Property Office, the German Patent and Trade Mark Office, Australia’s Intellectual Property agency and China’s Intellectual Property Office, among others. Because UC/Vienna co-own this portfolio with Dr. Emmanuelle Charpentier (from whom we do not have sublicense rights), we refer to this co-owned worldwide patent portfolio as the “UC/Vienna/Charpentier patent family.” UC/Vienna could challenge Caribou’s rights under their license agreement, including Caribou’s right to sublicense its rights to others, such as Intellia, and on what terms such a sublicense would be granted, each of which could adversely impact our rights under our license agreement with Caribou.
On June 16, 2021, we executed a Leaseback agreement with Caribou, which settled the arbitration with Caribou. Under the Leaseback agreement, in exchange for an upfront payment, potential future regulatory and sales milestones, and single-digit royalties payable by Caribou to us, we have agreed to leaseback or sublicense certain CRISPR/Cas9 IP, including our chemical gRNA modification technology and foundational CRISPR/Cas9 IP, to Caribou so that it can develop and commercialize CB-010. Caribou also will be responsible for any payments required in respect of our in-licensed IP, such as the foundational CRISPR/Cas9 IP. Under the Leaseback agreement, Caribou will be able to compete with us (or our licensees) in the development of CAR-T cell human therapeutics directed at CD19, which could adversely affect our business.
Third parties could assert that UC/Vienna/Charpentier do not have rights to the CRISPR/Cas9 technology, including inventorship and ownership rights to currently issued or allowable patents, or that any rights owned by UC/Vienna/Charpentier are limited. If such third parties were found to have rights to the CRISPR/Cas9 technology, we could be required to obtain rights from such parties or cease our development and commercialization efforts. For example, under our sublicense from Caribou, we have rights to patent applications owned by UC/Vienna Charpentier covering certain aspects of CRISPR/Cas9 systems to edit genes in eukaryotic cells, including human cells (collectively, the “UC/Vienna/Charpentier eukaryotic patent family”). The Broad Institute (as defined above) and the Rockefeller University co-own patents and patent applications that also claim CRISPR/Cas9 systems to edit genes in eukaryotic cells (collectively, the “Broad Institute patent family”). Because the respective owners of various UC/Vienna/Charpentier patent applications and the Broad Institute patent family both allege owning intellectual property claiming overlapping aspects of CRISPR/Cas9 systems and methods to edit genes in eukaryotic cells, including human cells, our ability to market and sell CRISPR/Cas9-based human therapeutics may be adversely impacted depending on the scope and actual ownership over the inventions claimed in the competing patent portfolios. On June 25, 2019, the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office (“USPTO”) declared an interference between the UC/Vienna/Charpentier eukaryotic patent family and the Broad Institute patent family to determine which research group first invented the use of the CRISPR/Cas9 technology in eukaryotic cells and, therefore, is entitled to the patents covering the invention. The interference involved 14 allowable patent applications from the UC/Vienna/Charpentier eukaryotic patent family and 13 patents and one patent application from the Broad Institute patent family. On February 28, 2022, the PTAB issued a Decision of Priority and Judgment in the interference finding that the Broad Institute patent family has priority over the UC/Vienna/Charpentier patent family with respect to the subject matter of the interference, which decision may be appealed by UC/Vienna/Charpentier. On March 30, 2022, UC/Vienna/Charpentier filed a notice of appeal of the PTAB's decision.
On December 14, 2020, the PTAB declared an additional interference between the same 14 allowable patent applications in the UC/Vienna/Charpentier patent family, and one patent application owned by ToolGen, Inc. And, on June 21, 2021, the PTAB declared another interference between the same 14 allowable patent applications in the UC/Vienna/Charpentier patent family and one patent application owned by Sigma-Aldrich Co. LLC (a subsidiary of Merck KGaA). Because the patent applications involved in these interferences also purport to cover the use of CRISPR/Cas9 for gene editing in eukaryotic cells, the PTAB seeks to determine between the various groups which one invented first and is entitled to the resulting patents. These two latter interferences are still in their motion phases where the PTAB may consider, among other matters, which party will have the burden of proof in their respective priority phases. If either the Broad Institute, ToolGen or Sigma-Aldrich were to succeed in their respective interference, the prevailing party or parties could seek to assert its issued patents against us based on our CRISPR/Cas9-based activities, including commercialization.
In addition, other third parties, such as Vilnius University, and Harvard University, filed patent applications claiming CRISPR/Cas9-related inventions around or within a year after the first patent application filed in the UC/Vienna/Charpentier
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patent family and allege (or may allege) that they invented one or more of the inventions claimed by UC/Vienna/Charpentier before UC/Vienna/Charpentier. If the USPTO deems the scope of the claims of one or more of these parties to sufficiently overlap with the allowable claims from the applicable patent applications in the UC/Vienna/Charpentier patent family, the USPTO could declare other interference proceedings to determine the actual inventor of such claims. If these third parties were to prevail in their inventorship claims or obtain patent claims that cover our product candidates or related activities through these various legal proceedings, then we could be prevented from utilizing the intellectual property we have licensed from Caribou, as well as from developing and commercializing all or some of our products candidates unless we can obtain rights to the third parties’ intellectual property, or avoid or invalidate it.
Further, these third-parties, and others, have also filed patent applications and obtained patents covering aspects of the CRISPR/Cas9 technology in other key jurisdictions, including the EU members, the U.K., China and Japan. If these patents are deemed valid and cover our product candidates or related activities, we could be prevented from developing and commercializing all or some of our product candidates unless we license the relevant intellectual property or avoid it.
Defense of any potential infringement claims, regardless of their merit, would involve substantial litigation expense, would be a substantial diversion of management and other employee resources from our business and may impact our reputation. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. In that event, we could be unable to further develop and commercialize our product candidates, which could harm our business significantly.
We depend on intellectual property licensed from third parties and termination or modification of any of these licenses could result in the loss of significant rights, which would harm our business.
We are dependent on patents, know-how and proprietary technology, both our own and licensed from others, including Caribou, Novartis and Ospedale San Raffaele (“OSR”). Any termination of these licenses, loss by our licensors of the rights they receive from others, diminution of our rights or those of our licensors, or a finding that such intellectual property lacks legal effect, could result in the loss of significant rights and could harm our ability to commercialize any product candidates. For example, UC/Vienna could challenge Caribou’s rights under their agreement, including Caribou’s right to sublicense its rights to others, such as Intellia, and on what terms such a sublicense would be granted, each of which could adversely impact our rights under our agreement with Caribou. Similarly, Caribou or other licensors, or other third parties from which we derive rights, could challenge the scope of our licensed rights or fields under our license agreement, which could adversely impact our exclusive rights to use CRISPR/Cas9 technology in our human therapeutics field.
Disputes have and may arise between us and our licensors, our licensors and their licensors, or us and third parties that co-own intellectual property with our licensors or their licensors, regarding intellectual property subject to a license agreement, including those relating to:
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If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, or are insufficient to provide us the necessary rights to use the intellectual property, we may be unable to successfully develop and commercialize the affected product candidates. If we or any such licensors fail to adequately protect this intellectual property, our ability to commercialize our products could suffer.
We depend, in part, on our licensors to file, prosecute, maintain, defend and enforce patents and patent applications that are material to our business.
Patents relating to our product candidates are controlled by certain of our licensors or their respective licensors. Each of our licensors or their licensors generally has rights to file, prosecute, maintain and defend the patents we have licensed from such licensor. If these licensors or any future licensees and in some cases, co-owners from which we do not yet have licenses, having rights to file, prosecute, maintain, and defend our patent rights fail to adequately conduct these activities for patents or patent applications covering any of our product candidates, our ability to develop and commercialize those product candidates may be adversely affected and we may not be able to prevent competitors from making, using or selling competing products. We cannot be certain that such activities by our licensors or their respective licensors have been or will be conducted in compliance with applicable laws and regulations or in our best interests, or will result in valid and enforceable patents or other intellectual property rights. Pursuant to the terms of the license agreements with our licensors, the licensors may have the right to control enforcement of our licensed patents or defense of any claims asserting the invalidity of these patents and, even if we are permitted to pursue such enforcement or defense, we cannot ensure the cooperation of our licensors or, in some cases, other necessary parties, such as the co-owners of the intellectual property from which we have not yet obtained a license. We cannot be certain that our licensors or their licensors, and in some cases, their respective co-owners, will allocate sufficient resources or prioritize their or our enforcement of such patents or defense of such claims to protect our interests in the licensed patents. For example, with respect to our sublicensed rights from Caribou to UC/Vienna/Charpentier intellectual property, UC retained the right to control the prosecution, enforcement and defense of this intellectual property in its license agreement with Caribou and, pursuant to an Invention Management Agreement, shares these responsibilities with CRISPR Therapeutics AG and, under certain circumstances, ERS Genomics, Ltd., as the designated managers of the intellectual property. For these reasons, UC may be unable or unwilling to prosecute certain patent claims that would be best for our product candidates, or enforce its patent rights against infringers of the UC/Vienna/Charpentier patent family.
Even if we are not a party to legal actions or other disputes involving our licensed intellectual property, an adverse outcome could harm our business because it might prevent us from continuing to license intellectual property that we may need to operate our business. In addition, even when we have the right to control patent prosecution of licensed patents and patent applications, enforcement of licensed patents, or defense of claims asserting the invalidity of those patents, we may still be adversely affected or prejudiced by actions or inactions of our licensors and their counsel that took place prior to or after our assuming control.
We may not be successful in obtaining or maintaining necessary rights to product components and processes or other technology for our product development pipeline.
The growth of our business will likely depend in part on our ability to acquire or in-license additional proprietary rights. For example, our programs may involve additional product candidates, delivery systems or technologies that may require the use of additional proprietary rights held by third parties, including competitors. Our ultimate product candidates may also require specific modifications or formulations to work effectively and efficiently. These modifications or formulations may be covered by intellectual property rights held by others, including competitors. We may be unable to acquire or in-license any relevant third party intellectual property rights that we identify as necessary or important to our business operations.
Additionally, we sometimes collaborate with academic institutions to accelerate our preclinical research or development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such option, we may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.
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The licensing and acquisition of third party intellectual property rights is a competitive practice and companies that may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies may have a competitive advantage over us due to their larger size and cash resources or greater clinical development and commercialization capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to acquire.
If we are unable to successfully obtain rights to valid third party intellectual property or to maintain the existing intellectual property rights we have, we may have to abandon development of such program and our business and financial condition could suffer.
We may be required to pay certain milestones and royalties under our license agreements with third party licensors.
Under our current and future license agreements, we may be required to pay milestones and royalties based on our revenues, including sales revenues of our products, utilizing the technologies licensed or sublicensed from third parties, including Caribou, OSR and Rewrite, and these milestones and royalty payments could adversely affect our ability to research, develop and obtain approval of product candidates, as well as the overall profitability for us of any products that we may seek to commercialize. In order to maintain our license rights under these license agreements, we will need to meet certain specified milestones, subject to certain cure provisions, in the development of our product candidates. Further, our licensors (or their licensors) or licensees may dispute the terms, including amounts, that we are required to pay under the respective license agreements. If these claims were to result in a material increase in the amounts that we are required to pay to our licensors, or in a claim of breach of the license, our ability to research, develop and obtain approval of product candidates, or to commercialize products, could be significantly impaired.
In addition, these agreements contain diligence milestones and we may not be successful in meeting all of the milestones in the future on a timely basis or at all. We will need to outsource and rely on third parties for many aspects of the clinical development, sales and marketing of our products covered under our license agreements. Delay or failure by these third parties could adversely affect the continuation of our license agreements with their third party licensors.
Risks Related to Patents and Trademarks
We could be unsuccessful in obtaining or maintaining adequate patent protection for one or more of our products or product candidates, or asserting and defending our intellectual property rights that protect our products and technologies.
We anticipate that we will file additional patent applications both in the U.S. and in other countries, as appropriate. However, we cannot predict:
Composition of matter patents for biological and pharmaceutical products are generally considered to be the strongest form of intellectual property protection for those types of products, as such patents provide protection without regard to any method of use. We cannot be certain, however, that any claims in our pending or future patent applications covering the composition of matter of our product candidates will be considered patentable by the USPTO or by patent offices in foreign countries, or that the claims in any of our ultimately issued patents will be considered valid and enforceable by courts in the U.S. or foreign countries. Method of use patents protect the use of a product for the specified method, for example a method of treating a certain indication using a product. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively
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promote their product for our targeted indications, physicians may prescribe these products “off-label” for those uses that are covered by our method of use patents. Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute.
The strength of patents in the biotechnology and pharmaceutical field can be uncertain, and evaluating the scope of such patents involves complex legal and scientific analyses. The patent applications that we own or in-license may fail to result in issued patents with claims that cover any product candidates or uses thereof in the U.S. or in other foreign countries.
Further, the patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we do not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. We may also require the cooperation of our licensors or other necessary parties, such as the co-owners of the intellectual property from which we have not yet obtained a license, in order to enforce the licensed patent rights, and such cooperation may not be provided. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The laws of foreign countries may not protect our rights to the same extent as the laws of the U.S. and we may fail to seek or obtain patent protection in all major markets. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the U.S. and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we will be unable to know with certainty whether we were the first to make any inventions claimed in any patents or patent applications, or that we were the first to file for patent protection of such inventions, nor can we know whether those from whom we license patents were the first to make the inventions claimed or were the first to file.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the U.S. and abroad. There is a substantial amount of litigation as well as administrative proceedings for challenging patents, including interference, derivation, reexamination, and other post-grant proceedings before the USPTO and oppositions and other comparable proceedings in foreign jurisdictions, involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, and we expect this to be true for the CRISPR/Cas9 space as well. Indeed, a number of third parties have filed oppositions challenging the validity, and seeking the revocation, of several CRISPR/Cas9 genome editing patents granted to UC/Vienna/Charpentier by the European Patent Office (“EPO”). To date, UC/Vienna/Charpentier have successfully defended before the EPO’s opposition division the validity of their first European patent, which covers compositions comprising Cas9 and single gRNA molecules, as well as methods of editing DNA in vitro or ex vivo using Cas9 and single gRNAs. The opponents to this patent have appealed the decision of the EPO’s opposition division. If UC/Vienna/Charpentier fail in defending the validity of its first European patent, we may lose valuable intellectual property rights, such as the right to exclude others from using such intellectual property. Such an outcome could have a material adverse effect on our business in Europe. Similarly, third parties are opposing the other patents issued by the EPO to UC/Vienna/Charpentier, including their second European patent that was recently revoked by the EPO’s opposition division, a decision that UC/Vienna/Charpentier have appealed. Although the claims of these other patents are more limited in scope compared to the first European patent, the inability to defend their respective validity could result in loss of valuable rights. In addition, since the passage of the America Invents Act in 2013, U.S. law also provides for other procedures to challenge patents, including inter partes reviews and post-grant reviews, that add uncertainty to the possibility of challenge to our developed or licensed patents and patent applications in the future. Furthermore, for U.S. applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. See the above risk factor titled “Third party claims of intellectual property infringement against us, our licensors or our collaborators may prevent or delay our product discovery and development efforts.”
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Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to practice the invention or stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property or prevent others from designing their products to avoid being covered by our claims. If the breadth or strength of protection provided by the patent applications we hold is threatened, this could dissuade companies from collaborating with us to develop, and could threaten our ability to commercialize, product candidates. Further, if we encounter delays in our clinical trials, the period of time during which we could market product candidates under patent protection would be reduced. Because patent applications in the U.S. and most other countries are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our product candidates.
Our pending and future patent applications or the patent applications that we obtain rights to through in-licensing arrangements may not result in patents being issued which protect our technology or future product candidates, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the U.S. and other countries may diminish the value of our patents or narrow the scope of our patent protection.
Litigation or other administrative proceedings challenging our intellectual property, including interferences, derivation, reexamination, inter partes reviews and post-grant reviews, may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees. Furthermore, there could be public announcement of the results of hearings, motions or other interim proceedings or developments in any proceeding challenging the issuance, scope, validity and enforceability of our developed or licensed intellectual property. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
Any of these potential negative developments could impact the scope, validity, enforceability or commercial value of our patent rights and, as a result, have material adverse effect on our business, financial condition, results of operations or prospects.
We may be subject to claims challenging the inventorship of our patents and other intellectual property.
We may in the future be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor or other claims challenging the inventorship of our patents or ownership of our intellectual property (including patents and intellectual property that we in-license). For example, the UC/Vienna/Charpentier patent family that is covered by our license agreement with Caribou is co-owned by UC/Vienna and Dr. Charpentier, and our sublicense rights are derived from the first two co-owners and not from Dr. Charpentier. Therefore, our rights to these patents are not exclusive and third parties, including competitors, may have access to intellectual property that is important to our business. In addition, we may have inventorship disputes arise from conflicting obligations of collaborators, consultants or others who are involved in developing our technology and product candidates. Litigation or other legal proceedings may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
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We have limited foreign intellectual property rights and may not be able to protect our intellectual property rights throughout the world.
We have limited intellectual property rights outside the U.S. Filing, prosecuting, maintaining and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the U.S. can have a different scope and strength than do those in the U.S. In addition, the laws of some foreign countries, such as China, Brazil, Russia, India and South Africa, do not protect intellectual property rights to the same extent as federal and state laws in the U.S. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the U.S., or from selling or importing products made using our inventions in and into the U.S. or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as those in the U.S. These products may compete with our products and our patents or other intellectual property rights may not be effective or adequate to prevent them from competing. In addition, in jurisdictions outside the U.S., a license may not be enforceable unless all the owners of the intellectual property agree or consent to the license. Further, patients may choose to travel to countries in which we do not have intellectual property rights or which do not enforce these rights to obtain the products or treatment from competitors in such countries.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, such as China, Brazil, Russia, India and South Africa, do not favor the enforcement of patents, trade secrets and other intellectual property, particularly those relating to biopharmaceutical products, which could make it difficult in those jurisdictions for us to stop the infringement or misappropriation of our patents or other intellectual property rights, or the marketing of competing products in violation of our proprietary rights. Proceedings to enforce our patent and other intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Furthermore, such proceedings could put our patents at risk of being invalidated, held unenforceable, or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims of infringement or misappropriation against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our licenses, which could be expensive, time-consuming, and unsuccessful.
Competitors may infringe our patents or the patents of our licensors. To cease such infringement or unauthorized use, we may be required to file patent infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding or a declaratory judgment action against us, a court may decide that one or more of our patents is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.
Interference or derivation proceedings provoked by third parties or brought by the USPTO may be necessary to determine the priority of inventions with respect to, or the correct inventorship of, our patents or patent applications or those of our licensors. An unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Litigation, interference or derivation proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees.
Further, if a party to our licenses, either a licensee or licensor, were to breach or challenge our rights under the relevant license agreement (or if one of our licensor’s own licensors were to challenge our licensor’s rights), we may have to initiate or participate in a legal proceeding to enforce our rights. Any such legal proceeding could be expensive and time-consuming. In addition, if a court or other tribunal were to rule against us, we could lose key intellectual property and financial rights. Pursuing or defending against these legal claims, regardless of merits, would involve substantial legal expense and would be a substantial diversion of employee resources from our business. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or contractual litigation there is a risk that some of our confidential information could be
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compromised by disclosure during this type of litigation or proceeding. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.
Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or before the USPTO or comparable foreign authority.
If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid or unenforceable. In patent litigation in the U.S., defendant counterclaims alleging invalidity or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may also raise similar claims before administrative bodies in the U.S. or other jurisdictions, even outside the context of litigation. Such mechanisms include re-examination, inter partes review, post-grant review and equivalent proceedings in foreign jurisdictions, such as opposition or derivation proceedings. Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover and protect our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity of our patents, for example, we cannot be certain that there is no invalidating prior art of which we, our patent counsel, and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity, unpatentability and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. For example, as highlighted in the above risk factor entitled “We could be unsuccessful in obtaining or maintaining adequate patent protection for one or more of our products or product candidates, or asserting and defending our intellectual property rights that protect our products and technologies”, various third parties have filed challenges to the validity of UC/Vienna/Charpentier’s European patents, which cover compositions comprising Cas9 and gRNA molecules, as well as methods of editing DNA in vitro or ex vivo using Cas9 and gRNAs. If UC/Vienna/Charpentier fail in defending the validity of these patents, we may lose valuable intellectual property rights, such as the exclusive right to use such intellectual property. Such an outcome could have a material adverse effect on our business in Europe.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. Although an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. In any such event, our competitors might be able to enter the market, which would have a material adverse effect on our business.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected. Our unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or future, potential customers in our markets of interest. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our unregistered trademarks or trade names. Over the long term, if we are unable to successfully register our trademarks and trade names and establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely impact our financial condition or results of operations.
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Risks Related to Confidentiality
Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of trade secrets and other proprietary information.
In addition to the protection afforded by patents, we seek to rely on trade secret protection and confidentiality agreements to protect our proprietary and confidential information. We also utilize proprietary processes for which it would be difficult to enforce patents. In addition, other elements of our product discovery and development processes involve proprietary know-how, information, or technology that is not covered by patents. Trade secrets, however, may be difficult to protect. We seek to protect our proprietary processes, in part, by entering into confidentiality agreements with our employees, consultants, outside scientific advisors, contractors, and collaborators, and we also rely on national and state laws requiring our directors, employees, contractors and collaborators to protect our proprietary information. Although we use reasonable efforts to protect our trade secrets, our employees, consultants, outside scientific advisors, contractors, and collaborators might intentionally or inadvertently disclose our trade secret information to competitors. In addition, competitors may otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Furthermore, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the U.S. and abroad. If we are unable to prevent unauthorized material disclosure of our intellectual property to third parties, or misappropriation of our intellectual property by third parties, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, operating results, and financial condition. Our trade secrets and other confidential information of ours may also be exposed through cybersecurity attacks, ransomware attacks, and other hacking attempts directed at our information technology systems and those of our employees, consultants, outside scientific advisors, contractors, vendors and collaborators. For more information, please see the risk factor section entitled “Risks Related to Data and Privacy.”
We may be subject to claims that our employees, directors, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties.
We have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employed at other biotechnology or pharmaceutical companies as well as academic research institutions. We may be subject to claims that we or our employees, directors, consultants, or independent contractors have inadvertently or otherwise used or disclosed confidential information of these third parties or our employees’ former employers. Litigation may be necessary to defend against these claims, which could result in money damages or a judicial order prohibiting the use of certain intellectual property. Even if we are successful in defending against these claims, litigation could result in substantial cost and be a distraction to our management and employees.
Risks Related to Our Common Stock
Risks Related to Investment in Securities
An active trading market for our common stock may not be sustained.
If an active market for our common stock does not continue, it may be difficult for our stockholders to sell their shares without depressing the market price for the shares or sell their shares at or above the prices at which they acquired their shares or sell their shares at the time they would like to sell. Any inactive trading market for our common stock may also impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.
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The price of our common stock historically has been volatile, which may affect the price at which you could sell any shares of our common stock.
The market price for our common stock historically has been highly volatile and could continue to be subject to wide fluctuations in response to various factors. This volatility may affect the price at which you could sell the shares of our common stock, and the sale of substantial amounts of our common stock could adversely affect the price of our common stock. Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to market and other factors, including:
In addition, the trading prices for our common stock and other biopharmaceutical companies have been highly volatile as a result of the COVID-19 pandemic. The extent to which the outbreak may impact our business, preclinical studies and ongoing and planned clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the emergence of new variants of the disease, the ability of governments to vaccinate their populations and that existing vaccines can treat any new variants effectively, the ultimate containment of the disease, the modification or lifting of travel restrictions and other actions implemented to contain the outbreak or address its impact, such as social distancing and quarantines or lock-downs in the U.S. and other countries, business closures or business disruptions, and the ultimate effectiveness of other actions taken in the U.S. and other countries to contain and address the disease. A resurgence or other negative developments relating to the pandemic may require us to again restrict access to our offices and laboratories, or to pause or suspend preclinical research and our clinical trial; and, further, may disrupt our manufacturing and supply chain or those of our third party suppliers and manufacturers.
Companies trading in the stock market in general, and in The Nasdaq Global Market in particular, have also experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
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If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts may not publish an adequate amount of research on us, which may negatively impact the trading price for our stock. In addition, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. Further, if our operating results fail to meet the forecasts of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.
Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.
Risk Related to Ownership Generally
Our principal stockholders and management own a significant percentage of our stock and, if they choose to act together, will be able to control or exercise significant influence over matters subject to stockholder approval.
As of December 31, 2021, our executive officers, directors, 5% or greater stockholders and their affiliates beneficially owned approximately 34.1% of our outstanding voting stock. These stockholders may have the ability to influence us through their ownership positions. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders, acting together, may be able to control elections of directors or approval of any merger, sale of assets or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may believe are in your best interest as one of our stockholders.
We have broad discretion over the use of our cash, cash equivalents and marketable securities, and may not use them effectively.
Our management has broad discretion to use our cash, cash equivalents and marketable securities to fund our operations and could spend these funds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending our use to fund operations, we may invest our cash, cash equivalents and marketable securities in a manner that does not produce income or that loses value.
We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to compliance initiatives and corporate governance practices.
As a public company, and particularly since we are no longer an “emerging growth company” under applicable SEC regulations, we incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Market and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”), we are required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. We conduct a process each year to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude that our
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internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our consolidated financial statements.
Risks Related to Future Financial Condition
Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of stockholders and could cause our stock price to fall.
We will need additional capital in the future to continue our planned operations in addition to the proceeds we received from our initial public offering (“IPO”) in May 2016 and follow-on public offerings in November 2017, June 2020, December 2020, and July 2021. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.
On August 23, 2019, we filed a Registration Statement on Form S-3, as amended (the “2019 Shelf”) with the SEC, which was declared effective on September 12, 2019 (File No. 333-233448) in relation to the registration of common stock, preferred stock, debt securities, warrants and units of any combination thereof. We also simultaneously entered into an Open Market Sale Agreement (the “2019 Sale Agreement”) with the Sales Agent, to provide for the offering, issuance and sale of up to an aggregate amount of $150.0 million of our common stock from time to time in “at-the-market” offerings under the 2019 Shelf and subject to the limitations thereof. We will pay to the Sales Agent cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2019 Sale Agreement. In December 2019, we issued 287,231 shares of our common stock at an average price of $16.48 per share in accordance with the 2019 Sale Agreement for aggregate net proceeds of $4.4 million, after payment of cash commissions to the Sales Agent and approximately $0.2 million related to legal, accounting and other fees in connection with the sales. During the year ended December 31, 2020, we issued 2,270,161 shares of our common stock in a series of sales at an average price of $22.53 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $49.5 million after payment of cash commissions to the Sales Agent and legal, accounting and other fees in connection with the sales. During the year ended December 31, 2021, we issued 641,709 shares of our common stock in a series of sales at an average price of $72.79 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $45.3 million after payment of cash commissions to Jefferies and approximately $0.1 million related to legal, accounting and other fees in connection with the sales. During the three months ended March 31, 2022, we issued 579,788 shares of our common stock in a series of sales at an average price of $69.43 per share in accordance with the 2019 Sale Agreement, for aggregate net proceeds of $38.9 million after payment of cash commissions to Jefferies and approximately $0.2 million related to legal, accounting and other fees in connection with the sales. In June 2020, we issued 6,301,370 shares of our common stock, including the exercise in full by the underwriters of their option to purchase an additional 821,917 shares, at the public offering price of $18.25 per share pursuant to the 2019 Shelf for aggregate cash consideration of $107.7 million, after payment of commissions and fees and approximately $0.4 million related to legal, accounting and other fees in connection with the sales. In June 2020 we also issued 925,218 shares of our common stock to Regeneron in a private placement for an aggregate cash consideration of $30.0 million, or $32.42 per share, representing a 100% premium over the volume-weighted average trading price of the Company’s common stock during the 30-day period prior to the closing. On November 30, 2020, we filed a Registration Statement on Form S-3ASR (the “Universal Shelf”) with the SEC, which was automatically declared effective upon filing (File No. 333-251022) in relation to the registration of common stock, preferred stock, debt securities, warrants and units of any combination thereof. In December 2020, we issued 5,513,699 shares of our common stock, including the exercise in full by the underwriters of their option to purchase an additional 719,178 shares, at the public offering price of $36.50 per share pursuant to the Universal Shelf for aggregate cash consideration of $188.9 million, after deducting the underwriting discount, commissions and offering expenses. In July 2021, we issued 4,758,620 shares of our common stock, including the exercise in full by the underwriters of their option to purchase an additional 620,689 shares, at the public offering price of $145.00 per share pursuant to the Universal Shelf for aggregate cash consideration of approximately $648.3 million, after deducting the underwriting discount, commissions and estimated offering expenses. In March 2022, we entered into an Open Market Sale Agreement (the “2022 Sale Agreement”) with the Sales Agent, to provide for the offering, issuance and sale of up to an aggregate amount of $400.0 million of our common stock from time to time in “at-the-market” offerings under the Universal Shelf and subject to the limitations thereof. We will pay to the Sales Agent cash commissions of 3.0% of the gross proceeds of sales of common stock under the 2022 Sale Agreement. In addition, sales of a substantial number of shares of our outstanding common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock. Persons who were our stockholders prior to our IPO continue to hold a substantial number of shares of our
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common stock that many of them are now able to sell in the public market. Significant portions of these shares are held by a relatively small number of stockholders. Sales by our stockholders of a substantial number of shares, or the expectation that such sales may occur, could significantly reduce the market price of our common stock.
Risks Related to our Charter and Bylaws
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us difficult, limit attempts by our stockholders to replace or remove our current management and adversely affect our stock price.
Provisions of our certificate of incorporation and by-laws may delay or discourage transactions involving an actual or potential change in our control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our stock. Among other things, the certificate of incorporation and by-laws:
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
Our certificate of incorporation and by-laws designate certain courts as the sole and exclusive forums for certain disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our certificate of incorporation and by-laws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for any state law claims for any derivative action or proceeding brought on our behalf alleging state law claims, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our certificate of incorporation or our by-laws, any action to interpret, apply, enforce, or determine the validity of our certificate of incorporation or bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine (the “Delaware Forum Provision”). The Delaware
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Forum Provision does not apply to claims arising under the Exchange Act or the Securities Act. Our by-laws further provide that the U.S. District Court for the District of Massachusetts will be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act (the “Federal Forum Provision”). We have chosen the U.S. District Court for the District of Massachusetts as the exclusive forum for such Securities Act causes of action because our principal executive offices are located in Cambridge, Massachusetts. Our by-laws provide that any person or entity purchasing or otherwise acquiring any interest in any shares of our common stock is deemed to have notice of and consented to the foregoing Delaware Forum Provision and the Federal Forum Provision.
The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation costs on stockholders in pursuing the claims identified above, particularly if the stockholders do not reside in or near the State of Delaware or the Commonwealth of Massachusetts. Additionally, the Delaware Forum Provision and the Federal Forum Provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the Delaware Forum Provision and the Federal Forum Provision to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition. The Court of Chancery of the State of Delaware or the U.S. District Court for the District of Massachusetts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.
Risks Related to Tax Matters
Changes in tax law may adversely affect our business and financial condition.
The laws and rules dealing with U.S. federal, state and local income taxation are routinely being reviewed and modified by governmental bodies, officials and regulatory agencies, including the Internal Revenue Service and the U.S. Treasury Department. Since we were founded in 2014, many such changes have been made and changes are likely to continue to occur in the future. We cannot predict whether, when, in what form, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or issued, that could result in an increase in our or our stockholders’ tax liability.
Our ability to use our net operating loss (“NOL”) carryforwards and certain other tax attributes may be limited.
We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. As of December 31, 2021, we had federal and state NOLs of $800.5 million and $767.8 million, respectively, some of which begin to expire in 2034. Federal and certain state NOLs generated in taxable years ending after December 31, 2017 are not subject to expiration. As of December 31, 2021, we had federal and state research and development and other credit carryforwards of approximately $37.9 million and $30.2 million, which begin to expire in 2034 and 2029, respectively. Under Sections 382 and 383 of the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a three-year period, the corporation’s ability to use its pre-change NOLs, and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income or taxes may be limited. We may have experienced ownership changes in the past and may experience ownership changes in the future as a result of our initial public offering in May of 2016, follow-on offerings and/or subsequent shifts in our stock ownership (some of which shifts are outside our control). As a result, if we earn net taxable income, our ability to use our pre-change NOLs and research and development tax credits to offset such taxable income and income tax, respectively, could be subject to limitations. Similar provisions of state tax law may also apply. As a result, even if we attain profitability, we may be unable to use a material portion of our NOLs and other tax attributes.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
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Item 6. Exhibits
The following exhibits are incorporated by reference or filed as part of this report.
10.1† |
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10.2 |
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10.3# |
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Fifth Amended and Restated Non-Employee Director Compensation Policy. (2) |
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10.4† |
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31.1 |
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31.2 |
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32.1 |
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101.INS |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. (2) |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document. (2) |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document. (2) |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document. (2) |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document. (2) |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document. (2) |
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104 |
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Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101) (2) |
† Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.
# Indicates a management contract or any compensatory plan, contract or arrangement.
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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, thereunto duly authorized.
Dated: May 5, 2022
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INTELLIA THERAPEUTICS, INC. |
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By: |
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/s/ John M. Leonard |
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John M. Leonard, M.D. |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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By: |
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/s/ Glenn G. Goddard |
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Glenn G. Goddard |
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Executive Vice President, Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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Exhibit 10.3
Intellia Therapeutics, Inc.
Fifth Amended and Restated Non-Employee Director Compensation Policy
The purpose of this Fifth Amended and Restated Non-Employee Director Compensation Policy (the “Policy”) of Intellia Therapeutics, Inc., a Delaware corporation (the “Company”), is to provide a total compensation package that enables the Company to attract and retain, on a long-term basis, high-caliber directors who are not employees or officers of the Company. This Policy will become effective as of the date of adoption by our Board of Directors (the “Effective Date”). In furtherance of this purpose, all non-employee directors shall be paid compensation for services provided to the Company as set forth below:
Cash Retainers
Annual Retainer for Board Membership: An annual cash retainer for general availability and participation in meetings and conference calls of our Board of Directors (the “Board”) shall be set annually by the Board and reflected on Appendix A. There shall be no additional compensation for attending individual Board meetings.
Additional Retainer for Chairperson of the Board: An annual cash retainer to acknowledge the additional responsibilities and time commitment of the Chairperson role shall be set annually by the Board and reflected on Appendix A.
Additional Annual Retainers for Committee Membership: Additional annual cash retainers for general availability and participation in meetings and conference calls of our various committees as well as an additional retainer for the chairperson of each committee shall be set annually by the Board and reflected on Appendix A. There shall be no additional compensation for attending individual committee meetings.
Cash Retainer Administration: All cash retainers will be paid quarterly, in arrears, or upon the earlier of resignation or removal of the non-employee director. Cash retainers to non-employee directors shall be approved as annualized cash retainers. With respect to non-employee directors who join the Board or a Committee during the calendar year, such amounts shall be pro-rated based on the number of calendar days served by such director in the year of their appointment.
Equity Retainers
Initial Equity Grant: A one-time equity award shall be granted to each new non-employee director upon his/her election to the Board after the Effective Date. The Value (as defined below), and form of, such initial equity grant shall be set annually by the Board based, among other factors, on the recommendation of the Compensation Committee and reflected on Appendix A.
Any initial option and/or restricted share unit (“RSU”) award shall be granted by the Board upon the director’s initial election to the Board. Such initial equity grant shall vest over three years as follows: 33 1/3 % of the total award shall vest one year after the date of grant and the remainder shall vest thereafter in substantially equal quarterly installments during the next two years, subject to the director’s continued service on the Board through the applicable vesting date.
Annual Equity Grant: An annual equity award or awards shall be granted automatically to each non-employee director serving on the Board immediately following each annual meeting of the Company’s stockholders, without
further resolution by the Compensation Committee or Board. The Value, and form of, such annual equity award(s) shall be set annually by the Board based, among other factors, on the recommendation of the Compensation Committee and reflected on Appendix A.
Any annual option and/or RSU grant(s) shall fully vest on the earlier of either (i) the one-year anniversary of the grant date and (ii) the Company’s next annual meeting of stockholders, subject to the director’s continued service on the Board through either such date.
Value: For purposes of this Policy, “Value” means with respect to:
For purposes of awards made pursuant to this Policy, the number of shares of Common Stock subject to such award shall be determined based on the Value of the award as set forth on Appendix A and shall be rounded up to the nearest whole share.
Terms and Conditions of Equity Awards: All equity grants made to members of the Board shall be governed by the terms and conditions set forth in the Amended and Restated 2015 Stock Option and Incentive Plan (the “2015 Plan”) and any applicable option and/or RSU grant agreement executed by the Company and each Director. Notwithstanding anything to the contrary in the 2015 Plan or the applicable award agreement, all equity grants made to members of the Board pursuant to this Policy will accelerate and become fully vested and exercisable or nonforfeitable upon a Sale Event (as defined in the 2015 Plan).
Expenses
The Company shall reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending Board and committee meetings.
Total Direct Compensation
In accordance with the 2015 Amended and Restated Stock Option and Incentive Plan, the value of all Awards awarded under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any calendar year shall not exceed $1,000,000.
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ADOPTED BY THE BOARD OF DIRECTORS: October 25, 2016.
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: July 24, 2017
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: December 11, 2019
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: December 10, 2020
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: April 9, 2021
AMENDED AND RESTATED BY THE BOARD OF DIRECTORS: April 12, 2022
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Appendix A
2021 Non-Employee Director Compensation Guidelines
Cash Retainers
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Membership Retainer |
Additional Retainer for Chairperson |
Board of Directors |
$45,000 |
$35,000 |
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Audit Committee |
$10,000 |
$10,000 |
Compensation Committee |
$7,500 |
$7,500 |
Nominating and Governance Committee |
$5,000 |
$5,000 |
Science and Technology Committee |
$5,000 |
$5,000 |
Equity Retainers
|
Value of option component |
Value of RSU component |
Initial Equity Grant |
$400,000 |
$400,000 |
Annual Equity Grant |
$200,000 |
$200,000 |
4
CERTAIN CONFIDENTIAL INFORMATION MARKED BY [***] HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND IS THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
Exhibit 10.4
EXECUTION VERSION
CONFIDENTIAL
LICENSE AND COLLABORATION AGREEMENT
By and Between
REGENERON PHARMACEUTICALS, INC.
and
INTELLIA THERAPEUTICS, INC.
April 11, 2016
Table of Contents
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Page |
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ARTICLE 1 |
DEFINITIONS |
1 |
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ARTICLE 2 |
AGREEMENT OVERVIEW AND GOVERNANCE |
13 |
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2.1 |
Agreement Overview |
13 |
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2.2 |
Joint Steering Committee |
14 |
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2.3 |
Alliance Management |
16 |
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2.4 |
Authority |
16 |
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ARTICLE 3 |
TECHNOLOGY COLLABORATION |
16 |
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3.1 |
Technology Collaboration Plan |
16 |
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3.2 |
Technology Collaboration Performance |
16 |
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3.3 |
Technology Collaboration Term |
17 |
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3.4 |
Technology Collaboration Funding |
17 |
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3.5 |
Technology Collaboration License Grants |
18 |
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3.6 |
Freedom to Operate License Grant by Regeneron |
18 |
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ARTICLE 4 |
TARGET NOMINATION, SELECTION AND PROGRAMS |
18 |
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4.1 |
Regeneron Reserved Liver Targets; Regeneron Liver Target Pool and Intellia Liver Targets |
18 |
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4.2 |
Selection of Regeneron Targets |
21 |
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4.3 |
Target Profiles and Product R&D Programs/Plans |
23 |
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4.4 |
Product R&D Program Performance |
24 |
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4.5 |
Program Funding |
24 |
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4.6 |
Product R&D Program Licenses |
25 |
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4.7 |
Discussion of Additional License |
25 |
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ARTICLE 5 |
CO-DEVELOPMENT AND CO-COMMERCIALIZATION OPTIONS |
26 |
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5.1 |
Intellia Liver Targets; Intellia Reserved Liver Targets |
26 |
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5.2 |
Intellia Option on Regeneron Targets |
28 |
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5.3 |
Form of Co-Co Agreement |
28 |
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5.4 |
Modification of this Agreement By Co-Co Agreement |
29 |
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ARTICLE 6 |
REGENERON PRODUCT DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION |
29 |
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6.1 |
Development, Manufacturing and Commercialization |
29 |
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6.2 |
Marketing Approvals and Other Approvals |
29 |
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6.3 |
Regeneron Product Licenses |
29 |
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6.4 |
Unblocking License |
30 |
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6.5 |
Ex-Vivo Field |
30 |
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6.6 |
Regeneron Product Limitations |
30 |
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ARTICLE 7 |
PERFORMANCE AND PERFORMANCE STANDARDS |
30 |
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7.1 |
Licenses Generally; No Implied License |
30 |
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7.2 |
Performance Standards |
30 |
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7.3 |
Intellia Third Party Agreements |
31 |
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7.4 |
Coordination of Third Party Intellectual Property Licensing |
31 |
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7.5 |
Records |
32 |
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7.6 |
Governmental Inspection |
32 |
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7.7 |
Materials for Technology Collaboration, Regeneron Target Evaluation Programs, Intellia Target Evaluation Programs and Product R&D Program |
32 |
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7.8 |
Debarment |
32 |
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7.9 |
No Use of Non-Controlled IP in Technology Collaboration or Product R&D Program |
33 |
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7.10 |
Further Assurances and Transaction Approvals |
33 |
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7.11 |
Ongoing Technology Update and Transfer Obligations |
33 |
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7.12 |
Regeneron IP |
33 |
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ARTICLE 8 |
REGENERON PRODUCT MANUFACTURING |
33 |
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8.1 |
General |
33 |
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8.2 |
Supply for Product R&D Program |
34 |
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8.3 |
Supply Beyond Pre-Clinical |
34 |
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8.4 |
Manufacturing Process Technology Transfer |
34 |
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ARTICLE 9 |
PAYMENTS |
35 |
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9.1 |
Upfront Payment |
35 |
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9.2 |
Development and Commercial Milestones |
35 |
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9.3 |
Royalty Payments for Regeneron Products |
36 |
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9.4 |
Payments to Third Parties |
36 |
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9.5 |
Royalty Floor |
36 |
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9.6 |
Royalty Conditions |
36 |
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9.7 |
Royalty Term |
37 |
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9.8 |
Periodic Royalty Reports and Royalty Payment |
37 |
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9.9 |
Payment Method and Currency |
37 |
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9.10 |
Taxes |
37 |
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9.11 |
Resolution of Payment Disputes |
37 |
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9.12 |
Late Fee |
37 |
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ARTICLE 10 |
INTELLECTUAL PROPERTY |
38 |
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10.1 |
Newly Created Intellectual Property |
38 |
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10.2 |
Prosecution and Maintenance of Patent Rights |
39 |
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10.3 |
Administrative Patent Proceedings |
40 |
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10.4 |
Third Party Infringement Suits |
41 |
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-ii-
10.5 |
BPCIA and Biosimilar Applications |
41 |
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10.6 |
Extensions and Other Protections |
42 |
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10.7 |
Patent Marking |
42 |
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10.8 |
Third Party Claims Related to Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or Product R&D Program |
42 |
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10.9 |
Infringement of Third Party Patent Rights or Third Party Know-How |
42 |
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10.10 |
Third Party Rights |
42 |
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ARTICLE 11 |
BOOKS, RECORDS AND INSPECTIONS; AUDITS AND ADJUSTMENTS |
42 |
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11.1 |
Books and Records |
42 |
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11.2 |
Audits and Adjustments |
43 |
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11.3 |
GAAP |
43 |
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ARTICLE 12 |
REPRESENTATIONS, WARRANTIES AND COVENANTS |
43 |
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12.1 |
Joint Representations and Warranties |
43 |
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12.2 |
Additional Intellia Representations, Warranties and Covenants of Intellia |
43 |
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12.3 |
Covenants |
44 |
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12.4 |
Intellia Third Party Agreements |
45 |
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12.5 |
Compliance with Laws |
45 |
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12.6 |
Disclaimer of Warranties |
45 |
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12.7 |
Exclusivity |
46 |
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ARTICLE 13 |
CONFIDENTIALITY |
46 |
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13.1 |
Confidential Information |
46 |
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13.2 |
Exceptions |
47 |
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13.3 |
Injunctive Relief |
47 |
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13.4 |
Publications |
47 |
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13.5 |
Disclosures Concerning this Agreement |
48 |
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ARTICLE 14 |
INDEMNITY |
49 |
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14.1 |
Indemnity and Insurance |
49 |
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14.2 |
Indemnity Procedure |
49 |
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14.3 |
Insurance |
50 |
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ARTICLE 15 |
FORCE MAJEURE |
50 |
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ARTICLE 16 |
TERM AND TERMINATION |
50 |
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16.1 |
Term |
50 |
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16.2 |
Termination for Insolvency |
51 |
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16.3 |
Termination of Regeneron Target by Regeneron for Convenience |
51 |
-iii-
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16.4 |
Breach of the Agreement |
51 |
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16.5 |
Termination for IP Challenge |
52 |
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16.6 |
Termination for Suspension of Development |
52 |
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16.7 |
Effects of Termination of Agreement with respect to a given Regeneron Target |
52 |
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16.8 |
Effects of Termination of Agreement with respect to a Technology Collaboration |
54 |
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16.9 |
Regeneron Reduction of Payments in lieu of Termination |
55 |
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16.10 |
Survival of Obligations |
55 |
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16.11 |
Return of Confidential Information |
55 |
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ARTICLE 17 |
MISCELLANEOUS |
55 |
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17.1 |
Governing Law; Dispute Resolution; Submission to Jurisdiction |
55 |
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17.2 |
Waiver |
56 |
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17.3 |
Notices |
57 |
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17.4 |
Entire Agreement |
57 |
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17.5 |
Amendments |
57 |
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17.6 |
Interpretation |
57 |
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17.7 |
Construction |
57 |
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17.8 |
Severability |
57 |
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17.9 |
Assignment |
57 |
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17.10 |
Successors and Assigns |
57 |
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17.11 |
Counterparts |
58 |
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17.12 |
Third Party Beneficiaries |
58 |
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17.13 |
Relationship of the Parties |
58 |
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17.14 |
Limitation of Damages |
58 |
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17.15 |
Injunctive or Other Equity Relief |
58 |
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17.16 |
Non-Exclusive Remedies |
58 |
-iv-
Schedules:
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[***] |
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Schedule 1.47 |
Intellia Background Patent Rights as of the Effective Date |
Schedule 1.50 |
Intellia Existing Third Party Agreements |
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Schedule 1.58 |
Intellia Reserved Liver Targets |
[***] |
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Schedule 1.119 |
Regeneron Target Evaluation Plan |
Schedule 5.1(e)(iii) |
[***] Target and Development Plan |
Schedule 5.3 |
Key Terms for Co-Co Agreement |
Schedule 7.3(b) |
Non-Exclusively Licensed Patent Rights |
[***] |
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Schedule 9.4 |
Certain Third Party Patent Rights |
Schedule 12.2 |
Disclosures |
[***] |
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Schedule 17.3 |
Notice Information |
-v-
LICENSE AND COLLABORATION AGREEMENT
THIS LICENSE AND COLLABORATION AGREEMENT (“Agreement”), dated as of April 11, 2016 (the “Effective Date”), is by and between REGENERON PHARMACEUTICALS, INC., a corporation organized under the laws of New York and having a principal place of business at 777 Old Saw Mill River Road, Tarrytown, New York 10591 (“Regeneron”), and INTELLIA THERAPEUTICS, INC., a corporation organized under the laws of Delaware and having a principal place of business at 130 Brookline Street, Suite 201, Cambridge, MA 02139 (“Intellia”) (with each of Regeneron and Intellia referred to herein individually as a “Party” and collectively as the “Parties”).
WHEREAS, the Parties each have scientific expertise and technology that is useful in the discovery and development of therapeutic products based on CRISPR-Cas (as defined below);
WHEREAS, the Parties wish to collaborate to research and develop improvements to CRISPR-Cas technology, and, in connection therewith, each Party will grant the other certain licenses in furtherance of conducting such activities;
WHEREAS, the Parties also wish to engage in a research and development program in which they will research and develop CRISPR Products Directed to certain Targets (as each such term is defined below) selected by Regeneron in accordance herewith, and, in connection therewith, each Party will grant the other certain licenses in furtherance of conducting such activities, and Intellia will grant Regeneron an exclusive license to commercialize CRISPR Products Directed to such Targets in the Field (as each such term is defined below); and
WHEREAS, each Party desires to grant to the other Party certain options to enter into an [***] cost and profit share arrangement for the development and commercialization of certain CRISPR Products.
NOW, THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement, whether used in the singular or plural, except as expressly set forth herein, shall have the meanings set forth below:
1.1 “Affiliate” shall mean, with respect to any Person, another Person which controls, is controlled by, or is under common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the generality of the foregoing, a Person shall be deemed to control another Person if any of the following conditions is met: (a) in the case of corporate entities, direct or indirect ownership of more than fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (b) in the case of non-corporate entities, direct or indirect ownership of more than fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities. The Parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such case such lower percentage shall be substituted in the preceding sentence, provided that such foreign investor has the power to direct the management and policies of such entity. For purposes of this Agreement, in no event shall Intellia or any of its Affiliates be deemed an Affiliate of Regeneron or any of its Affiliates nor shall Regeneron or any of its Affiliates be deemed an Affiliate of Intellia or any of its Affiliates.
1.2 “Anti-Corruption Laws” shall mean all Applicable Laws regarding public or private-sector corruption, bribery, kickbacks, speed or facilitation payments, ethical business conduct, money laundering, embezzlement, political contributions, gifts, gratuities, expenses, entertainment, hospitalities, agency relationships, commissions, lobbying, books and records, and financial controls, including the FCPA, the U.S. Travel Act, and other anti-corruption laws.
1.3 “API” shall mean any active pharmaceutical (including biological) ingredient or component (but excluding, for clarity, an adjuvant or excipient).
-1-
1.4 “Applicable Law” shall mean applicable laws, rules, and regulations, including any rules, regulations, guidelines, standard, agency requirement, license, or permit or other requirements of any Governmental Authority, which may be in effect from time to time, including Good Practices.
1.5 “Approval” shall mean, with respect to each Regeneron Product, any approval, registration, license or authorization from the applicable Regulatory Authority required for the development, manufacture or commercialization of such Regeneron Product in a regulatory jurisdiction, and shall include any such approval, registration, license or authorization granted for any Marketing Approval.
1.6 “Available Liver Target” shall mean any Liver Target that, at the applicable time, is not an Intellia Reserved Liver Target, a Declined Target, an Intellia Liver Target, a Regeneron Target or a Regeneron Evaluation Target.
1.7 “Biosimilar Application” means an application or submission filed with a Regulatory Authority for Marketing Approval of a pharmaceutical or biological product claimed to be biosimilar or interchangeable to any Regeneron Product or otherwise relying on the approval of such Regeneron Product, including, for example, an application filed under 42 U.S.C. §262(k).
1.8 “BPCIA” means the Biologics Price Competition and Innovation Act of 2009, and its implementing regulations promulgated thereunder, as both may be amended from time to time, or equivalent legislation in countries other than the United States.
1.9 “Business Day” shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in New York, New York, are authorized or required by law to remain closed.
1.10 “Caribou-Intellia License Agreement” means the License Agreement by and between Caribou Biosciences Inc. (“Caribou”) and Intellia, dated July 16, 2014, as supplemented by the Supplement to License Agreement between Intellia and Caribou dated August 21, 2015 and as amended by Amendment No. 1 to License Agreement and the Addendum to License Agreement, each between Intellia and Caribou and each dated February 2, 2016, as may be amended following the Effective Date in accordance with Section 12.4.
1.11 “CART” means a T-cell engineered to express a CAR.
1.12 “Change of Control” means, with respect to a Party, (a) a merger or consolidation of such Party with a Third Party that results in the voting securities of such Party outstanding immediately prior thereto, or any securities into which such voting securities have been converted or exchanged, ceasing to represent more than fifty percent (50%) of the combined voting power of the surviving entity or the parent of the surviving entity immediately after such merger or consolidation, (b) a transaction or series of related transactions in which a Third Party, together with its Affiliates, (i) becomes the direct or indirect beneficial owner of more than fifty percent (50%) of the combined voting power of the outstanding securities, and (ii) acquires the ability to appoint a majority of the board of directors, of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s and its Affiliates’ assets.
1.13 “Chimeric Antigen Receptor” or “CAR” means [***].
1.14 “Combination Product” shall mean a Regeneron Product incorporating or comprising at least [***] CP that is developed under this Agreement and at least [***].
1.15 “Commercially Reasonable Efforts” shall mean, with respect to the efforts to be expended by a Party or its Affiliate with respect to any objective, activity or decision to be undertaken hereunder, those reasonable, good faith efforts and resources to accomplish such objective, activity or decision consistent with those efforts and resources the relevant Party would normally use to accomplish a similar objective, activity or decision under similar circumstances, it being understood and agreed that with respect to the research, development, manufacture, seeking and obtaining Marketing Approval, or commercialization of a product, such efforts and resources shall be consistent with the usual practices of such Party [***].
1.16 “Contract Year” shall mean the period beginning on the Effective Date and ending on December 31, 2016, and each succeeding twelve (12) month period thereafter during the Term (except that the last Contract Year shall end on the effective date of any termination or expiration of the Term).
-2-
1.17 “Control” shall mean, with respect to any Material, Confidential Information, Intellectual Property right, or trademark that a Party (a) owns such Material, Confidential Information, Intellectual Property right, or trademark, or (b) has a license or right to use to such Material, Confidential Information, Intellectual Property right, or trademark, in each case of (a) or (b), with the ability to grant to the other Party access to, or a license or a sublicense (as applicable) of such rights to such Material, Confidential Information, Intellectual Property right, or trademark on the terms and conditions set forth herein, without (i) violating the terms of any agreement with any Third Party in existence as of the Effective Date or (ii) with respect to any such Material, Confidential Information, Intellectual Property right, or trademark that Intellia (or its Affiliate) in-licenses pursuant to an in-license agreement entered into by Intellia (or its Affiliate) with a Third Party after the Effective Date, having an obligation to pay any royalties or other consideration or that is subject to additional conditions that are applicable to a sublicensee under such in-license, unless Regeneron agrees to assume the applicable obligations pursuant to the election procedures set forth in Section 7.3, as applicable, or (iii) with respect to any such Material, Confidential Information, Intellectual Property Right, or trademark that Intellia (or its Affiliate) comes to own after the Effective Date that was invented under [***] or (iv)with respect to any such Material, Confidential Information, Intellectual Property right, or trademark that Regeneron (or its Affiliate) in-licenses pursuant to an in-license agreement entered into by Regeneron (or its Affiliate) with a Third Party after the Effective Date, having an obligation to pay any royalties or other consideration or that is subject to additional conditions that are applicable to a sublicensee under such in-license, unless Intellia agrees to assume the applicable obligation under such in-licenses, as applicable, or (v) with respect to any such Material, Confidential Information, Intellectual Property Right, or trademark that Regeneron (or its Affiliate) comes to own after the Effective Date [***] , in each of (i), (ii), (iii),(iv) and (v), as of the time such Party or its Affiliates would first be required hereunder to grant the other Party such access, license or (sub)license; provided, that, for clarity, Intellia will be deemed to Control such Intellectual Property as is licensed to it under the Intellia Existing Third Party Licenses (but subject to the terms and conditions of those Intellia Existing Third Party Licenses as and to the extent set forth in Section 7.3(f)). Notwithstanding anything in this Agreement to the contrary, in the event of a Change of Control of a Party, a Party will be deemed not to Control any Material, Confidential Information, Intellectual Property right, or trademark that are owned or in-licensed by a Third Party described in the definition of “Change of Control” or such Third Party’s Affiliates (other than such Party or such Party’s Affiliates immediately prior to the closing of such Change of Control) (a) prior to the closing of such Change of Control, except to the extent that any such Patent Rights, Know-How or Materials were Controlled by such Party or any of its Affiliates prior to such Change of Control, or (b) after such Change of Control to the extent that such Patent Rights, Know-How or Materials are invented or created by such Third Party or its Affiliates (other than such Party or such Party’s Affiliates immediately prior to the closing of such Change of Control) after such Change of Control without using or incorporating any Patent Rights, Know-How or Materials licensed hereunder, provided that, notwithstanding the foregoing, following such Change of Control, such Party shall in all cases be deemed to Control all Patent Rights, Know-How and Materials (1) arising from the performance of activities under this Agreement, including the Technology Collaboration, Regeneron Target Evaluation Programs, Intellia Target Evaluation Programs or Product R&D Programs, on the terms as set forth in this Agreement, or (2) that are improvements to, or derivatives of, or are otherwise based on or incorporates, any Patent Rights, Know-How or Materials Controlled by such Party or any of its Affiliates prior to such Change of Control or (3) that such Party or its Affiliates chooses to make available for the conduct of activities under this Agreement or actually uses in the conduct of activities under this Agreement.
1.18 “Cover”, “Covering” or “Covered” shall mean, with respect to a given product in a given country, that the composition of matter (other than formulation) of such product, or method of use or manufacture of such product, is claimed under a Valid Claim in the country of sale [***] of such product and that in the absence of ownership of or a license granted under such Valid Claim, the manufacture, use, offer for sale, sale or importation of such product or the practice of such method, would infringe such Valid Claim; provided, that with respect to a method of use, such method of use is for an indication for which a Marketing Approval has been received for such product in such country (as set forth on the approved labeling in such country for such product).
1.19 “CPI” shall mean the Consumer Price Index – All Urban Consumers for the country in which the applicable personnel are located (for example, CPI-U for the United States) published by the United States Department of Labor, Bureau of Statistics (or its successor equivalent index), or an equivalent index in a foreign country applicable to FTEs in such country.
1.20 “CPI Adjustment” shall mean the percentage increase or decrease, if any, in the CPI applicable to the applicable personnel for the [***] months ending [***] of the Contract Year prior to the Contract Year for which the adjustment is being made.
1.21 “CRISPR-Cas” shall mean genome editing technology using (a) [***] the enzyme known as Cas9, or variants thereof, [***] together with (b) one (1) or more nucleic acid molecules [***] that is/are required for the function or targeting of the [***] in clause (a) (the materials specified in clauses (a) and (b), the “CRISPR-Cas Materials”).
1.22 “CRISPR Product” or “CP” shall mean any product that uses or incorporates CRISPR-Cas or, with respect to the Ex-Vivo Field, is a cell-based therapeutic product manufactured using CRISPR-Cas.
-3-
1.23 “Declined Target” shall mean (a) each Intellia Liver Target that specifically becomes designated as a Declined Target [***], and (b) each Regeneron Target that is specifically designated as, or specifically becomes, a Declined Target [***].
1.24 “Directed to” shall mean, with respect to a particular CP and a particular Target, that such CP is engineered or selected to specifically Modulate such Target. [***]
1.25 “Executive Officers” shall mean the [***] of Regeneron and the [***] of Intellia, or their respective designees with equivalent decision-making authority with respect to matters under this Agreement.
1.26 “Ex-Vivo Field” shall mean modification of cells using CRISPR-Cas where such modification is conducted ex vivo for the purpose of reintroducing such modified cells into a patient for therapeutic purposes.
1.27 “FCPA” shall mean the U.S. Foreign Corrupt Practices Act of 1977 (15 U.S.C. §§78dd-1, et seq.) as amended.
1.28 “FDA” shall mean the United States Food and Drug Administration and any successor agency thereto.
1.29 “Field” shall mean any and all [***] uses of CPs for therapeutic, palliative, prophylactic, and diagnostics purposes but excluding [***].
1.30 “First Commercial Sale” shall mean, with respect to a Regeneron Product and a country, the first commercial sale by or on behalf of Regeneron or any of its Affiliates or sublicenses to a Third Party for use or consumption by the general public (including through public or private means or markets) of such Regeneron Product in the Field in such country after Marketing Approval for commercial sale of such Regeneron Product has been obtained in such country or where Marketing Approval in such country is not required, but where such sale is permitted to occur under, or is dependent upon, Marketing Approval for such Regeneron Product in another major market country, such as so called “named patient sales” or any compassionate use. Sales for test marketing or clinical trial purposes shall not be construed as a First Commercial Sale.
1.31 “FTE” shall mean a full time equivalent employee [***] employed by Party (or its Affiliate) who performs activities under a Plan, with such commitment of time and effort to constitute [***] employee performing such work on a full-time basis, which for purposes hereof shall be [***] hours per Contract Year (pro-rated for any Contract Year that is less than twelve (12) months).
1.32 “FTE Cost” shall mean, for a given period, the number of FTEs for such period multiplied by the FTE Rate.
1.33 “FTE Rate” shall mean (a) for each FTE based in the US, $[***] per FTE per Contract Year, adjusted each Contract Year on January 1 (commencing on January 1, 2017) in accordance with any CPI Adjustment, and (b) for each FTE based outside the U.S., such amount as the Parties shall agree to, in writing, in the local currency in the country where such FTE is based (which shall be converted into United States Dollars in accordance with Section 9.9). [***]
1.34 [***]
1.35 [***]
1.36 “GAAP” shall mean generally accepted accounting principles as applicable in the United States.
1.37 “Gene” shall mean a contiguous DNA sequence that is transcribed [***].
1.38 “Good Practices” shall mean compliance with the applicable standards contained in then-current “Good Laboratory Practices” or “GLP”, “Good Manufacturing Practices” or “GMP” and “Good Clinical Practices” or “GCP” as promulgated by the FDA, and all analogous guidelines promulgated by the EMA or the ICH, as applicable.
1.39 “Governmental Authority” shall mean any court, agency, authority, department, regulatory body, or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city, or other political subdivision of any such government or any supranational organization of which any such country is a member, including Regulatory Authorities.
1.40 “HSC” means hematopoietic stem cells [***].
1.41 “ICH” shall mean the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use.
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1.42 “IND” shall mean, with respect to a product, an Investigational New Drug Application filed with the FDA pursuant to 21 C.F.R. § 312 the filing of which is necessary to commence clinical testing of such product in humans, including all amendments and supplements to such application, or any equivalent filing with any Regulatory Authority outside the United States.
1.43 “IND Acceptance” shall mean, with respect to a particular Regeneron Product, that the particular IND for such Regeneron Product was accepted by the FDA (or other applicable Regulatory Authority outside the United States if the IND was submitted to such Regulatory Authority outside the United States), as evidenced by no objection by the FDA (or such other applicable Regulatory Authority outside the United States) within [***]) days after the date of the IND submission (or any amended submission if such amendment restarted the applicable [***]-day period).
1.44 “Intellectual Property” shall mean any Know-How, Patent Rights, copyrights and any other intellectual property rights, but excluding trademarks.
1.45 [***]
1.46 “Intellia Allocated Regeneron Target Evaluation Plan Costs” shall mean all Plan Costs for Regeneron Target Evaluation Plans that are not Regeneron Allocated Regeneron Target Evaluation Plan Costs, until such time as the JSC determines that continued evaluation of the Regeneron Evaluation Target is [***].
1.47 “Intellia Background Patent Rights” shall mean those Patent Rights that (1) are Controlled by Intellia or any of its Affiliates (a) as of the Effective Date or (b) during the IP Term [***], or (c) during the IP Term [***], or (d) any (i) Patent Rights claiming priority to the Patent Rights, or (ii) foreign equivalents of the Patent Rights, in each case of (i) and (ii), in subclauses (a), (b), or (c), but in each of (a), (b), (c), and (d) excluding Patent Rights to the extent within the [***] Intellia Materials Improvements, Intellia CRISPR-Cas IP, [***] Regeneron Product Inventions, Regeneron Materials Improvements, [***] and (2) are necessary or useful for (i) the research, development, making, using, exploitation or selling of (A) a CP (or any component thereof) that is or could be Directed to a Target that is or could become a Regeneron Target or (B) CRISPR-Cas, or (ii) the conduct of the Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or the Product R&D Program. The Intellia Background Patent Rights as of the Effective Date include those set forth in Schedule 1.47.
1.48 “Intellia CP” shall mean any CP owned or controlled by Intellia (or any of its Affiliates), or any other CP for which Intellia (or any of its Affiliates) has a material role in its research, development, manufacture or commercialization (including Intellia Liver Products), but in all events excluding any Regeneron Product.
1.49 “Intellia CRISPR-Cas IP” shall mean (i) any improvement, enhancement or modification to any CRISPR-Cas, including any composition of, or any method of using or making, CRISPR-Cas Materials, and (ii) any Intellectual Property in and to the foregoing clause (i), in each of (i) and (ii) that is invented solely by or on behalf of Intellia [***].
1.50 “Intellia Existing Third Party Agreements” shall mean those agreements entered into by Intellia or an Affiliate of Intellia and a Third Party as of the Effective Date, including any amendments or restatements thereto as of the Effective Date or amendments following the Effective Date in accordance with Section 12.4, and under which Intellia is granted rights which are then sublicensed to Regeneron hereunder as Intellia Patent Rights, Intellia Know-How or Intellia Materials [***]. The Intellia Existing Third Party Agreements are set forth on Schedule 1.50.
1.51 “Intellia Intellectual Property” shall mean the Intellia Patent Rights and the Intellia Know-How.
1.52 “Intellia Know-How” shall mean any and all Know-How that (a) is Controlled by Intellia or any of its Affiliates (i) as of the Effective Date or (ii) during the IP Term [***], and (b) is necessary or useful for (i) the research, development, making, using, exploitation or selling of (A) a CP (or any component thereof) that is or could be Directed to a Target that is or could become a Regeneron Target or (B) CRISPR-Cas, [***] or (ii) the conduct of the Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or the Product R&D Program. Intellia Know-How shall include Know-How created during the IP Term in or related to Intellia Materials, Intellia Materials Improvements or Intellia CRISPR-Cas IP, as well as Intellia’s interests in any [***].
1.53 “Intellia Liver Product” shall mean a Liver Product that is Directed to an Intellia Liver Target that is not an Intellia Reserved Liver Target or a Declined Target.
1.54 “Intellia Liver Target” shall mean a Liver Target selected by Intellia for its development pursuant to Section 4.1 of this Agreement that is not an Intellia Reserved Liver Target or a Declined Target.
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1.55 “Intellia Materials” shall mean Intellia’s (or its Affiliate’s) proprietary [***] that are used in the performance of this Agreement or otherwise licensed to Regeneron hereunder. [***]
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1.56 “Intellia Materials Improvement” shall mean (a) any Intellectual Property that is invented by or on behalf of either Party (solely or jointly with the other) under this Agreement during the IP Term that constitutes or comprises an improvement, enhancement or other modification to any Intellia Materials [***] including any such Intellectual Property that comprises a composition of, or any method of using or making, Intellia Materials [***], and (b) any Patent Rights to the extent within the Intellectual Property in the foregoing clause (a), in each case of (a) and (b) other than Regeneron Product Inventions, Regeneron Materials Improvements, [***] Intellia CRISPR-Cas IP or [***].
1.57 “Intellia Patent Rights” shall mean the Intellia Background Patent Rights and Intellia’s interest in Patent Rights to the extent within [***]Intellia Materials Improvements, Intellia CRISPR-Cas IP[***]. Intellia Patent Rights shall include the Patent Rights listed on Schedule1.47.
1.58 “Intellia Reserved Liver Targets” shall mean those Targets set forth on Schedule 1.58.
1.59 “Intellia Target Evaluation Plan” shall mean a written plan associated with the evaluation of a particular Intellia Liver Target and setting forth the evaluation activities to be conducted for such Intellia Liver Target as set forth in Section 4.1(a)(v). For clarity, there shall be a distinct plan for each Intellia Liver Target that is selected for inclusion under the Intellia Target Evaluation Program in accordance with Section 4.1(a)(v)(1), which plan will be prepared and modified in accordance with Section 4.1(a)(v)(2).
1.60 “Intellia Target Evaluation Program” shall mean collectively, or individually, as applicable, the program(s) to be performed under this Agreement as more particularly described in Section 4.1(a)(v) that is/are intended to assist Intellia in the evaluation of the Intellia Liver Targets, as set forth in the applicable Intellia Target Evaluation Plan(s).
1.61 “Intellia Target Evaluation Program Inventions” shall mean all Intellectual Property that is invented by or on behalf of either Party (or by the Parties jointly) in the performance of activities under the Intellia Target Evaluation Program [***]
1.62 “Intellia Target Evaluation Program Term” shall mean, for each Intellia Liver Target that is subject to an Intellia Target Evaluation Program, on an Intellia Target Evaluation Program-by-Intellia Target Evaluation Program basis, the period commencing on the date that such Intellia Liver Target is selected for inclusion under the Intellia Target Evaluation Program in accordance with Section 4.1(a)(v)(1) and expiring on the first to occur of (i) the expiration or termination of this Agreement in its entirety, (ii) [***] or (iii) the end of the Target Selection Period.
1.63 “IP Term” shall mean that period, during the Term, commencing on the Effective Date and continuing for five (5) years following the later of (i) the end of the Technology Collaboration Term, and (ii) the end of the last Product R&D Program Term.
1.64 “Joint Improvement” shall mean [***]:
(a) (i) any Intellectual Property that is invented by or on behalf of either Party (solely or jointly with the other) under this Agreement during the IP Term that constitutes or comprises a composition of, or any method of using or making, a combination of Intellia Materials and Regeneron Materials, including an improvement, enhancement or other modification to the combination of Intellia Materials and Regeneron Materials (i.e., such Intellectual Property necessarily involves both Intellia Materials and Regeneron Materials), and (ii) any Patent Rights to the extent within the Intellectual Property in the foregoing clause (i); and
(b) (i) any improvement, enhancement or modification to any CRISPR-Cas, including any composition of, or any method of using or making, CRISPR-Cas Materials, and (ii) any Intellectual Property in and to the foregoing clause (i), in each of (i) and (ii) that is invented (x) by or on behalf of Intellia alone [***], or (y) by or on behalf of Regeneron alone or jointly by or on behalf of the Parties under this Agreement, in each of (x) and (y) during the IP Term (“Joint CRISPR-Cas Improvements”).
1.65 “Know-How” shall mean any and all proprietary technical or scientific information, data, test results, conclusions, analysis, knowledge, techniques, discoveries, inventions, specifications, designs, trade secrets, chemical structures, compositions of matter and other information (whether or not patentable or otherwise protected by trade secret law).
1.66 “Lead Candidate” shall mean a Regeneron Product or Intellia Liver Product, as applicable, that [***] has been selected by the respective Party for initiation of preclinical studies [***] needed to support an IND and the initiation of GMP manufacturing.
1.67 “Legal Dispute” shall mean any dispute related to a Party’s alleged material breach of this Agreement or the validity, breach, termination or interpretation of this Agreement, or Intellectual Property-related disputes.
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1.68 “Liver Cell” shall mean any of the [***] cells constituting the liver itself or contained within the liver that are involved in the functional activities of the liver [***].
1.69 “Liver Product” shall mean any CP that has been specifically engineered or selected to confer its intended therapeutic effect by Modulating a Target in a Liver Cell. [***]
1.70 “Liver Target” shall mean any Target to which a Liver Product or anticipated Liver Product is Directed.
1.71 “Manufacturing Cost” shall mean the fully burdened cost (without mark-up) of manufacturing a Regeneron Product [***].
1.72 “Marketing Approval” shall mean all approvals of the applicable Regulatory Authority necessary for the marketing and sale of a Regeneron Product in a given country (or other jurisdiction).
1.73 “Modulate” shall mean, with respect to a Target[***].
1.74 “Net Sales” shall mean, with respect to a Regeneron Product, the gross amount invoiced for bona fide arms’ length sales of all units of such Regeneron Product in the Field by or on behalf of Regeneron or its Affiliates or sublicensees (but excluding distributors) to the first Third Party (including distributors), less the following deductions, consistently applied:
(a) [***]
Such amounts will be determined from the books and records of Regeneron, its Affiliates and sublicensees, maintained in accordance with GAAP. Net Sales in currency other than United States Dollars shall be converted into United States Dollars according to the provisions of Section 9.9 of this Agreement.
Sales between Regeneron and its Affiliates or sublicensees, for resale, shall be disregarded for purposes of calculating Net Sales. Any of the items set forth above that would otherwise be deducted from the invoice price in the calculation of Net Sales but which are separately charged to and paid by Third Parties shall not be deducted from the invoice price in the calculation of Net Sales. In the case of any sale of a Regeneron Product for consideration other than cash, such as barter or countertrade, Net Sales shall be calculated based [***].
Solely for purposes of calculating Net Sales, if Regeneron or any of its Affiliates or sublicensees sells any Regeneron Product in the form of a Combination Product, then [***].
1.75 [***]
1.76 [***]
1.77 [***]
1.78 [***]
1.79 “Non-Liver Product” shall mean any CP that is not a Liver Product.
1.80 “Non-Liver Target” shall mean any Target to which a Non-Liver Product or anticipated Non-Liver Product is Directed.
1.81 “Offsettable Amounts” shall mean milestones due pursuant to Section 9.2 and Royalties due pursuant to Section 9.3.
1.82 “Option Package” shall mean (a) with respect to Intellia, the following information related to all Intellia Liver Products Directed to a given Intellia Liver Target to be provided to Regeneron pursuant to Section 5.1(d), or (b) with respect to Regeneron, the following information related to all Regeneron Products Directed to a given Regeneron Target to be provided to Intellia pursuant to Section 5.2(b), as applicable:
[***]
(e) such other information as reasonably determined by the JSC.
1.83 [***]
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1.84 “Out-of-Pocket Costs” shall mean costs and expenses paid to [***] under [***] in accordance with this Agreement and such Plan [***]
1.85 “Patent Application” shall mean any application for a Patent, including any provisional, non-provisional, continuation, continuation-in-part or divisional applications and any PCT international applications or national phase applications, whether in the U.S. or any foreign country, including any applications claiming priority to any of the foregoing.
1.86 “Patent Rights” shall mean Patents and Patent Applications and without limiting the foregoing, the right to claim priority of such Patents and Patent Applications.
1.87 “Patents” shall mean any patent, including any patent(s) that issue from a Patent Application, and further including any reissue, extension, substitution, confirmation, re-registrations, re-examination, revival, supplementary protection certificate or patents of addition, whether in the U.S. or any foreign country.
1.88 “Person” shall mean and include an individual, partnership, joint venture, limited liability company, corporation, firm, trust, unincorporated organization or government or other department or agency thereof.
1.89 “Phase I Trial” shall mean a human clinical trial that would satisfy the requirements of 21 C.F.R. 312.21(a) (as amended or any replacement thereof), including an equivalent clinical trial conducted in a country other than the United States.
1.90 “Phase II Trial” shall mean a human clinical trial that would satisfy the requirements of 21 C.F.R. 312.21(b) (as amended or any replacement thereof), including an equivalent clinical trial conducted in a country other than the United States.
1.91 “Phase III Trial” shall mean a human clinical trial that would satisfy the requirements of 21 C.F.R. 312.21(c) (as amended or any replacement thereof), including, to the extent satisfying the foregoing requirements (a) a human clinical trial that becomes a registration trial sufficient for filing an application for a Marketing Approval for such product in the United States or (b) an equivalent clinical trial in conducted in a country other than the United States.
1.92 “Plans” shall mean, collectively, the Technology Collaboration Plan, the Regeneron Target Evaluation Plans, the Intellia Target Evaluation Plans and the Product R&D Plans, and each individually shall be a “Plan”.
1.93 “Plan Costs” shall mean the following costs incurred by a Party directly in connection with the performance of its obligations under the applicable Plan in accordance with this Agreement and the applicable Plan, but solely to the extent set forth in the JSC-approved budget (based on Quarters) for the applicable Plan:
(d) [***]any other costs or expenses specifically identified and included in the applicable Plan or otherwise expressly included as Plan Costs under this Agreement.
[***]
1.94 “Product R&D Plan” shall mean a written plan and Quarterly budget associated with the discovery, research, preclinical development, and manufacture of Regeneron Products. For clarity, there shall be a distinct plan for each Regeneron Target, which plans will be prepared and modified in accordance with Section 4.3(d).
1.95 “Product R&D Program” shall mean collectively, or individually, as applicable, the research and development program(s) to be performed under this Agreement that is/are intended to discover, research, manufacture and develop Regeneron Products, as set forth in the applicable Product R&D Plan(s).
1.96 “Product R&D Program Inventions” shall mean all Intellectual Property that is invented by or on behalf of either Party (or by the Parties jointly) in the performance of (i) activities under a Product R&D Program, or (ii) in connection with the development, manufacture or commercialization of any Regeneron Product (other than the Technology Collaboration) during the IP Term but following the end of the Product R&D Program for such Regeneron Product [***]
1.97 “Product R&D Program Term” shall mean, on a Product R&D Program-by-Product R&D Program basis, the period commencing on the date that a Target is selected as a Regeneron Target by Regeneron in accordance with Section 4.2 and expiring on the date of IND Acceptance with respect to a Regeneron Product Directed to such Regeneron Target and developed under such Product R&D Program. [***]
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1.98 [***]
1.99 “Quarter” or “Quarterly” shall refer to a calendar quarter, except that the first (1st) Quarter shall commence on the Effective Date and extend to the end of the then-current calendar quarter and the last calendar quarter shall extend from the first day of such calendar quarter until the effective date of the termination or expiration of this Agreement.
1.100 [***]
1.101 “Regeneron Allocated Regeneron Target Evaluation Plan Costs” shall mean [***] for the [***] Regeneron Evaluation Targets that Regeneron selects from the Liver Target Pool for a Regeneron Target Evaluation Program during each [***] period starting on the Effective Date, on a Regeneron Target Evaluation Program-by Regeneron Target Evaluation Program basis, all Plan Costs [***].
1.102 “Regeneron Contributed IP” shall mean (a) Know-How within the Regeneron Contributed Technologies and (b) Patents to the extent within the foregoing Know-How in clause (a) or the Regeneron Contributed Technologies, in each case of (a) and (b), that is Controlled by Regeneron or its Affiliate.
1.103 “Regeneron Contributed Technology” shall mean technology Controlled by Regeneron or its Affiliates and that Regeneron chooses to contribute under this Agreement for its or Intellia’s use in the performance of, as applicable:
(a) the Technology Collaboration (such technology, the “Technology Collaboration Contributed Technology”),
(b) the Regeneron Target Evaluation Program (such technology, the “Regeneron Target Evaluation Program Contributed Technology”), or
(c) the Product R&D Program (such technology, the “Product R&D Program Contributed Technology”);
but in each case, excluding, for clarity, Regeneron’s interest in any [***].
1.104 “Regeneron CRISPR-Cas IP” shall mean that subset of Regeneron Contributed Technology that is Technology Collaboration Contributed Technology [***].
1.105 [***]
1.106 [***]
1.107 [***]
1.108 [***]
1.109 “Regeneron FTO IP” shall mean, with respect to a given [***] Invention, (a) the Regeneron CRISPR-Cas IP that is (i) incorporated into or used to invent such [***] Invention in the performance of the [***] during the [***] Term and (ii) necessary for the practice of such [***] Invention and (b) any Patents to the extent within the Regeneron CRISPR-Cas IP that claim the foregoing clause (a).
1.110 “Regeneron Materials” shall mean Regeneron’s (or its Affiliate’s) proprietary [***] that are used in the performance of this Agreement or otherwise included in the Regeneron Contributed Technology. [***]
1.111 “Regeneron Materials Improvement” shall mean (a) any Intellectual Property that is invented by or on behalf of either Party (solely or jointly with the other) under this Agreement during the IP Term that constitutes or comprises an improvement, enhancement or other modification to any Regeneron Materials [***], including any such Intellectual Property that comprises a composition of, or any method of using or making, Regeneron Materials [***] and (b) any Patent Rights to the extent within the Intellectual Property in the foregoing clause (a), [***].
1.112 “Regeneron Material Relationship” means a written agreement or other arrangement between Regeneron (or any of its Affiliates) and a Third Party whereby Regeneron (or any of its Affiliates) has a material role at any time in the research, development, manufacture or commercialization of a product for which [***] are necessary or useful. [***]
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1.113 “Regeneron Mice” shall mean Regeneron’s proprietary, genetically modified mice that are used in the performance of this Agreement, and any progeny or derivatives thereof shall constitute Regeneron Materials Improvements.
1.114 “Regeneron Product” shall mean any CP developed under this Agreement, including through performance of the Technology Collaboration, Regeneron Target Evaluation Plan or the Product R&D Program, that is [***] Directed to a Regeneron Target [***]
1.115 “Regeneron Product Invention” shall mean (x) all Intellectual Property that is invented by or on behalf of either Party (or by the Parties jointly) in the performance of (i) activities under [***] or (ii) development, manufacture or commercialization of any Regeneron Product during the IP Term, in each case that solely relates to or covers one or more Regeneron Products or components thereof [***], and (y) Patent Rights within any of the foregoing Intellectual Property. [***]
1.116 [***]
1.117 “Regeneron [***] IP” shall mean [***]
1.118 “Regeneron Target” shall mean any Target that becomes a Regeneron Target pursuant to Section 4.2, including Section 4.2(b).
1.119 “Regeneron Target Evaluation Plan” shall mean a written plan associated with the evaluation of a particular Regeneron Evaluation Target as a candidate for potential selection as a Regeneron Target, which plan shall be substantially in the form attached hereto as Schedule 1.119. For clarity, there shall be a distinct plan for each Regeneron Evaluation Target, which plan will be prepared and modified in accordance with Section 4.1(a)(iii)(2).
1.120 “Regeneron Target Evaluation Program” shall mean collectively, or individually, as applicable, the program(s) to be performed under this Agreement that is/are intended to assist Regeneron in the evaluation of the Regeneron Evaluation Target [***] as set forth in the applicable Regeneron Target Evaluation Plan(s).
1.121 “Regeneron Target Evaluation Program Inventions” shall mean all Intellectual Property that is invented by or on behalf of either Party (or by the Parties jointly) in the performance of activities under the Regeneron Target Evaluation Program or Additional Evaluation Activities [***]
1.122 “Regeneron Target Evaluation Program Term” shall mean, on a Regeneron Target Evaluation Program-by-Regeneron Target Evaluation Program basis, the period commencing on the date that a Liver Target is selected as a Regeneron Evaluation Target in accordance with Section 4.1 and expiring on the first to occur of (i) the date the Regeneron Evaluation Target under such Regeneron Target Evaluation Program is selected by Regeneron as a Regeneron Target pursuant to Section 4.2, (ii) upon the expiration or termination of this Agreement in its entirety, (iii) upon the replacement of the subject Regeneron Evaluation Target in accordance with Section 4.1; (iv) [***] or (v) determination by Regeneron to cease activities under such Regeneron Target Evaluation Program by way of written notice pursuant to Section 4.1(a)(iii)(3)(g).
1.123 “Regulatory Authority” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity anywhere in the world with authority over the activities conducted under this Agreement or the development, manufacture, or commercialization of products.
1.124 “Regulatory Filings” shall mean regulatory applications, submissions, dossiers, notifications, registrations, Approvals, or other filings made to or with, or other approvals granted by, a Regulatory Authority that are necessary in order to develop, manufacture or commercialize a Regeneron Product in a particular country or regulatory jurisdiction.
1.125 “Reserved Ex-Vivo Field” shall mean (a) modification of cells using CRISPR-Cas where such modification is conducted ex vivo for the purpose of [***] (b) modification of HSCs using CRISPR-Cas where such modification is conducted ex vivo for the purpose of [***], and (c) modification of cells using CRISPR-Cas for use in [***].
1.126 [***]
1.127 “Target” shall mean [***]
1.128 [***]
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1.129 “Technology Collaboration” shall mean the research and development activities to be performed under this Agreement that are intended to discover and develop novel technologies to enable the development of therapeutics based on CRISPR-Cas with optimal therapeutic properties.
1.130 “Technology Collaboration Inventions” shall mean all Intellectual Property that is invented by or on behalf of either Party (or by the Parties jointly) in the performance of activities under the Technology Collaboration [***]
1.131 “Technology Collaboration Plan” shall mean the written plan and budget (based on Quarters) associated with the performance of the Technology Collaboration, which plan shall be prepared and modified in accordance with Section 3.1.
1.132 “Technology Collaboration Term” shall mean the period commencing on the Effective Date and expiring on the sixth (6th) anniversary of such date; provided, that Regeneron may extend the Technology Collaboration Term, at its sole discretion, in accordance with Section 3.3(a). For clarity, the Technology Collaboration Term would also immediately expire upon the expiration or termination of this Agreement in its entirety.
1.133 “Third Party” shall mean any Person other than Intellia or Regeneron or any Affiliate of either Party.
1.134 “UC Technology License” shall mean the Exclusive License Agreement, dated as of April 16, 2013, by and between Caribou, the University of Vienna and the Regents of the University of California, as amended on April 17, 2013.
1.135 “Unavailable Target” shall mean any Non-Liver Target, (a) that is the subject of planned research activities by Intellia (or its Affiliates) pursuant to a bona fide research plan specific to such Target [***], or (b) for which Intellia has an active and ongoing research or development program for Intellia CPs Directed to such Target [***], or (c) for which Intellia has granted exclusive rights (or an exclusive option to obtain exclusive rights) to a Third Party to develop and commercialize CPs Directed to such Target [***]; or (d) for which Intellia is in active partnering or licensing discussions with a Third Party to grant exclusive rights (or an exclusive option to obtain exclusive rights) to such Third Party to develop and commercialize CPs Directed to such Target [***], in each case of (a), (b), (c) or (d), as applicable, at the time Regeneron nominates such Target pursuant to Section 4.2.
1.136 “United States” or “U.S.” shall mean the United States of America and its territories and possessions.
1.137 “U.S. Export Control Laws” shall mean all applicable U.S. laws and regulations relating to the export or re-export of commodities, technologies, or services, including the Export Administration Act of 1979, 24 U.S.C. §§ 2401-2420, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706, the Trading with the Enemy Act, 50 U.S.C. §§ 1 et. seq., the Arms Export Control Act, 22 U.S.C. §§ 2778 and 2779, and the International Boycott Provisions of Section 999 of the U.S. Internal Revenue Code of 1986.
1.138 “Valid Claim” shall mean a claim of an issued and unexpired Patent (including the term of any patent term extension, supplemental protection certificate, renewal or other similar extension) within the Intellia Patent Rights or Regeneron Product Inventions [***].
1.139 The remaining capitalized terms used in this Agreement shall have the meanings set forth in the following Sections of this Agreement:
|
|
Term
|
Section Reference
|
[***] |
4.2(c) |
[***] |
4.2(c) |
“Additional Evaluation Activities” |
4.1(a)(iii)(3)(b) |
“Aggregate Liver Target Pool Cap” |
4.1(a)(ii)(2) |
“Agreement” |
Preamble |
“Alleged Party” |
16.4(b) |
“Alleging Party” |
16.4(b) |
“Alliance Manager” or “Alliance Managers” |
2.3 |
“Annual Technology Cost Cap” |
3.4(d) |
“Approval Milestones” |
9.2(c) |
“Arbitration” |
17.1(b) |
“Arbitration Draft” |
5.3(b)(i) |
“Arbitrators” |
5.3(b)(ii) |
“Breach Notice” |
16.4(b) |
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“Caribou” |
1.10 |
[***] |
[***] |
“CDA” |
13.1(b) |
“Challenge” |
16.5 |
“Challenged Patent Right” |
16.5 |
“Claim” |
14.1(a) |
[***] |
[***] |
“Co-Chairperson” |
2.2(a) |
“Co-Co Agreement” |
5.1(e)(i) |
“Collaboration Dispute” |
17.1(b) |
“Collaboration Reversion IP” |
16.7(c)(ii) |
“Confidential Information” |
13.1(a) |
“Consultation Party” |
10.2(d)(i) |
“CRISPR-Cas Materials” |
1.21 |
“Damages” |
14.1(a) |
“Development Milestones” |
9.2(c) |
“Disclosing Party” |
13.1(a) |
“Discontinuation Notice” |
16.6(a) |
“Discontinuation Period” |
16.6(b) |
“Draft” |
4.1(a) |
“Drafted Expired Target” |
4.1(a)(iv)(5) |
[***] |
4.1(a)(i)(1) |
[***] |
4.1(a)(i)(2)(c) |
“Effective Date” |
Preamble |
[***] |
[***] |
“Force Majeure” |
Article 15 |
“Form of Co-Co Agreement” |
5.3(a) |
“Funding Support Payment” |
3.4(d) |
“In-Licensed Reversion IP” |
16.7(c)(vi) |
“Indemnified Party” |
14.2(a) |
“Indemnifying Party” |
14.2(a) |
[***] |
5.1(e)(iii) |
“Intellia” |
Preamble |
“Intellia Competing Program” |
12.7(d) |
“Intellia Cost Report” |
4.5(b)(i) |
“Intellia Evaluation Target” |
4.1(a)(v)(1) |
“Intellia Indemnitees” |
14.1(b) |
[***] |
5.2(a) |
“Intellia Minimum Active Program Right” |
5.1(a)(iii) |
“Intellia Option” |
5.2(a) |
“Intellia Option Exercise Notice” |
5.2(c)(i) |
“Intellia Option Period” |
5.2(c)(i) |
“Intellia Platform In-License” |
7.3(c) |
[***] |
1.64(b) |
“JSC” |
2.2(a) |
“Lead Litigation Party” |
10.4(b) |
“Liver Target Pool” |
4.1 |
“Materials” |
7.7(a) |
“New Intellia Platform License” |
7.3(d) |
“Non-Liver Target Nomination Meeting” |
4.2(a)(i)(2)(a) |
[***] |
1.24 |
“Opening Brief” |
17.1(b)(iv) |
“Option Period” |
5.1(c) |
“Party” and “Parties” |
Preamble |
“Permitted Target Development Overage” |
4.5(c) |
“Permitted Technology Development Overage” |
3.4(e) |
“Periodic Liver Target Pool Cap” |
4.1(a)(ii)(1) |
“Product Infringement” |
10.4(a) |
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“Product R&D Program Contributed Technology” |
1.103(c) |
“Product Term” |
16.1 |
[***] |
4.1(a)(i)(1) |
“Receiving Party” |
13.1(a) |
“Redacted Agreement” |
13.5(d) |
“Regeneron” |
Preamble |
“Regeneron Background Reversion IP” |
16.7(c)(ii) |
“Regeneron Evaluation Target” |
4.1 |
“Regeneron Indemnitees” |
14.1(a) |
[***] |
5.1(c) |
“Regeneron Option” |
5.1(c) |
“Regeneron Option Exercise Notice” |
5.1(e)(i) |
“Regeneron Option Period” |
5.1(e)(i) |
[***] |
4.1(a) |
“Regeneron Specific Third Party Payments” |
7.3(e) |
“Regeneron Target Cap” |
4.2 |
“Regeneron Target Evaluation Program Contributed Technology” |
1.103(b) |
“Regulatory Exclusivity” |
9.7 |
“Rejection Period” |
8.2(b) |
“Response Brief” |
17.1(b)(v) |
“Responsible Party” |
10.2(d)(i) |
“Reversion Field” |
16.7(c)(i) |
“Reversion IP” |
16.7(c)(i) |
“Reversion License” |
16.7(c) |
“Reversion Products” |
16.7(c)(i) |
“Royalties” |
9.3(a) |
“Royalty Term” |
9.7 |
“SEC” |
13.5(d) |
[***] |
[***] |
“Target Draft Period” |
4.1(a) |
“Target Selection Notice” |
4.2(a)(i) |
“Target Selection Period” |
4.2(a)(i) |
“Target Profile” |
4.3(a) |
[***] |
[***] |
“Technology Collaboration Contributed Technology” |
1.103(a) |
“Technology Cost Reconciliation Report” |
3.4(c) |
“Technology Plan Cost Report” |
3.4(b) |
“Term” |
16.1 |
“Terminated Regeneron Target” |
16.7 |
“Termination Business Plan” |
16.6(c) |
“Termination for Suspension Notice” |
16.6(c) |
“Third Party Acquisition” |
12.7(d) |
[***] |
[***] |
ARTICLE 2
AGREEMENT OVERVIEW AND GOVERNANCE
2.1 Agreement Overview. The Parties intend and have agreed to undertake a collaboration under this Agreement consisting, in general, of the following major components:
(a) the Technology Collaboration consisting of a collaborative research program related to CRISPR-Cas technology, as more particularly described in ARTICLE 3, pursuant to which each Party will perform certain activities as set forth in the Technology Collaboration Plan [***], in each case as more particularly described herein;
(b) the Regeneron Target Evaluation Programs consisting of Regeneron Evaluation Target-specific research activities related to Regeneron’s preliminary evaluation of a Liver Target for Regeneron’s potential selection as a Regeneron Target, as more particularly described in Section 4.1, pursuant to which each Party will perform certain activities as set forth in the Regeneron Target
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Evaluation Plans, Regeneron will bear the Regeneron Allocated Regeneron Target Evaluation Plan Costs and Intellia will bear the Intellia Allocated Regeneron Target Evaluation Plan Costs;
(c) the Intellia Target Evaluation Programs consisting of Intellia Liver Target-specific research activities related to Intellia’s preliminary evaluation of such Liver Target, as more particularly described in Section 4.1, pursuant to which each Party will perform certain activities as set forth in the Intellia Target Evaluation Plans a [***];
(d) the Product R&D Programs consisting of Regeneron Target-specific research and development activities related to the development of Regeneron Products Directed to such Regeneron Targets, as more particularly described in ARTICLE 4, pursuant to which each Party will perform certain activities as set forth in the Product R&D Plans [***], and Intellia will grant Regeneron exclusive licenses to research, develop, make, have made, use, sell, offer for sale and import Regeneron Products, in each case as more particularly described herein; and
(e) the option for each Party to enter into a [***] cost and profit arrangement for certain Regeneron Products or Intellia CPs as further described herein.
2.2 Joint Steering Committee.
(a) Formation, Composition and Membership. Promptly after the Effective Date, the Parties will establish a joint steering committee (“JSC”), which shall consist of [***] senior representatives appointed by Regeneron [***] and [***] senior representatives appointed by Intellia [***]; provided, that the Parties may agree to increase or decrease the number of equal representatives from each Party. Each Party may replace its JSC members upon written notice to the other Party (which may be via email); provided, that such replacement is a senior representative of such Party, or is otherwise reasonably acceptable to the other Party. Each Party will appoint one of its representatives to serve as a “Co-Chairperson” of the JSC and each Party may change its designated Co-Chairperson from time to time upon written notice to the other Party.
(b) Decision Making. The JSC shall have the right to determine matters that are within the scope of the JSC (as set forth in Section 2.2(d)) or are otherwise expressly allocated to the JSC as set forth in this Agreement. [***]. The Parties shall cause their respective representatives on the JSC to use their good faith efforts to resolve all matters presented to them as expeditiously as possible. The representatives of each Party shall have collectively one (1) vote on behalf of such Party; provided, that no such vote taken at a meeting shall be valid unless a representative of each Party is present and participating in the vote. Disputes at the JSC shall be resolved as follows:
(i) In the event that the JSC, after a period of [***] days from the date a matter is submitted to it for decision (including if the Parties are unable to agree on a Technology Collaboration Plan (or amendment thereto), Regeneron Target Evaluation Plan (or amendment thereto), Intellia Target Evaluation Plan (or amendment thereto), Product R&D Plan (or amendment thereto), or any other matter that must be resolved by the JSC), is unable to make a decision [***], either Party may require that the matter be submitted to the Executive Officers for a joint decision by providing written notice to the other Party formally requesting that the dispute be resolved by the Executive Officers and specifying the nature of the dispute with sufficient specificity to permit adequate consideration by such Executive Officers.
(ii) If the dispute is referred to the Executive Officers, then the Executive Officers shall diligently and in good faith attempt to resolve the referred dispute within [***] days after receiving such written notification or such longer period of time as the Executive Officers may agree in writing. All such referred disputes shall require a joint decision of both Parties’ Executive Officers.
(iii) If the Executive Officers cannot resolve such dispute within such [***] days or other agreed period, such dispute will be resolved as follows:
[***]
(5) with respect to all other disputes under the scope of the JSC [***], such disputes will be submitted to the resolution procedures of Section 17.1.
(6) Notwithstanding the foregoing provisions of this Section 2.2(b)(iii), resolution of Legal Disputes shall be governed by Section 17.1(c).
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(c) Meetings of the JSC. The first meeting of the JSC shall take place within [***] days after the Effective Date where the JSC will begin discussing the initial strategy and goals for the Technology Collaboration. Thereafter, the JSC shall meet at least [***], and more frequently as either Party may reasonably request, until the later of [***], unless the Parties otherwise agree in writing, at which point the JSC shall be disbanded and any information exchanges that were previously subject to the JSC’s oversight shall be handled directly between the Alliance Managers. All JSC meetings may be conducted by telephone, video-conference or in person as determined by the Co-Chairpersons; provided, however, that the JSC shall meet in person at least [***]. Unless otherwise agreed by the Parties, all in-person meetings of the JSC shall be held on an alternating basis between Regeneron’s facilities and Intellia’s facilities. Further, each Co-Chairperson shall be entitled to call meetings in addition to the regularly scheduled [***] meetings. The Co-Chairpersons shall coordinate activities to prepare and circulate an agenda in advance of each meeting and prepare and issue [***] minutes of each meeting [***]. With the consent of the other Party (not to be unreasonably withheld, conditioned or delayed), a [***] number of other representatives of a Party may attend any JSC meeting as non-voting observers (provided that such additional representatives are under obligations of confidentiality and non-use applicable to the Confidential Information of the other Party that are at least as stringent as those set forth in Article 13 below). Each Party shall be responsible for all of its own personnel and travel costs and expenses relating to participation in JSC meetings, which costs and expenses, for clarity, shall not be considered Plan Costs.
(d) JSC Duties. The JSC shall:
(i) set the overarching research objectives for the Technology Collaboration and oversee the general strategies and activities undertaken by the Parties under the Technology Collaboration and the Product R&D Programs;
(ii) approve the Technology Collaboration Plan (including the annual budget for each Party to be included therein with costs allocated to the Parties [***]) to conduct the activities under such Technology Collaboration Plan;
(iii) approve each Regeneron Target Evaluation Plan (including the annual budget (based on Quarters) for each Party to be included therein) to conduct the activities under such Regeneron Target Evaluation Plan;
(iv) approve each Intellia Target Evaluation Plan to conduct the activities under such Intellia Target Evaluation Plan;
(v) review material results arising from any Additional Evaluation Activities;
(vi) approve each Target Profile and Product R&D Plan (including the annual budget (based on Quarters) for each Party to be included therein) to conduct the activities under such Product R&D Plan;
(vii) discuss which Intellia Materials and other Intellia Know-how may be useful for the conduct of the Technology Collaboration or Product R&D Program and facilitate the transfer of such materials and information to Regeneron pursuant to Section 2.2(f);
(viii) discuss which Regeneron Contributed Technology may be useful for the conduct of the Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or Product R&D Program, [***] facilitate the transfer of such materials and Know-How to Intellia;
(ix) exchange and review scientific information and data from activities being conducted under, and the then-current progress of, the Technology Collaboration Plan, each Regeneron Target Evaluation Plan, each Intellia Target Evaluation Plan, each Product R&D Plan, and Intellia’s research and development of Intellia Liver Products [***], and establish processes for the exchange of information relating to such activities;
(x) discuss manufacturing process development and scale-up activities for manufacture of Regeneron Products in accordance with Article 8;
(xi) discuss manufacturing of Regeneron Products, [***];
(xii) discuss potential Non-Liver Targets to be nominated as a Regeneron Target and included in the Product R&D Program;
(xiii) review and approve publications in accordance with Section 13.4(a);
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(xiv) consider and act upon such other matters as specified in this Agreement or as otherwise agreed to by the Parties;
(xv) make any such decisions as are expressly allocated to the JSC under this Agreement; and
(xvi) at the request of either Party’s representatives to the JSC, conduct ad hoc meetings in addition to the [***] meetings of the JSC as reasonably necessary to coordinate and expedite all decisions made by the JSC.
(e) Sub-Committees and Working Groups. The JSC may establish sub-committees or working groups to interact on a more frequent basis on specific projects and tasks assigned to them by the JSC (e.g., a sub-committee for the Technology Collaboration, a sub-committee for the Product R&D Program and a sub-committee for manufacturing); provided, that the authority of such sub-committees shall not expand beyond the authority of the JSC. Any such sub-committees shall have no decision making authority, but shall make recommendations to the JSC for the JSC’s review and approvals.
(f) Information Sharing. Each Party will share information with the JSC in a timely manner concerning the progress of the Plans and, in any event, at least [***] days prior to each regular [***] meeting of the JSC, and in connection therewith, each Party will provide to the JSC a written report (in electronic form) [***]. In addition, and without limiting the foregoing, Regeneron will share information with the JSC in a timely manner concerning any Additional Evaluation Activities and, in any event, at least [***] days prior to each regular [***] meeting of the JSC, and in connection therewith, Regeneron will provide to the JSC a written report (in electronic form) [***]. In addition, and without limiting the foregoing, with respect to Intellia’s research and development of Intellia Liver Products, Intellia will share information with the JSC [***] per Contract Year, up to the point of [***], and, in any event, at least [***] days prior to [***] such [***] meeting of the JSC [***], and in connection therewith, Intellia will provide to the JSC a written report (in electronic form) [***].
2.3 Alliance Management. Within [***] days after the Effective Date, each of Intellia and Regeneron shall appoint a senior representative [***] to act as its alliance manager hereunder, and each Party may replace such person upon notice (which may be via email) to the other Party (each such person, an “Alliance Manager”, and collectively, the “Alliance Managers”). Each Alliance Manager shall be charged with creating and maintaining a collaborative work environment between the Parties. Each Alliance Manager will also be responsible for acting as a single-point of communication for seeking consensus both internally within the respective Party’s organization and with the other Party’s organization, including facilitating review of external corporate communications. The Alliance Managers shall continue to serve in their role until [***].
2.4 Authority. Each Party shall retain the rights, powers and discretion granted to it under this Agreement and each committee under Section 2.2 shall have solely the powers expressly assigned to it in Section 2.2 or elsewhere in this Agreement, and no committee, including the JSC, shall have any power to amend, modify or waive compliance with this Agreement.
ARTICLE 3
TECHNOLOGY COLLABORATION
3.1 Technology Collaboration Plan. The Technology Collaboration shall be conducted in accordance with a Technology Collaboration Plan that will be approved by the JSC. The Technology Collaboration Plan shall set forth the overall strategy and objectives for the Technology Collaboration, as well as each Party’s activities to be conducted under the Technology Collaboration, and an annual budget (based on Quarters) [***] for the Technology Collaboration activities.
(a) Scope. The Parties generally anticipate that the Technology Collaboration Plan will include the following:
[***]
(b) Preparation and Amendment of Plan. Within [***] days (or any extension thereof mutually agreed in writing by the Parties) after the Effective Date, the Parties will jointly prepare the initial Technology Collaboration Plan and present such plan to the JSC for review and approval. Thereafter, either Party may propose at any meeting of the JSC amendments to the Technology Collaboration Plan; provided, that, at a minimum, no later than [***] days prior to the start of a given Contract Year during the Technology Collaboration Term, the Parties shall update the Technology Collaboration Plan and propose a budget (based on Quarters) for the Technology Collaboration for the upcoming Contract Year for the JSC’s review and approval.
3.2 Technology Collaboration Performance.
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(a) Efforts. Each Party shall use Commercially Reasonable Efforts to perform its activities under the Technology Collaboration Plan within the timelines set forth in the Technology Collaboration Plan and to achieve the goals and deliverables set forth in the Technology Collaboration Plan. Each Party will have day-to-day operational control over those activities delegated to such Party in the Technology Collaboration Plan.
(b) Costs. [***]
(c) Reporting. Each Party shall report the progress and results of its activities under the Technology Collaboration Plan to the JSC in accordance with Section 2.2(f). For clarity, all such reports shall be considered the Confidential Information of both Parties.
3.3 Technology Collaboration Term.
(a) Extensions. Regeneron may, by written notice to Intellia given at any time at least [***] months prior to the end of the Technology Collaboration Term, extend the Technology Collaboration Term one-time for an additional twenty-four (24) months, such that it will end on the eighth (8th) anniversary of the Effective Date (rather than the sixth (6th) anniversary of the Effective Date). If Regeneron delivers such written extension notice, then on or prior to the [***], Regeneron shall pay to Intellia twenty-five million dollars ($25,000,000); provided that Intellia has issued to a Regeneron an invoice for such amount (which invoice may be paid at any time on or prior to the [***]).
(b) End of Technology Collaboration. From and after the expiration or termination of the Technology Collaboration Term, (i) no further activities shall be conducted by the Parties under the Technology Collaboration Plan or otherwise with respect to the Technology Collaboration, (ii) the licenses set forth in Section 3.5 shall automatically terminate and (iii) no additional amount shall be payable pursuant to Section3.4(a), if any, other than amounts which had become due and payable prior to the effective date of such expiration or termination and that remain unpaid as of such date.
3.4 Technology Collaboration Funding.
(a) Sharing of Costs. The Parties shall [***] the Plan Costs incurred by each of the Parties in the performance of the Technology Collaboration in accordance with the Technology Collaboration Plan. Such costs shall be reported and paid in accordance with this Section 3.4.
(b) Reporting of Costs. Within [***] days after the end of each Quarter, each Party shall provide the other Party with a detailed, activity-based statement of its Plan Costs incurred in such Quarter for the performance of the Technology Collaboration, [***] (each, a “Technology Plan Cost Report”), in each case to the extent incurred in such Quarter
(c) Reconciliation. Within [***] days after the end of each Quarter (and subject to Regeneron’s receipt of Intellia’s Technology Plan Cost Report pursuant to Section 3.4(b)), Regeneron will provide Intellia with a written report (the “Technology Cost Reconciliation Report”) setting forth the calculations of aggregate Plan Costs for such Quarter, each Party’s share of such aggregate Plan Costs and the net payment due from one Party to the other Party (subject to Sections 3.4(d) and 3.4(e)). Any undisputed net payment owed from one Party to the other Party in order for the Parties to [***] all such Plan Costs shall be paid within [***] days following receipt of such Technology Cost Reconciliation Report and an invoice therefor (i.e., assuming timely receipt of the Technology Plan Cost Report and the Technology Cost Reconciliation Report, no later than [***] days after the end of the Quarter); provided, that if a Party disputes an amount provided in a Technology Plan Cost Report or Technology Cost Reconciliation Report and such dispute is not resolved within [***] days, then the provisions of Section 9.11 shall apply to resolve such dispute. If requested by Regeneron or Intellia, any invoices [***] shall be promptly provided.
(d) Funding Support Payments and Offsets. In the event that Intellia’s aggregate share of Plan Costs [***] pursuant to this Section 3.4 exceeds the [***] in a given Contract Year, with such pro-ration based upon the number of days in such Contract Year as compared to a full calendar year (the “Annual Technology Cost Cap”), then [***] with respect to any additional Plan Costs that Intellia actually incurs during such Contract Year that exceed the Annual Technology Cost Cap, [***].
(e) Budgets and Overages. Each Party shall use Commercially Reasonable Efforts to ensure that the actual costs associated with the performance of activities allocated to it in the Technology Collaboration Plan for a given Contract Year do not exceed [***] of the budgeted costs allocated to such Party for such Contract Year as set forth in the budget. Costs for the performance of all activities described in the Technology Collaboration Plan that exceed the estimated allocated costs therefor as set forth in the budget by up to [***] shall be referred to herein as the “Permitted Technology Development Overage” and such costs shall be included as Plan Costs. If either Party reasonably believes that the actual costs in relation to its Technology Collaboration activities in a Contract Year will exceed the allocated budget in the Technology Collaboration Plan (plus the Permitted Technology Development
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Overage) for all such activities during such Contract Year, such Party may request the JSC to review and approve such activities and the costs thereof before undertaking such excess cost. [***]
(f) Recording of Costs; Reports. All Plan Costs pursuant to this Section 3.4 shall be recorded and reported consistent with GAAP, consistently applied. Each Party shall keep records associated with Plan Costs incurred through performance of the Technology Collaboration strictly separate from records associated with Plan Costs incurred through performance of the Regeneron Target Evaluation Programs, Intellia Target Evaluation Programs and Product R&D Programs. Unless otherwise agreed by the JSC, the financial data in the Technology Plan Cost Report will include calculations in local currency and United States Dollars (converted into United States Dollars in accordance with Section 9.9). The JSC shall approve the form of any necessary documentation relating to any Plan Cost payments hereunder in connection with the Technology Collaboration so as to afford the Parties appropriate accounting treatment in relation to any of the transactions or payments contemplated hereunder.
3.5 Technology Collaboration License Grants.
(a) Grant by Intellia. Intellia shall grant, and hereby grants, to Regeneron a non-exclusive, worldwide license under the Intellia Intellectual Property solely to perform the activities designated to Regeneron under the Technology Collaboration Plan during the Technology Collaboration Term. Regeneron may sublicense the license granted under this Section 3.5(a) (i) only in accordance with Section 7.2(c) and as necessary to enable permitted subcontractors under, and in accordance with, Section 7.2(b) to perform certain of Regeneron’s obligations under the Technology Collaboration Plan and (ii) subject to obtaining Intellia’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed, and which consent will be deemed to have already been granted to the extent such subcontracted activity (including the identity of the subcontractor) is specified in the Technology Collaboration Plan.
(b) Grant by Regeneron. Regeneron shall grant, and hereby grants, to Intellia a non-exclusive, worldwide license under Regeneron Product Inventions, Regeneron Materials Improvements and that portion of the Regeneron Contributed IP that is Technology Collaboration Contributed Technology solely to perform the activities designated to Intellia under the Technology Collaboration Plan during the Technology Collaboration Term. Intellia may sublicense the license granted under this Section 3.5(b) (i) only in accordance with Section 7.2(c) and as necessary to enable permitted subcontractors under, and in accordance with, Section 7.2(b) to perform certain of Intellia’s obligations under the Technology Collaboration Plan and (ii) subject to obtaining Regeneron’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed, and which consent will be deemed to have already been granted to the extent such subcontracted activity (including the identity of the subcontractor) is specified in the Technology Collaboration Plan.
(c) Third Party Payments. If a Party (or any of its Affiliates) would owe any payments (including royalties, milestones or other amounts) for the use of any Intellectual Property it contributes to, or licenses in connection with, the Technology Collaboration, then any and all such payments shall be paid by such Party and shall not be considered Plan Costs.
3.6 Freedom to Operate License Grant by Regeneron. Subject to the terms and conditions of this Agreement (including Section 6.3 and Section 12.7), Regeneron shall grant, and hereby grants, to Intellia a non-exclusive, worldwide, sublicensable through multiple tiers (in accordance with Section 7.2(c)), provided that such sublicense shall not require the prior written consent of Regeneron), royalty-free and fully paid-up (subject to Section 7.12) license under the Regeneron FTO IP solely to the extent necessary (and with respect to any Patent Rights within the Regeneron FTO IP, on a claim-by-claim basis) to use, practice and otherwise exploit the applicable [***] Invention (and any improvements or derivatives but then, for clarity, only for the practice of such original [***] Invention or such improvements or derivatives of such original [***] Invention and not any other technology or use) for the research, development, making, having made, using, selling, offering for sale and importing of CPs and products or services incorporating or based upon such CPs (but excluding, for clarity, Regeneron Products).
ARTICLE 4
TARGET NOMINATION, SELECTION AND PROGRAMS
4.1 [***]; Regeneron Liver Target Pool and Intellia Liver Targets. The Parties intend to create a pool of Liver Targets that are not Intellia Liver Targets from which Regeneron shall have the right to select Liver Targets as Regeneron Targets in accordance with Section 4.2 (such pool being referred to in this Agreement as the “Liver Target Pool” and each Liver Target that is a member of the Liver Target Pool, a “Regeneron Evaluation Target”). In addition, the Parties also intend to allow Intellia to select Liver Targets to be included as Intellia Liver Targets in accordance with this Section 4.1 for (i) possible inclusion under the Intellia Target Evaluation Program pursuant to Section 4.1(a)(v) and (ii) development by Intellia pursuant to Section 5.1(a).
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(a) Nomination of Intellia Liver Targets and Regeneron Evaluation Targets. [***]. During the period commencing on the Effective Date until the sixth (6th) anniversary of the Effective Date (or the eighth (8th) anniversary of the Effective Date in the event that the Regeneron elects to extend the Technology Collaboration Term pursuant to Section 3.3(a) (the “Target Draft Period”), the Parties will conduct a draft process [***], as further contemplated by Section 4.1(a)(i) below, through which Available Liver Targets are nominated as Regeneron Evaluation Targets or Intellia Liver Targets (each, a “Draft”). Each Draft will be conducted by telephone, video-conference or in person as determined by the Co-Chairpersons of the JSC and under the oversight of the JSC. Decisions of the JSC in relation to any Draft matter will be made by mutual agreement of both Parties’ JSC representatives.
(i) Draft Process.
[***]
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(ii) Size of Liver Target Pool.
(1) During the Target Draft Period, there may be up to [***] Regeneron Evaluation Targets in the Liver Target Pool at any given time [***] (such maximum number of Regeneron Evaluation Targets that may be included in the Liver Target Pool at any given time under this Section 4.1(a)(ii)(1), the “Periodic Liver Target Pool Cap”).
(2) No more than an aggregate total of [***] Regeneron Evaluation Targets may ever be included in the Liver Target Pool within the Target Draft Period (the “Aggregate Liver Target Pool Cap”).
(iii) Regeneron Target Evaluation Program.
(1) Regeneron Target Evaluation Programs. The Parties’ objective under each Regeneron Target Evaluation Program is to enable Regeneron to evaluate the Regeneron Evaluation Target as a candidate for potential selection as a Regeneron Target under this [***], to aid in Regeneron’s evaluation of the applicable Regeneron Evaluation Target as a candidate for potential selection as a Regeneron Target under this Agreement. Each Regeneron Target Evaluation Program for a Regeneron Evaluation Target shall be conducted in accordance with a Regeneron Target Evaluation Plan for such Regeneron Evaluation Target that will be prepared and approved in accordance with Section 4.1(a)(iii)(2) and which will be consistent with the activities and costs outlined in Schedule 1.119. The Regeneron Target Evaluation Plan shall set forth (A) the overall strategy and objectives for the Regeneron Target Evaluation Program for such Regeneron Evaluation Target, including technical requirements and specifications of Intellia deliverables, (B) each Party’s specific activities to be conducted under such Regeneron Target Evaluation Plan, and (C) an annual budget (based on Quarters) [***] for the Regeneron Target Evaluation Program activities.
(2) Preparation and Amendment of Plan. Within [***] days (or such extension thereof mutually agreed in writing by the Parties) after a given Liver Target becomes a Regeneron Evaluation Target pursuant to this Agreement, the Parties will jointly prepare the initial Regeneron Target Evaluation Plan for such Regeneron Evaluation Target and present such plan to the JSC for review and approval [***]. Thereafter, during the applicable Contract Year, either Party may propose at any meeting of the JSC amendments to the Regeneron Target Evaluation Plan for such Regeneron Evaluation Target; provided, that, at a minimum, no later than [***] days prior to the start of a given Contract Year during which Regeneron Target Evaluation Program activities will continue to be conducted for a given Regeneron Evaluation Target, Regeneron (with input from Intellia) shall propose an updated Regeneron Target Evaluation Plan and corresponding updated budget for such Regeneron Target Evaluation Program for the upcoming Contract Year for the JSC’s review and approval; provided, however, that if the JSC does not approve such Regeneron Target Evaluation Plan and budget for such upcoming Contract Year, then the dispute shall be resolved in accordance with Section 2.2(b).
(3) Regeneron Target Evaluation Program Performance.
(a) Efforts. Each Party shall use Commercially Reasonable Efforts, during the Regeneron Target Evaluation Program Term for a given Regeneron Evaluation Target, to perform the activities allocated to such Party under the Regeneron Target Evaluation Plans within the timelines set forth in the Regeneron Target Evaluation Plans and to achieve the goals and deliverables set forth in the Regeneron Target Evaluation Plans. Each Party will have day-to-day operational control over those activities delegated to it in the Regeneron Target Evaluation Plan. [***] In all cases, if requested by Regeneron, Intellia shall use Commercially Reasonable Efforts to assist Regeneron with the performance of Regeneron’s activities under the Regeneron Target Evaluation Plan, including the transition of such activities to Regeneron[***].
(b) Additional Regeneron Target Evaluation Activities by Regeneron. Without limiting the activities to be performed under the Regeneron Target Evaluation Plan, Regeneron shall have the right to conduct additional activities, including research activities, in its discretion and at its cost, solely to evaluate the Regeneron Evaluation Targets as a candidate for potential selection as a Regeneron Target under this Agreement (the “Additional Evaluation Activities”), even if such activities are not included in the Regeneron Target Evaluation Plan, provided that any such Additional Evaluations Activities conducted or to be conducted by or on behalf of Regeneron shall be reported to the JSC as set forth in Section 2.2(f).
(c) Regeneron Target Evaluation License Grant by Intellia. Without limitation to the licenses granted pursuant to Section 6.3, Intellia shall grant, and hereby grants, to Regeneron a non-exclusive, worldwide license under the Intellia Intellectual Property solely to the extent necessary to perform the activities designated to Regeneron under each Regeneron Target Evaluation Plan during the applicable Regeneron Target Evaluation Program Term and to perform the Additional Evaluation Activities for a given Regeneron Evaluation Target during the applicable Regeneron Target Evaluation Program Term. Regeneron may sublicense the license granted under this Section 4.1(a)(iii)(3)(c) only in accordance with Section 7.2(c) and only as necessary to enable permitted subcontractors under, and in accordance with, Section 7.2(b) (i) to perform certain of Regeneron’s obligations under the applicable Regeneron Target Evaluation Plan or (ii) to perform the Additional Evaluation Activities.
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(d) Regeneron Target Evaluation License Grant by Regeneron. Regeneron shall grant, and hereby grants, to Intellia a non-exclusive, worldwide license under that portion of the Regeneron Contributed IP that is Regeneron Target Evaluation Program Contributed Technology, Regeneron Product Inventions, and Regeneron Materials Improvements, solely to the extent necessary to perform the activities designated to Intellia under each Regeneron Target Evaluation Plan during the applicable Regeneron Target Evaluation Program Term. Intellia may sublicense the license granted under this Section 4.1(a)(iii)(3)(d) only in accordance with Section 7.2(c) and only as necessary to enable permitted subcontractors under, and in accordance with, Section 7.2(b) to perform certain of Intellia’s obligations under the applicable Regeneron Target Evaluation Plan.
(e) Costs. Intellia Allocated Regeneron Target Evaluation Plan Costs and Regeneron Allocated Regeneron Target Evaluation Plan Costs incurred in the conduct of the Regeneron Target Evaluation Program will be borne by Intellia and Regeneron, respectively, and paid in accordance with Section 4.5 to the extent applicable.
(f) Reporting. Each Party shall report the progress and results of its activities under any Regeneron Target Evaluation Plan to the JSC in accordance with Section 2.2(f). For clarity, all Materials and Intellectual Property contained or referenced therein shall be subject to the ownership provisions of this Agreement.
(g) Termination of a Regeneron Target Evaluation Program Term for a Given Regeneron Evaluation Target. In the event of an early termination of a Regeneron Target Evaluation Program by way of written notice from Regeneron to Intellia [***], Regeneron shall promptly pay to Intellia for all Regeneron Allocated Regeneron Target Evaluation Plan Costs, if any, accrued by or owed to Intellia with respect to such terminated Regeneron Target Evaluation Program as of the effective date of such expiration or termination, including all applicable non-cancelable financial commitments made by Intellia to Third Parties prior to Regeneron’s notice of termination that were in accordance with the then-current Regeneron Target Evaluation Plan [***].
(h) Third Party Payments. Subject to Section 7.3 and Section 7.12 and the allocation of the applicable Third Party payments described therein, if a Party (or any of its Affiliates) would owe any payments (including royalties, milestones or other amounts) for the use of any Intellectual Property it contributes to, or licenses in connection with, the Regeneron Target Evaluation Program, then any and all such payments shall be paid by such Party and not included in Plan Costs.
(iv) Removal of Regeneron Evaluation Targets from the Liver Target Pool.
(1) At any time during the Target Selection Period, Regeneron may select any Regeneron Evaluation Target from the Liver Target Pool as a Regeneron Target in accordance with Section 4.2, and in such case, such Regeneron Evaluation Target shall no longer be included in the Liver Target Pool. In addition, at any time during the Target Selection Period, Regeneron may notify Intellia in writing that it is removing a given Regeneron Evaluation Target from the Liver Target Pool, and in such case, such Regeneron Evaluation Target shall no longer be included in the Liver Target Pool [***] and Drafted Expired Target. In addition, after the end of Target Selection Period [***], (A) any Regeneron Evaluation Target that is, at such time, not selected as Regeneron Target shall become a Drafted Expired Target and (B) any then current [***] Drafted Expired Targets shall continue to be a Drafted Expired Target [***].
(2) If Regeneron does not select a given Regeneron Evaluation Target as a Regeneron Target within [***] days after Regeneron determines that such Regeneron Evaluation Target qualifies as a Lead Candidate, then such Regeneron Evaluation Target shall no longer be included in the Liver Target Pool and shall become a Declined Target.
(3) If Regeneron does not select a given Regeneron Evaluation Target as a Regeneron Target within [***] shall thereafter constitute [***] a Drafted Expired Target.
(4) If Regeneron seeks to [***] shall automatically constitute [***] a Drafted Expired Target.
(5) As used in this Agreement, “Drafted Expired Target” shall mean each Regeneron Evaluation Target that is specifically designated as, or specifically becomes, a Drafted Expired Target pursuant to Section 4.1(a)(iv)(1), 4.1(a)(iv)(3) or 4.1(a)(iv)(4). If a given Drafted Expired Target ever subsequently becomes an Intellia Liver Target or a Regeneron Evaluation Target through the draft process under Section 4.1(a)(i) then it shall cease to be a Drafted Expired Target.
(v) Intellia Target Evaluation Program.
(1) Intellia Target Evaluation Programs. During the Target Selection Period [***], Intellia shall have the right, upon written notice to Regeneron, to select Intellia Liver Targets for inclusion in the Intellia Target Evaluation Program; provided, however that Intellia shall not be entitled to select more than [***] Intellia Liver Targets for inclusion in the Intellia Target
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Evaluation Programs [***] (each such Intellia Liver Target included in an Intellia Target Evaluation Program, an “Intellia Evaluation Target”); provided that, notwithstanding anything to the contrary contained herein, there shall be no more than [***] Intellia Target Evaluation Programs at any given time. The Parties’ objective under each Intellia Target Evaluation Program is to have Regeneron perform certain specific activities to be agreed to by the Parties and specified in the applicable Intellia Target Evaluation Plan as set forth in Section 4.1(a)(v)(2) [***]. Each Intellia Target Evaluation Program for an Intellia Evaluation Target shall be conducted in accordance with an Intellia Target Evaluation Plan for such Intellia Evaluation Target that will be prepared and approved in accordance with Section 4.1(a)(v)(2). For clarity, not all Intellia Liver Targets will be included under an Intellia Target Evaluation Program.
(2) Preparation and Amendment of Plan. Within [***] days (or such extension thereof mutually agreed in writing by the Parties) after Intellia selects a given Intellia Liver Target as an Intellia Evaluation Target pursuant to Section 4.1(a)(v)(1), the Parties will discuss (x) relevant mouse model for the applicable Intellia Evaluation Target and (y) up to three (3) queries that can reasonably be performed by Regeneron on existing and available genotypes/data in the Regeneron Genomics Center with respect to the Intellia Evaluation Target [***].
(3) Intellia Target Evaluation Program Performance.
(a) Efforts. Regeneron shall use Commercially Reasonable Efforts, during the Intellia Target Evaluation Program Term for a given Intellia Evaluation Target, to perform the activities allocated to Regeneron under the Intellia Target Evaluation Plans. Regeneron will have day-to-day operational control over those activities delegated to it in the Intellia Target Evaluation Plan. [***]
(b) Intellia Target Evaluation License Grant by Intellia. Without limitation to the licenses granted pursuant to Section 6.3, Intellia shall grant, and hereby grants, to Regeneron a non-exclusive, worldwide license under the Intellia Intellectual Property solely to the extent necessary to perform the activities designated to Regeneron under each Intellia Target Evaluation Plan during the applicable Intellia Target Evaluation Program Term. Regeneron may sublicense the license granted under this Section 4.1(a)(v)(3)(b) only in accordance with Section 7.2(c) and only as necessary to enable permitted subcontractors under, and in accordance with, Section 7.2(b) to perform certain of Regeneron’s obligations under the applicable Intellia Target Evaluation Plan.
(c) Intellia Target Evaluation License Grant by Regeneron. With respect to the Intellia Evaluation Target under a given Intellia Target Evaluation Program, Regeneron shall grant, and hereby grants, to Intellia a non-exclusive, worldwide, sublicensable through multiple tiers (in accordance with Section 7.2(c)) license under Regeneron’s interest in any Regeneron Mice models (to the extent Controlled by Regeneron) used in, [***] such Intellia Target Evaluation Program to research, develop, make, have made, use, sell, offer for sale and import Intellia Liver Products Directed to such Intellia Evaluation Target for any and all uses in the Field.
(d) Costs. Costs incurred in the conduct of the Intellia Target Evaluation Program will be borne [***].
(e) Reporting. Each Party shall report the progress and results of its activities under any Intellia Target Evaluation Plan to the JSC in accordance with Section 2.2(f). For clarity, all Materials and Intellectual Property contained or referenced therein shall be subject to the ownership provisions of this Agreement.
(f) Third Party Payments. Subject to Section 7.12 and the allocation of the applicable Third Party payments described therein, if a Party (or any of its Affiliates) would owe any payments (including royalties, milestones or other amounts) for the use of any Intellectual Property it contributes to, or licenses in connection with, the Intellia Target Evaluation Program, then any and all such payments shall be paid by [***].
[***]
4.2 Selection of Regeneron Targets. Regeneron will have the right, from time to time in accordance with this Section 4.2, to select up to ten (10) Targets at any given time (the “Regeneron Target Cap”) to become Regeneron Targets; provided, that (a) if Regeneron desires to select a given Liver Target as a Regeneron Target, Regeneron may only select Liver Targets from the Liver Target Pool as Regeneron Targets, and (b) [***] no more than five (5) of such Targets at any given time under Product R&D Programs may be Non-Liver Targets, [***] Notwithstanding the foregoing, the Parties agree and acknowledge that the Regeneron Target Cap is subject to increase pursuant to Section 4.2(c). Upon selection of a Regeneron Target by Regeneron pursuant to this Section 4.2, such Regeneron Target shall be included in the Product R&D Program and Regeneron Products will be developed for such Regeneron Target (on a Regeneron Target-by-Regeneron Target basis) under a Product R&D Plan for such Regeneron Target (which Product R&D Plan shall be prepared in accordance with Section 4.3(d)). [***].
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(a) Nomination and Selection of Regeneron Targets.
(i) Subject to the Regeneron Target Cap and associated payment of any replacement fees required pursuant to Section 4.2(b) below, as applicable, at any time during the period from the Effective Date (x) for Regeneron Liver Targets (i.e., in the case of clause (A) below), until [***] the Target Draft Period and (y) for Non-Liver Targets (i.e., in the case of clause (B) below), until [***] the Target Draft Period (as applicable, the “Target Selection Period”), and without limiting Regeneron’s substitution rights under Section 4.2(b), Regeneron may nominate as Regeneron Targets (A) any Regeneron Evaluation Target from the Liver Target Pool [***] or (B) any Non-Liver Target, in either case by providing written notice thereof to Intellia (the “Target Selection Notice”). [***]
(1) Liver Targets. Any Regeneron Evaluation Target identified for selection in a Target Selection Notice shall immediately become a Regeneron Target.
(2) Non-Liver Targets.
(a) If a Target Selection Notice identifies a Non-Liver Target for selection then, provided such nominated Non-Liver Target is not an Unavailable Target, within [***] days of providing such notice, the Parties will meet to discuss or discuss via teleconference, as agreed by the Parties, the suitability of such nominated Non-Liver Target for future development of CPs (the “Non-Liver Target Nomination Meeting”) [***]. Within [***] days after such meeting, Regeneron will provide notice to Intellia indicating whether it desires to include such Non-Liver Target as a Regeneron Target [***]. If Regeneron does not provide notice indicating that it desires to include any such Non-Liver Target as a Regeneron Target within such [***] day period, then Regeneron will be deemed to have determined to not include such Non-Liver Target as a Regeneron Target and such Non-Liver Target shall not be a Regeneron Target.
(b) In the event that a Non-Liver Target is an Unavailable Target, Intellia shall provide written notice to Regeneron indicating such status within [***] days of receiving such nomination from Regeneron. In the event that Regeneron desires to challenge such status, it shall provide notice thereof to Intellia within [***] days of Regeneron receiving such notice from [***]. If such Non-Liver Target is determined to not be an Unavailable Target [***] such Non-Liver Target shall become a Regeneron Target. [***]
(c) In the event that Regeneron nominates a Non-Liver Target pursuant to Section 4.2 and such Non-Liver Target is not an Unavailable Target, but Intellia has already granted a non-exclusive license or an option to obtain a non-exclusive license with respect to such Target, then Intellia shall disclose the same to Regeneron, including the terms and conditions applicable to such license or option, and Regeneron’s rights hereunder with respect to such Non-Liver Target would be subject to such terms and conditions (for so long as such terms and conditions remain in full force and effect) should Regeneron select such Target as a Regeneron Target.
(b) Replacement of Regeneron Target by Regeneron. At any time during the Target Selection Period, Regeneron may notify Intellia in writing if it desires to (i) replace a given Regeneron Target with a Regeneron Evaluation Target from the Liver Target Pool and in such case the original Regeneron Target shall no longer be a Regeneron Target and shall thereafter constitute a Declined Target for purposes of this Agreement, and the new Liver Target selected by Regeneron shall thereafter be a Regeneron Target hereunder and/or (ii) replace a given Regeneron Target with a Non-Liver Target (in which case, the procedures set forth in Section 4.2(a)(i)(2) shall apply) and in such case, if the new Non-Liver Target replaces and becomes a Regeneron Target in accordance with the procedures set forth in Section 4.2(a)(i)(2) then the original Regeneron Target shall no longer be a Regeneron Target and shall thereafter constitute a Declined Target for purposes of this Agreement, and the new Non-Liver Target selected by Regeneron shall thereafter be a Regeneron Target hereunder. Notwithstanding the foregoing, Regeneron shall not have the right to replace a given Regeneron Target pursuant to this Section 4.2(b) if an IND for a Regeneron Product Directed to such Regeneron Target has been filed. For each such substituted Liver Target that becomes a Regeneron Target pursuant to this Section 4.2(b) (i.e., the new Regeneron Target is a Liver Target, regardless of the type of Target that is being replaced by such new Regeneron Target), Regeneron shall pay [***] to Intellia, and for each such substituted Non-Liver Target that becomes a Regeneron Target pursuant to this Section 4.2(b) (i.e., the new Regeneron Target is a Non-Liver Target, regardless of the type of Target that is being replaced by such new Regeneron Target), Regeneron shall pay [***] to Intellia, which payments shall be payable by Regeneron within [***] days following Regeneron’s selection of such new Regeneron Target. Regeneron shall have the right to replace (i.e., select as a new Regeneron Target) up to (x) a maximum of [***] Liver Targets pursuant to this Section 4.2(b) and (y) a maximum of [***] Non-Liver Targets pursuant to this Section 4.2(b). In the event that Regeneron replaces a given Regeneron Target pursuant to this Section 4.2(b), then the Parties shall as promptly as practicable wind-down all activities under the Product R&D Plan for such replaced Regeneron Target. [***]
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(c) Regeneron Target Cap Increase. In the event that [***], the Regeneron Target Cap shall be increased to [***] for purposes of this Agreement and Regeneron shall have the right to select additional Targets in accordance with this Section 4.2 up to such increased Regeneron Target Cap. In the event that the Regeneron Target Cap is increased [***], Intellia shall be awarded the right to exercise an Intellia Option [***].
4.3 Target Profiles and Product R&D Programs/Plans.
(a) Target Product Profile. Following a Target becoming a Regeneron Target pursuant to Section 4.2, Regeneron will provide Intellia with a desired product profile and technical specifications (each, a “Target Profile”). Such Target Profile shall be discussed at the JSC and the JSC shall agree on a final Target Profile for such Regeneron Target. Either Party may propose amendments to any given Target Profile to the JSC and, for clarity, decision-making with respect to the initial Target Profile or any such amendments shall be in accordance with Section 2.2(b).
(b) Product R&D Program. The Parties’ objective under each Product R&D Program is to discover, research, conduct preclinical development (including manufacturing process development and certain other manufacturing activities), and obtain IND Acceptance for Regeneron Products that are Directed to the applicable Regeneron Target to enable further development and commercialization by Regeneron. Once the Target Profile is approved by the JSC with respect to a given Regeneron Target, the Product R&D Program for such Regeneron Target shall be conducted in accordance with a Product R&D Plan for such Regeneron Target that will be prepared and approved in accordance with Section 4.3(d). The Product R&D Plan shall set forth the overall strategy and objectives for the Product R&D Program for such Regeneron Target, as well as each Party’s specific activities to be conducted under such Product R&D Plan, and shall also include an annual budget (based on Quarters) [***] for the Product R&D Program activities. Unless otherwise set forth in a given Product R&D Plan or otherwise determined by the JSC, Intellia shall have primary responsibility for performance of the following components of the Product R&D Plan activities: [***]. The JSC shall allocate additional responsibilities in accordance with the Parties’ respective capabilities and capacity; provided, however, that at the determination of Regeneron, Regeneron may [***] terminate the Product R&D Program for such Regeneron Target pursuant to Section 4.4(e)(i) such that Regeneron shall have responsibility for the performance of some or all such activities as determined by Regeneron.
(c) Scope. The Parties generally anticipate that each Product R&D Plan will include, and designate the Party primarily responsible for, the following activities:
(i) Identification, research, development, optimization and validation of a Lead Candidate that is Directed to the Regeneron Target that is the subject of such Product R&D Plan and that meets the Target Profile;
(ii) Conducting in-vitro and initial in-vivo experiments to screen and identify optimal guide RNAs, Cas9 or other endonuclease elements, and delivery systems and vectors;
(iii) Identification, development, optimization and validation of back-up and next generation Regeneron Products that are Directed to such Regeneron Target;
(iv) Developing an initial manufacturing process that would be suitable for scale up for production of GMP materials for toxicology studies and Phase I Trials; and
(v) Following Regeneron’s designation of a Lead Candidate that is Directed to such Regeneron Target, conducting the preclinical studies (e.g., GLP toxicity studies) and GMP manufacturing needed to support an IND for a Regeneron Product that is Directed to such Regeneron Target.
(d) Preparation and Amendment of Plan. Within [***] days (or such extension thereof mutually agreed in writing by the Parties) after a given Target becomes a Regeneron Target pursuant to this Agreement, the Parties will jointly prepare the initial Product R&D Plan for such Regeneron Target and present such plan to the JSC for review and approval [***]. Thereafter, during the applicable Contract Year, either Party may propose at any meeting of the JSC amendments to the Product R&D Plan for such Regeneron Target; provided, that, at a minimum, no later than [***] days prior to the start of a given Contract Year during which Product R&D Program activities will continue to be conducted for a given Regeneron Target, Regeneron (with input from Intellia) shall propose an updated Product R&D Plan and corresponding updated budget for such Product R&D Program for the upcoming Contract Year for the JSC’s review and approval; provided, however, that if the JSC does not approve such Product R&D Plan or budget for such upcoming Contract Year, then the dispute shall be resolved in accordance with Section 2.2(b).
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4.4 Product R&D Program Performance.
(a) Efforts. Each Party shall use Commercially Reasonable Efforts to perform the activities allocated to such Party under the Product R&D Plans within the timelines set forth in the Product R&D Plans and to achieve the goals and deliverables set forth in the Product R&D Plans, including using Commercially Reasonable Efforts to generate a Lead Candidate that meets the Target Profile for each Regeneron Target in accordance with the Product R&D Plans. Each Party will have day-to-day operational control over those activities delegated to it in the Product R&D Plan. In all cases, if requested by Regeneron, Intellia shall use Commercially Reasonable Efforts to assist Regeneron with the performance of activities under the Product R&D Plan, including the transition of such activities to Regeneron [***].
(b) Costs. Costs incurred in the conduct of the Product R&D Program will be borne in accordance with Section 4.5.
(c) Reporting. Each Party shall report the progress and results of its activities under any Product R&D Plan to the JSC in accordance with Section 2.2(f). For clarity, all such reports shall be considered the Confidential Information of Regeneron, provided that all Materials and Intellectual Property contained or referenced therein shall be subject to the ownership provisions of this Agreement.
(d) Initial IND Acceptance. Without limiting the first sentence of Section 4.4(a), subject to JSC input on the overall regulatory strategy for the initial IND filing for a given Regeneron Product under a Product R&D Program, Regeneron shall have primary responsibility with respect to submitting, and shall use Commercially Reasonable Efforts to submit, Regulatory Filings necessary to achieve initial IND Acceptance for a Regeneron Product. Regeneron shall be responsible for all communications with Regulatory Authorities in connection therewith, with Intellia’s support and input [***], which support and input shall be provided by Intellia upon reasonable request by Regeneron [***]. At the written request of Intellia, for so long as the Product R&D Program is continuing with respect to a given Regeneron Target, Regeneron shall, subject to Applicable Law, use Commercially Reasonable Efforts to include Intellia as an observer in material meetings with Regulatory Authorities for the initial IND filing for a given Regeneron Product Directed to such Regeneron Target.
(e) Expiration or Termination of Product R&D Program Term for a Given Regeneron Target.
(i) Regeneron may elect to assume all responsibilities under a Product R&D Program and terminate the Product R&D Program associated with given Regeneron Target [***] by notifying Intellia in writing; provided that Regeneron gives Intellia at least [***] months prior written notice of such termination. [***] In the event of any such Product R&D Program termination [***], Regeneron shall promptly pay Intellia [***] all Plan Cost amounts accrued by or owed to Intellia with respect to such terminated Product R&D Program as of the effective date of such termination [***].
(ii) Without limiting, and in addition to, Section 7.11, as soon as reasonably practicable following the end of the Product R&D Program for a given Regeneron Target (but in all cases within [***] days thereafter), Intellia shall [***].
(iii) From and after the termination of a given Product R&D Program, or expiration of a given Product R&D Program Term, (x) no further activities shall be conducted under such Product R&D Program (and the licenses set forth in Section 4.6 shall terminate), (y) the further development of Regeneron Products that are Directed to the applicable Regeneron Target shall be at the sole discretion of Regeneron (and shall no longer be subject to a Product R&D Plan), subject to the terms and conditions of this Agreement, and (z) for so long as Regeneron or its Affiliate continues to research and develop Regeneron Products Directed to such Regeneron Target that is the subject of the terminated Product R&D Program, Regeneron shall, subject to Applicable Law, use Commercially Reasonable Efforts to include Intellia as an observer in material meetings with Regulatory Authorities for the initial IND filing for the first Regeneron Product Directed to a Regeneron Target, as well as, all discussions and meetings with such Regulatory Authorities [***] for applicable Regeneron Products. For clarity, the termination of a given Product R&D Program, or expiration of a given Product R&D Program Term, shall not affect Regeneron’s obligations to provide updates regarding such Product R&D Program under Section 2.2(f) or affect any other Product R&D Program.
4.5 Program Funding.
(a) Regeneron Responsibility for Costs. Regeneron shall be responsible for [***] Regeneron Allocated Regeneron Target Evaluation Plan Costs, in accordance with, and subject to, the remainder of this Section 4.5.
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(b) Reporting and Payment of Costs.
(i) Within [***] days after the end of each Quarter, Intellia shall provide Regeneron with a detailed, activity-based statement of its Plan Costs incurred in such Quarter for the performance of the Product R&D Program and Regeneron Target Evaluation Program [***] (each, a “Intellia Cost Report”). Subject to Section 4.5(c), Regeneron shall make payment of Plan Costs that are [***] are Regeneron Allocated Regeneron Target Evaluation Plan Costs to Intellia within [***] days following receipt of such Intellia Cost Report, and an invoice therefor (i.e., assuming timely receipt of the Intellia Cost Report, no later than [***] days after the end of the Quarter).
(ii) If requested by Regeneron, any invoices [***] shall be promptly provided.
(c) Budgets and Overages. Intellia shall use Commercially Reasonable Efforts to ensure that the actual costs associated with the performance of activities allocated to it in a Product R&D Plan for a given Contract Year do not exceed [***] of the budgeted costs for such activities for such Contract Year as set forth in the budget in such Product R&D Plan. Costs for the performance of all activities described in a Product R&D Plan that exceed the estimated allocated costs therefor as set forth in the budget by up to [***] shall be referred to herein as the “Permitted Target Development Overage”, and such costs shall be included as Plan Costs. If Intellia believes that the actual costs in relation to its Product R&D Program activities during a Contract Year will exceed the allocated budget (plus the Permitted Target Development Overage, as applicable) for all such activities during such Contract Year, Intellia may request the JSC to review and approve such activities and the costs thereof before undertaking such excess cost. [***]
[***]
(d) Recording of Costs; Reports. All Plan Costs pursuant to this Section 4.5 shall be recorded and reported consistent with GAAP, consistently applied. Each Party shall keep records associated with Plan Costs incurred through performance of the Product R&D Programs and Regeneron Target Evaluation Plan strictly separate from records associated with Plan Costs incurred through performance of the Intellia Target Evaluation Programs and the Technology Collaboration. Unless otherwise agreed by the JSC, the financial data in the reports will include calculations in local currency and United States Dollars (converted into United States Dollars in accordance with Section 9.9). The JSC shall approve the form of any necessary documentation relating to any Plan Cost payments hereunder in connection with the Product R&D Programs and Regeneron Evaluation Target Programs so as to afford the Parties appropriate accounting treatment in relation to any of the transactions or payments contemplated hereunder.
4.6 Product R&D Program Licenses.
(a) Without limitation to the licenses granted pursuant to Section 6.3, Intellia shall grant, and hereby grants, to Regeneron a non-exclusive, worldwide, sublicensable license under the Intellia Intellectual Property (i) solely to perform the activities designated to be performed by Regeneron under applicable Product R&D Plan and (ii) solely to conduct research to evaluate potential Targets for nomination and selection as Regeneron Targets pursuant to Section 4.2 with respect to Non-Liver Targets, in the case of (i) until the expiration or termination of the applicable Product R&D Program Term, and in the case of (ii) until the expiration or termination of the Target Selection Period.
(b) Regeneron shall grant, and hereby grants, to Intellia a non-exclusive worldwide license under the Regeneron Product Inventions, Regeneron Materials Improvements and that portion of the Regeneron Contributed IP that is Product R&D Program Contributed Technology solely to perform the activities designated to be performed by Intellia under the applicable Product R&D Plan until the expiration or termination of the applicable Product R&D Program Term. Intellia may sublicense the license granted under this Section 4.6(b), (x) only in accordance with Section 7.2(c) and as necessary to enable permitted subcontractors under and in accordance with, Section 7.2(b) to perform certain of Intellia’s obligations under an applicable Product R&D Plan and (y) subject in all cases to obtaining Regeneron’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed, and which consent will be deemed to have already been granted to the extent such subcontracted activity (including the identity of the subcontractor) is included in the applicable Product R&D Plan.
4.7 Discussion of Additional License. Without limiting the rights and licenses expressly granted by Regeneron to Intellia under this Agreement, in the event that Intellia desires to obtain any additional licenses to Regeneron Contributed IP, Regeneron Materials and/or Regeneron Materials Improvements for use outside of the Technology Collaboration, a Regeneron Target Evaluation Program or Product R&D Program, then, at the reasonable written request of Intellia, and provided that such additional license does not include the Regeneron Products, the Parties shall discuss the terms and conditions under which such license may be so granted, and in the event that Parties agree on such terms and conditions, the Parties may negotiate a separate license agreement (or an amendment to this Agreement, as applicable) for such additional license. [***]
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ARTICLE 5
CO-DEVELOPMENT AND CO-COMMERCIALIZATION OPTIONS
5.1 Intellia Liver Targets; Intellia Reserved Liver Targets.
(a) Research and Development of Intellia Liver Products; Intellia Reserved Liver Products.
(i) Subject to Section 5.1(a)(ii), Intellia may conduct research and development of Intellia Liver Products in its sole discretion, and Intellia shall be responsible for all costs related to such activities (except for Regeneron’s activities under an Intellia Target Evaluation Plan and as set forth in Section 5.1(e) following the execution of a Co-Co Agreement). All research and development activities with respect to Intellia Liver Products, will be conducted in compliance with Applicable Laws, including Good Practices (as applicable). Decisions with respect to any [***] corrective action related to any Intellia Liver Product shall be made by Intellia (except as such decision making authority may be modified following the execution of a Co-Co Agreement), provided that in the event any such [***] corrective action would reasonably be expected to have a material adverse impact on Regeneron’s or its Affiliates’ development, manufacture and/or commercialization of Regeneron Products in the Field, then Intellia will discuss such decision with Regeneron. [***]
(ii) With respect to each Intellia Liver Target selected by Intellia pursuant to Section 4.1(a), during the Option Period, Intellia agrees to use Commercially Reasonable Efforts to conduct research and development with respect to Intellia Liver Products Directed to each such Intellia Liver Target [***]. If at any time during the Target Draft Period Intellia is no longer utilizing such Commercially Reasonable Efforts to research and develop Intellia Liver Products Directed to a given Intellia Liver Target, then, such Intellia Liver Target shall no longer be an Intellia Liver Target [***] and Intellia shall provide prompt written notice thereof to Regeneron, and thereafter, the Parties shall be free to nominate such Liver Target for a Draft in accordance with Section 4.1(a). Intellia will provide [***] updates to the JSC in respect of such Intellia Liver Targets researched and developed as contemplated by this Section 5.1(a)(ii). [***]
(iii) If, at any period during the Target Selection Period, a sufficient number of Intellia Reserved Liver Targets have become [***] Targets such that Intellia and its Affiliates, either alone or with a Third Party, are using Commercially Reasonable Efforts to research or develop less than a combined aggregate of [***] Intellia Reserved Liver Targets and Declined Targets, Intellia shall have the right, upon written notice to Regeneron, to elect to change Intellia Liver Target(s) to Intellia Reserved Liver Target(s) such that Intellia and its Affiliates, either alone or with a Third Party, may then research or develop a combined aggregate of [***] Intellia Reserved Liver Targets and Declined Targets (any such right, the “Intellia Minimum Active Program Right”) [***]. When Intellia elects to exercise any Intellia Minimum Active Program Right, Intellia shall send Regeneron written notice (i) certifying that Intellia and its Affiliates, either alone or with a Third Party, are then researching and developing less than a combined aggregate of [***] Intellia Reserved Liver Targets and Declined Targets (and identifying the Intellia Reserved Liver Targets and Declined Targets that are no longer being developed) and (ii) designating Intellia Liver Target(s) as Intellia Reserved Liver Target(s), and thereafter all such [***] Targets shall automatically become Available Liver Targets and Intellia shall thereafter make all then existing data and other information in its possession regarding such Intellia Abandoned Targets available to Regeneron for Regeneron’s evaluation of such Liver Targets for nomination [***]. Except as set forth in this Section 5.1(a)(ii), Intellia shall have no obligation to report to Regeneron (or the JSC) regarding in respect of its research and development of Intellia Liver Products Directed as Intellia Reserved Targets or Declined Targets.
(b) Intellia Target Evaluation Program. The provisions of Section 5.1(a) shall be in addition to, and without limitation of, the activities of each of the Parties under the Intellia Target Evaluation Programs.
(c) Regeneron Option. During the Target Draft Period and continuing for a period of [***] years thereafter (the “Option Period”), Intellia hereby grants Regeneron an exclusive option, to enter into a co-development and co-commercialization arrangement for [***] Intellia Liver Targets [***] which further includes an [***] cost and profit share arrangement with respect thereto (each, [***] a “Regeneron Option”), as more fully set forth in the remainder of this Section 5.1[***].
(d) Notice for Intellia Liver Product and Option Package.
(i) Upon the designation as a Lead Candidate of the first Intellia Liver Product Directed to each Intellia Liver Target that is subject to a Regeneron Option hereunder, and prior to any interactions or discussions with a Regulatory Authority (e.g., pre-Investigational New Drug Application meeting) with respect to such Intellia Liver Product, Intellia shall notify Regeneron regarding such designation. Within [***] days after receipt of such notice, Regeneron may request, in writing, that Intellia provide
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Regeneron the Option Package for such Intellia Liver Target. If Regeneron requests the Option Package within such timing, Intellia shall provide the Option Package for such Intellia Liver Product to Regeneron within twenty (20) days of such request. [***]
(ii) Within [***] days after the end of the Option Period, for any Intellia Liver Targets that are still subject to a Regeneron Option, Regeneron shall have the right to request an Option Package for such Intellia Liver Target pursuant to Section 5.1(d)(i) [***]. Intellia shall deliver to Regeneron an Option Package for each Intellia Liver Target as so requested by Regeneron [***], and thereafter Regeneron shall have the right to exercise a Regeneron Option for any such Intellia Liver Target in accordance with the provisions of this Section 5.1 [***]; provided, however, that, for clarity, notwithstanding the provisions of Section 5.1(e), if Regeneron does not exercise its Regeneron Option with respect to any such Intellia Liver Targets, such Intellia Liver Target shall not become a Declined Target.
(e) Exercise of Option.
(i) Exercise. If Regeneron wishes to exercise the Regeneron Option for a particular Intellia Liver Target, Regeneron shall provide written notice thereof (the “Regeneron Option Exercise Notice”) to Intellia in writing within [***] days following the receipt by Regeneron of the Option Package for the respective Intellia Liver Product (the “Regeneron Option Period”). Upon Regeneron’s timely exercise of the Regeneron Option with respect to a particular Intellia Liver Target, the Parties shall negotiate in good faith and enter into a separate agreement (“Co-Co Agreement”) to set forth the terms of such co-development, co-commercialization and [***] cost and profit share arrangement, which shall be based on the Form of Co-Co Agreement. In the event that Regeneron does not exercise the Regeneron Option for a given Intellia Liver Target in accordance with this Section 5.1(e), then such Intellia Liver Target shall be deemed to be a Declined Target for purposes of this Agreement.
[***]
(iii) TTR Target. The Parties hereby agree and acknowledge that the Target set forth on Schedule 5.1(e)(iii)(the “[***] Target”) shall be treated as an Intellia Liver Target (including, for clarity, to count as one (1) Regeneron Target towards the Regeneron Target Cap) for which Regeneron has exercised a Regeneron Option pursuant to Section 5.1(e)[***]. In connection therewith, the Parties shall enter into a Co-Co Agreement for the [***] Target as soon as reasonably practicable following the Effective Date [***], but in all cases in accordance with Section 5.3. Attached hereto as Schedule 5.1(e)(iii) is Intellia’s development plan and budget for the development of the [***] Target, which shall not be amended without the mutual agreement of the Parties. Until such time as the Parties enter into a Co-Co Agreement for the [***] Target, Intellia shall use Commercially Reasonable Efforts to conduct, at its cost, the development activities for the [***] Target in accordance with such development plan and budget, and Intellia shall keep Regeneron reasonably informed in connection with all such activities. Once the Co-Co Agreement is entered into by the Parties for the [***] Target, Regeneron shall reimburse Intellia for [***] of the development costs incurred by Intellia for the conduct of such activities between the Effective Date and the date of execution of such Co-Co Agreement; provided that such costs shall not exceed the budget mutually determined by the Parties through the JSC and subject to the terms and conditions of the Co-Co Agreement.
(f) Counting a Former Intellia Liver Target Towards the Regeneron Target Cap. In the event that Regeneron exercises a Regeneron Option for a given Intellia Liver Target in accordance with Section 5.1(e) (including, for clarity, the exercise of a Regeneron Option on the Effective Date for the [***] Target), then, for the purposes of determining whether the number of Regeneron Targets exceeds the Regeneron Target Cap, such Intellia Liver Target shall be considered to be a Regeneron Target as of the date of exercise of such Regeneron Option and if the addition of such Intellia Liver Target as a Regeneron Target causes Regeneron to be in excess of the Regeneron Target Cap, Regeneron shall, as soon as reasonably practicable, identify in writing to Intellia a Regeneron Target that Regeneron desires to terminate in order to be at the Regeneron Target Cap [***] and the Parties shall as promptly as practicable wind-down all activities under the Product R&D Plan for such terminated Regeneron Target.
(g) Restrictions Prior to Regeneron Option. From and after the Effective Date but prior to the expiration of the Regeneron Option Period for a given Intellia Liver Target, Intellia (and its Affiliates) shall not [***].
(h) License for Declined Targets. With respect to Declined Targets, Regeneron shall grant, and hereby grants, to Intellia a perpetual, irrevocable, worldwide, royalty-free and fully paid-up (subject to Section 7.12), sublicensable through multiple tiers (in accordance with Section 7.2(c) and the remainder of this paragraph), license under (i) Regeneron’s interest in Technology Collaboration Inventions, Regeneron Target Evaluation Program Inventions, Intellia Target Evaluation Program Inventions, Product R&D Program Inventions, Regeneron Product Inventions and Joint Improvements (provided, that, in each instance of the foregoing Intellectual Property, only to the extent such Intellectual Property was invented under the Regeneron Target Evaluation Program, Intellia Target Evaluation Program, or Product R&D Program, as applicable, for the applicable Declined Target or was a Regeneron Product Invention solely relating to a CP Directed to the applicable Declined Target, as applicable), and (ii) the Regeneron [***] IP [***], in each case to use, practice and otherwise exploit such of the foregoing Intellectual Property of clauses (i) and (ii) to research, develop, make, have made, use, sell, offer for sale and import CPs Directed to the applicable Declined Target for any and all uses in the Field (including any CP that was previously a Regeneron Product Directed to a Regeneron Target where such Regeneron Target
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has become a Declined Target hereunder), provided that Intellia shall only have the right to sublicense to Third Parties for those CPs that are Intellia CPs. The foregoing license shall be (x) exclusive (even as to Regeneron) with respect to clause (i) above, and (y) non-exclusive with respect to clause (ii) above.
(i) License for Drafted Expired Targets. With respect to Drafted Expired Targets (including one that subsequently becomes an Intellia Liver Target), Regeneron shall grant, and hereby grants, to Intellia a perpetual, irrevocable, worldwide, royalty-free and fully paid-up (subject to Section 7.12), sublicensable through multiple tiers (in accordance with Section 7.2(c) and the remainder of the paragraph, provided that such sublicense shall not require the prior written consent of Regeneron following the end of the Target Selection Period), exclusive license under Regeneron’s interest in those Regeneron Product Inventions invented under the Regeneron Target Evaluation Program for such Drafted Expired Target to research, develop, make, have made, use, sell, offer for sale and import CPs Directed to such Drafted Expired Target for any and all uses in the Field, provided that Intellia shall only have the right to sublicense to Third Parties for those CPs that are Intellia CPs. The foregoing license shall immediately terminate if such Drafted Expired Target subsequently becomes a Regeneron Target or Regeneron Evaluation Target.
5.2 Intellia Option on Regeneron Targets.
(a) Intellia Option. During the Option Period, Regeneron hereby grants Intellia an exclusive option, to enter into a co-development and co-commercialization arrangement for [***] each Regeneron Target [***] which further includes an [***] cost and profit share arrangement with respect thereto, (each, [***] an “Intellia Option”), as more fully set forth in the remainder of this Section 5.2. [***]
(b) Option Package.
(i) Upon the designation as a Lead Candidate of the first Regeneron Product Directed to each Regeneron Target that is subject to an Intellia Option hereunder, and prior to any interactions or discussions with a Regulatory Authority (e.g., pre-Investigational New Drug Application meeting) with respect to such Regeneron Product, Regeneron shall notify Intellia regarding such designation. Within [***] days after receipt of such notice, Intellia may request, in writing, that Regeneron provide Intellia the Option Package for such Regeneron Target. If Intellia requests the Option Package within such timing, Regeneron shall provide the Option Package for such Regeneron Target to Intellia within [***] days of such request [***]
(ii) Within [***] days after the end of the Option Period, for any Regeneron Targets that are still subject to an Intellia Option, Intellia shall have the right to request an Option Package for such Regeneron Target pursuant to Section 5.2(b)(i) [***]. Regeneron shall deliver to Intellia an Option Package for each Regeneron Target as so requested by Intellia [***], and thereafter Intellia shall have the right to exercise an Intellia Option for any such Regeneron Target in accordance with the provisions of this Section 5.2 [***].
(c) Exercise of Option.
(i) Exercise. If Intellia wishes to exercise the Intellia Option for a particular Regeneron Target designated in the Option Package, it shall provide written notice thereof (the “Intellia Option Exercise Notice”) to Regeneron in writing within [***] days following the receipt by Intellia of the Option Package for such Regeneron Target (the “Intellia Option Period”). Upon Intellia’s timely exercise of its Intellia Option with respect to a particular Regeneron Target, the Parties will negotiate in good faith and enter into a separate Co-Co Agreement based on the Form of Co-Co Agreement.
[***]
(d) Restrictions Prior to Intellia Option. From and after the Effective Date but prior to the expiration of the Intellia Option Period for a given Regeneron Target, Regeneron (and its Affiliates) shall not [***].
5.3 Form of Co-Co Agreement.
(a) The Parties shall negotiate in good faith a form of Co-Co Agreement (“Form of Co-Co Agreement”) based on Schedule 5.3 following the Effective Date and in accordance with the timelines described in this Section 5.3. [***]
(b) In the event that the Parties cannot negotiate and finalize the Form of Co-Co Agreement on or prior to [***], and provided that both Parties have been negotiating in good faith and in accordance with this Agreement, then either Party may, by
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written notice to the other Party, initiate the procedures described in this Section 5.3(b) to finalize the definitive terms and conditions of such agreement through binding arbitration as follows:
[***]
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5.4 Modification of this Agreement By Co-Co Agreement. For clarity, in the event that the Parties enter into a Co-Co Agreement under this Article 5, such Co-Co Agreement may supersede certain provisions of this Agreement solely with respect to the particular Intellia Liver Target or Regeneron Target, as applicable, that is the subject of such Co-Co Agreement, which superseded provisions will be expressly identified in the Co-Co Agreement.
ARTICLE 6
REGENERON PRODUCT DEVELOPMENT, MANUFACTURING AND
COMMERCIALIZATION
6.1 Development, Manufacturing and Commercialization.
(a) Regeneron.
(i) Except [***] as otherwise agreed by the Parties in writing, Regeneron shall have the sole right to research, develop (including seeking Marketing Approval for), manufacture and commercialize Regeneron Products, and Intellia (and its Affiliates) shall have no right to (and shall not) do so.
(ii) Following [***] provided that there has been IND Acceptance for a Regeneron Product Directed to such Regeneron Target, Regeneron shall use Commercially Reasonable Efforts to develop (including submitting for Marketing Approval for) at least one (1) Regeneron Product Directed to the applicable Regeneron Target and, following receipt of Marketing Approval [***], to commercialize such Regeneron Product. The foregoing shall in no way limit Regeneron’s obligations to use Commercially Reasonable Efforts to submit Regulatory Filings necessary to achieve initial IND Acceptance for a Regeneron Product Directed to the applicable Regeneron Target as set forth in Section 4.4(d).
(b) Intellia Technical Support. Without limiting Section 4.4(e) and Section 7.11, following [***], upon Regeneron’s written request, Intellia shall provide Regeneron with reasonable technical support related to the development of Regeneron Products Directed to such Regeneron Target [***].
6.2 Marketing Approvals and Other Approvals. Subject to the provisions of Section 4.4(d), Regeneron shall have the sole right, at its discretion and expense, to conduct regulatory activities to seek to obtain and maintain Approvals (including Marketing Approval) of the Regeneron Products, including the preparation and submission of any and all regulatory materials for Regeneron Products. [***]
6.3 Regeneron Product Licenses. Intellia shall grant, and hereby grants, to Regeneron an exclusive (even as to Intellia and its Affiliates), worldwide, sublicensable in multiple tiers (in accordance with Section 7.2(c)), license under the Intellia Intellectual Property to research, develop, make, have made, use, sell, offer for sale, and import Regeneron Products for use in the Field; provided, that, notwithstanding the foregoing license, (i) Intellia reserves the right to perform the activities designated to Intellia as set forth in the Product R&D Plans, and to manufacture Regeneron Product for use in the Product R&D Programs and for the supply of Regeneron Products as set forth in ARTICLE 8, and (ii) solely with respect to those rights under the Caribou-Intellia License Agreement sublicensed by Intellia to Regeneron hereunder, Regeneron is not licensed any rights with respect to (x) anti-microbial and/or anti-fungal uses and applications (provided that, for clarity, anti-viral uses and applications are included in the licenses hereunder) unless and until such time as Intellia comes to Control such rights and then such rights shall be included in the license granted to Regeneron hereunder without any further actions required by the Parties or (y) therapeutic uses in animals unless and until such time as Intellia comes to Control such rights and then such rights shall be included in the license granted to Regeneron hereunder without any further actions required by the Parties (provided that, for clarity, this clause (y) shall not limit any research or development activities with or in animals for products for human use). Intellia shall promptly notify Regeneron in writing should it come to Control anti-microbial and/or anti-fungal uses and applications and/or animal uses under the Caribou-Intellia License Agreement. Regeneron shall not, and shall ensure its Affiliates and sublicensees shall not, (1) itself or with or for any Third Party, exercise the licenses set forth in this Section 6.3 to research, develop, manufacture or commercialize, or (2) directly encourage, or directly support with the intent to encourage, others to exercise the licenses set forth in this Section 6.3 to research, develop, manufacture or commercialize on behalf of Regeneron, its Affiliates or sublicensees, in each case of (1) and (2), any Regeneron Product for use outside of the Field.
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6.4 Unblocking License. In the event that either (a) the use, practice or exercise by Regeneron (or any of its Affiliates or sublicensees) of any Intellia Intellectual Property in accordance with the licenses expressly granted to Regeneron in accordance with this Agreement or (b) the research, development, making, having made, use, sale, offering for sale, or import by Regeneron (or any of its Affiliates or sublicensees) of a Regeneron Product [***] for use in the Field, pursuant to, and in accordance with, this Agreement, would infringe or misappropriate any Patent Right which is first Controlled by Intellia or its Affiliates after the IP Term and which is not covered by the license grant in Section 6.3, Intellia shall grant, and hereby grants, to Regeneron a non-exclusive, royalty-free, worldwide, sublicensable in multiple tiers (in accordance with Section 7.2(c)) license under such Patent Right solely as necessary to (i) use, practice and exercise the Intellia Intellectual Property in accordance with the licenses expressly granted to Regeneron in accordance with this Agreement and (ii) research, develop, make, have made, use, sale, offer for sale, and import Regeneron Products for use in the Field in accordance with this Agreement, and solely for such purpose. The foregoing license under this Section 6.4 shall automatically terminate on a Regeneron Product-by-Regeneron Product basis simultaneous with the termination of the license under Section 6.3 with respect to such Regeneron Product. [***]
6.5 Ex-Vivo Field. In the event that Regeneron desires to expand the Field to include the Ex-Vivo Field on a Regeneron Target-by-Regeneron Target basis, then, at the written request of Regeneron, and provided that such expansion does not include the Reserved Ex Vivo Field and subject to Intellia’s obligations to Third Parties under other license or collaboration arrangements, the Parties shall negotiate in good faith the terms and conditions under which the Field may be so expanded, and in the event that Parties agree on such terms and conditions, the Parties shall negotiate in good faith and enter into a separate agreement (or an amendment to this Agreement, as applicable) to so expand the Field accordingly. Notwithstanding the foregoing or anything to the contrary herein, Intellia retains the sole and unmitigated right to determine whether it desires to grant any such additional license.
6.6 Regeneron Product Limitations. On a Regeneron Product-by-Regeneron Product basis, Intellia (and its Affiliates) shall not use (and shall not grant to any Third Party the right to use) any Regeneron Products for any purposes (including the research, development, manufacturing or commercialization thereof), except for (x) Intellia’s performance of the activities to be performed by Intellia under the Product R&D Program as set forth in the Product R&D Program Plan in accordance with this Agreement, and (y) the manufacture of Regeneron Products by Intellia for use in the Product R&D Programs as set forth in ARTICLE 8 or as otherwise agreed by the Parties in writing.
ARTICLE 7
PERFORMANCE AND PERFORMANCE STANDARDS
7.1 Licenses Generally; No Implied License. Except as expressly provided for herein, nothing in this Agreement grants either Party any right, title or interest in and to the intellectual property rights, materials or Confidential Information of the other Party (either expressly or by implication or estoppel). Except as expressly provided in this Agreement, neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party’s Patent Rights or Know-How, either expressly or by implication, estoppel or otherwise. [***]
7.2 Performance Standards.
(a) Affiliates. Each Party may carry out its obligations, and exercise its rights, under this Agreement through its Affiliates, and in such case, the Party carrying out such activities, or exercising such rights, through its Affiliate absolutely, unconditionally and irrevocably guarantees to the other Party the performance by such Party’s Affiliates in accordance with this Agreement, including performance of responsibilities, liabilities, covenants, warranties, agreements and undertakings of its Affiliates pursuant to this Agreement. Without limiting the foregoing, neither Party shall cause or permit any of its Affiliates to commit any act (including any act or omission) which such Party is prohibited hereunder from committing directly. Each Party represents and warrants to the other Party that it has licensed or will license from its Affiliates the Patent Rights and Know-How Controlled by its Affiliates that are to be licensed (or sublicensed) to the other Party under this Agreement.
(b) Subcontracts. Each Party may perform any of its obligations or exercise its rights under this Agreement through one or more subcontractors; provided that (i) [***]; (ii) the subcontracting Party remains responsible for the work allocated to, and payment to, such subcontractors it selects to the same extent it would if it had done such work itself and the non-subcontracting Party will have the right to proceed directly against the subcontracting Party without any obligation to first proceed against its subcontractor; (iii) [***]; and (iv) the subcontractor agrees in writing to assign all inventions and intellectual property developed in the course of performing any such work under [***], to the Party retaining such subcontractor (or to the other Party if such inventions or intellectual property are to be assigned to such other Party as required under this Agreement) and upon request to sign any documents to confirm or perfect such assignment and to cooperate in the preparation and prosecution of any such inventions. [***] To the extent any licenses are granted under any subcontract agreements, such agreements will be subject to Section 7.2(c).
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(c) Sublicensees.
(i) To the extent a license is sublicensable pursuant to the applicable license grant hereunder, or is required in connection with a permitted subcontracting pursuant to Section 7.2(b), the applicable Party may enter into sublicenses under such licenses granted in this Agreement, but subject to compliance with this Section 7.2(c) and the other applicable terms and conditions set forth in this Agreement. Each Party shall remain responsible and liable for the compliance, or failure to comply, by its sublicensees under the licensees granted herein with the applicable terms and conditions set forth in this Agreement and the non-sublicensing Party will have the right to proceed directly against the sublicensing Party without any obligation to first proceed against its sublicensee. [***]
(ii) With respect to [***] or any other Intellectual Property that is invented and jointly owned by the Parties under this Agreement, subject to the terms and conditions of this Agreement [***], each Party shall have the right to grant (sub)licenses (through multiple tiers) thereto for any purposes without the need to seek consent from or account to the other Party (and, for clarity, neither Party shall be required to obtain the consent of the other Party with respect to such (sub)license anywhere in the world and, to the extent that such consent is required in any country in the world, such consent is hereby granted) [***].
7.3 Intellia Third Party Agreements.
(a) [***] Intellia will be [***] responsible for all payments under the Intellia Existing Third Party Agreements and any and all other agreements between Intellia (or any of its Affiliates) and any Third Parties [***].
(b) [***].
(c) Following the Effective Date during the Term, Intellia or its Affiliates, in its sole discretion (but subject to Section 7.4), may enter into new agreements with Third Parties to license technologies or Intellectual Property from such Third Parties [***] (an “Intellia Platform In-License”).
(d) Commencing on the Effective Date and continuing until [***], if Intellia or its Affiliates enters into any Intellia Platform In-License during such period [***], that may be useful or necessary in connection with the [***], then Intellia will provide written notice of such license to Regeneron, [***], so Regeneron may elect whether to include such license under this Agreement. If Regeneron provides notice that it does elect to include such Intellectual Property within [***] of receipt of such written notice from Intellia [***], then (A) the respective Intellia Platform In-License will be deemed to be a “New Intellia Platform License” hereunder, and (B) with respect to any such New Intellia Platform License, the Patent Rights, Know-How and Materials in-licensed under such New Intellia Platform License will be deemed “Controlled” by Intellia under this Agreement. Any Intellia Platform In-License not selected by Regeneron hereunder within such [***] day period, shall not be deemed a New Intellia Platform License hereunder [***].
(e) To the extent that any milestones or royalties under a New Intellia Platform License are attributable to one or more Regeneron Products [***] (“Regeneron Specific Third Party Payments”), then [***] of such amounts shall be borne by Regeneron and Regeneron shall be solely responsible for and bear all of such Regeneron Specific Third Party Payments [***].
(f) To the extent applicable, the licenses granted to Regeneron and its Affiliates under this Agreement [***] will be subject to Regeneron’s and its Affiliates’, and their sublicensees’ compliance with the applicable terms of the applicable Intellia Existing Third Party Agreements [***], and as may be amended or restated in accordance with this Section 12.3(c) [***], and the applicable terms of any New Intellia Platform License [***] and as may be amended or restated in accordance with Section 12.4(a)(iv) [***]) and Intellia shall be permitted to disclose the terms and conditions of this Agreement to such Third Party licensors as and to the extent required for compliance therewith [***] provided that such Third Party licensors are subject to confidentiality restrictions that are substantially the same as, or at least as restrictive as, the confidentiality obligations in Article13.
[***]
(i) For clarity, this Section 7.3 shall not in any way limit Intellia’s obligations under Section 12.4.
7.4 Coordination of Third Party Intellectual Property Licensing.
(a) During the Target Selection Period, if either Party (or its Affiliate) desires to obtain a license to Intellectual Property of a Third Party for use in the performance of [***], then prior to entering into such license, the Parties shall discuss in good faith and coordinate the licensing of such Intellectual Property; provided, however, that nothing in this Section 7.4 shall prevent or prohibit or require a Party (or any of its Affiliates) from entering into any such license. [***]
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7.5 Records.
(a) Records.
(i) In connection with the Technology Collaboration, each Party shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data with respect to its activities conducted pursuant to the Technology Collaboration Plan in conformity with Applicable Laws and standard pharmaceutical industry practices; provided that in no case shall written documentation be maintained for less than [***] years following the Contract Year to which such records pertain. Such records shall fully and properly reflect all work done and results achieved in the performance of the development activities in good scientific manner appropriate for regulatory and patent purposes. Upon a Party’s written request, the other Party shall send legible copies of the aforesaid information to the requesting Party during the Term and for a minimum of [***] months following the Term.
(ii) In connection with the Regeneron Target Evaluation Programs and Product R&D Programs, Intellia shall prepare and maintain, or shall cause to be prepared and maintained, complete and accurate written records, accounts, notes, reports and data with respect to its activities conducted pursuant to each Regeneron Target Evaluation Program and Product R&D Plan in conformity with Applicable Laws and standard pharmaceutical industry practices; provided that in no case shall written documentation be maintained for less than [***] years following the Contract Year to which such records pertain. Such records shall fully and properly reflect all work done and results achieved in the performance of the development activities in good scientific manner appropriate for regulatory and patent purposes. Upon Regeneron’s written request, Intellia shall send legible copies of the aforesaid information to Regeneron during the Term and for a minimum of [***] months following the Term.
[***]
(b) Record Keeping Generally. The Parties acknowledge the importance of ensuring that the performance of each Plan is undertaken in accordance with the following good data management practices: (i) data shall be generated using sound scientific techniques and processes; (ii) data shall be accurately and reasonably contemporaneously recorded in accordance with good scientific practices by Persons conducting research hereunder; (iii) data shall be analyzed appropriately without bias in accordance with good scientific practices; and (iv) all data and results shall be stored securely and shall be easily retrievable.
7.6 Governmental Inspection. If any Governmental Authority conducts or gives notice to either Party of its intent to conduct an inspection or audit of such Party or its facilities that relates to such Party’s performance hereunder, or that could affect such Party’s ability to perform hereunder and in accordance herewith, such Party shall promptly notify the other Party and shall provide updates from time-to-time, including upon such other Party’s reasonable request, regarding the results of such audit or inspection, including any corrective steps to be taken.
7.7 Materials for Technology Collaboration, Regeneron Target Evaluation Programs, Intellia Target Evaluation Programs and Product R&D Program.
(a) Contributed Materials. To facilitate the conduct of activities hereunder, a Party shall provide the [***], “Materials”). All such Materials will remain the sole property of the providing Party. The receiving Party will (i) itself retain control of all such Materials, (ii) use such Materials only in the fulfillment of obligations or exercise of rights under this Agreement, (iii) not use such Materials or deliver the same to, or for the benefit of, any Third Party, without the providing Party’s prior written consent [***] and (iv) not use such Materials in research or testing involving human subjects, without the providing Party’s prior written consent [***]. The Materials supplied under this Section 7.7 are supplied “as is”, and accordingly the receiving Party agrees to use prudence and appropriate caution in the use, handling, storage, transportation and disposition and containment of all such Materials, as not all of their characteristics may be known. [***]
(b) Regeneron Mice. Without limiting Section 7.7(a), in the event Regeneron provides Intellia any Regeneron Mice hereunder, Intellia agrees that it will (and will ensure that its Affiliates and subcontractors will), [***] use Regeneron Mice solely for purpose of performing Intellia’s obligations under the applicable Plan in accordance with this Agreement [***].
7.8 Debarment. Each Party hereby covenants to the other Party that in the course of conducting Technology Collaboration, the Regeneron Target Evaluation Program, the Intellia Target Evaluation Program and the Product R&D Program, it will not use an employee or consultant who is or has been debarred by a Regulatory Authority or, to such Party’s knowledge, is or has been the subject of debarment proceedings by a Regulatory Authority.
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7.9 No Use of Non-Controlled IP in Technology Collaboration or Product R&D Program. Each Party hereby covenants to the other Party that in the course of conducting the Technology Collaboration, Intellia Target Evaluation Program or the Regeneron Target Evaluation Program it will not use in or contribute to the Technology Collaboration any material, Confidential Information, Intellectual Property, or trademark that such contributing Party knows (without any duty to inquire) misappropriates the Intellectual Property of a Third Party. Intellia hereby covenants to Regeneron that in the course of conducting the Regeneron Target Evaluation Program and Product R&D Program, it will not use in or contribute to the Regeneron Target Evaluation Program or Product R&D Program, as applicable, any material, Confidential Information, Intellectual Property, or trademark that it knows (without any duty to inquire), that it does not Control. Regeneron hereby covenants to Intellia that in the course of conducting the Intellia Target Evaluation Program, it will not use in or contribute to the Intellia Target Evaluation Program, as applicable, any material, Confidential Information, Intellectual Property, or trademark that it knows (without any duty to inquire), that it does not Control. The Parties acknowledge and agree that this Section 7.9 is not intended to be, and shall not be deemed to be, a covenant against non-infringement of Intellectual Property.
7.10 Further Assurances and Transaction Approvals. Upon the terms and subject to the conditions hereof, each of the Parties agrees to do and perform all such further ministerial acts and things and shall execute and deliver such other agreements, certificates, instruments and documents necessary or that the other Party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and to evidence, perfect or otherwise confirm its rights hereunder.
7.11 Ongoing Technology Update and Transfer Obligations. During the Term, Intellia shall (a) promptly disclose to Regeneron in English (and deliver in writing and in an electronic format) any Intellia Know-How relating to a Regeneron Product (or the development, manufacture, or commercialization thereof) as may be developed, accessed or identified by or on behalf of Intellia (or its Affiliates) or as may otherwise be requested by Regeneron, (b) transfer and provide to Regeneron any other materials and documentation in Intellia’s (or its Affiliate’s or subcontractor’s) possession as may be reasonably requested by Regeneron from time to time that are necessary or useful for the development, manufacture, or commercialization of Regeneron Products in accordance herewith and (c) at the request of Regeneron, provide reasonable assistance and personnel, including answering all reasonable questions, in order to allow Regeneron to utilize and implement the Intellia Know-How in connection with the Regeneron Products[***].
7.12 Regeneron IP. In the event that any Regeneron Contributed IP (or other Intellectual Property licensed by Regeneron to Intellia hereunder) is in-licensed from a Third Party, then (i) Regeneron will provide written notice of such in-license to Intellia [***] and the applicable Third Party [***], (ii) in using any such Regeneron Contributed IP (or such other Intellectual Property), or exercising any licenses granted to Intellia hereunder with respect thereto, Intellia shall comply (and ensure compliance by its Affiliates and sublicensees) with the terms and conditions of the applicable in-license agreement between Regeneron (or its Affiliate, as applicable) and the applicable Third Party, but only following Regeneron’s notification to Intellia thereof pursuant to clause (i) above, and (iii) Intellia shall reimburse Regeneron for any and all amounts payable by Regeneron (or its Affiliate, as applicable) to the applicable Third Party under the in-license agreement between Regeneron (or its Affiliate, as applicable) and the applicable Third Party solely to the extent (A) such amounts result from Intellia’s (or its Affiliate’s or sublicensee’s) use of such Regeneron Contributed IP (or such other Intellectual Property) or the exercise of any licenses granted to Intellia hereunder with respect thereto [***] and (B) such amounts were disclosed in writing to Intellia pursuant to clause (i) above, which amounts shall be reimbursed by Intellia to Regeneron within [***] days after receipt of an invoice therefor (and in connection therewith, Intellia shall provide to Regeneron reasonable information in Intellia’s possession in order for Regeneron to determine such amounts).
ARTICLE 8
REGENERON PRODUCT MANUFACTURING
8.1 General. Subject to the provisions of this ARTICLE 8, Intellia will be responsible for the non-GMP manufacture and supply of Regeneron Products to support the research and preclinical development of Regeneron Products pursuant to the Product R&D Plans. For clarity, except as otherwise agreed by the Parties pursuant to Section 8.3, Regeneron shall be responsible for the manufacture of Regeneron Products following preclinical development for a Regeneron Product, including for all clinical development and commercialization purposes, and during preclinical development to the extent contemplated by Section 8.2 or 8.4 below. The Parties through the JSC shall discuss in good faith the manufacture of Regeneron Products, and reasonably cooperate with each other in all such supply matters pertaining to the Regeneron Products under this Article 8.
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8.2 Supply for Product R&D Program.
(a) Supply. Subject to the provisions of this Section 8.2, Intellia shall manufacture (or have manufactured) the quantities of Regeneron Products (including its components) that are necessary to perform the pre-clinical activities under the Product R&D Programs, which manufacturing shall be performed in accordance with Applicable Laws and all other requirements as set forth in the Product R&D Plan. The quantities of Regeneron Products to be supplied by Intellia, shall be set forth in the applicable Product R&D Plan, and the Manufacturing Cost of such Regeneron Products shall be included as Plan Costs hereunder.
(b) Third Party Manufacturers. The Parties acknowledge that Intellia may use one or more Third Party contract manufacturers to manufacture such Regeneron Products pursuant to Section 8.2(a); provided that the selection of such Third Party contract manufacturer shall be subject to Regeneron’s prior written approval, not to be unreasonably withheld, conditioned or delayed. Intellia will give Regeneron [***] days’ written notice (the “Rejection Period”) prior to engaging any Third Party contract manufacturer for manufacture of pre-clinical Regeneron Products hereunder, and permit Regeneron to review such proposed Third Party contract manufacturer within such Rejection Period. If Intellia provides written notice to Regeneron of its intended engagement of a Third Party contract manufacturer to manufacture pre-clinical Regeneron Product pursuant to Section 8.2(a) and Regeneron either (i) consents to such Third Party manufacturer or (ii) Regeneron does not provide written notice of its reasonable rejection of such Third Party contract manufacturer within the Rejection Period, then Regeneron shall have accepted or be deemed to have accepted, respectively, such Third Party contract manufacturer as a permitted Third Party manufacturer hereunder. If Regeneron provides its written rejection of such Third Party contract manufacturer within such Rejection Period, then (x) Intellia shall not utilize such Third Party contract manufacturer to manufacture Regeneron Product to be supplied to Regeneron pursuant to Section 8.2(a), and (y) the Parties shall discuss and mutually agree upon an alternative Third Party contract manufacturer acceptable to both Parties and Intellia shall exercise reasonable, good faith efforts to enter into a contract with such Third Party contract manufacturer for supply of such Regeneron Products thereunder, or (z) Regeneron shall have the right to enter into a contract with a Third Party contract manufacturer for supply of such Regeneron Products to Regeneron, provided, further, that in each such case (y) and (z), Intellia shall ensure that copies of all Know-How Controlled by Intellia (or any of its Affiliates) necessary or useful for the manufacture of such Regeneron Product in accordance herewith shall be provided to such Third Party contract manufacturer, in accordance with this Agreement, which manufacturing shall be performed in accordance with Applicable Laws and all other requirements as set forth in the Product R&D Plan. With respect to any such Third Party contract manufacturer for Regeneron Products, Regeneron shall have the right (and Intellia shall ensure that Regeneron has the right) to audit the facilities utilized in the manufacture of Regeneron Products or records related thereto of any such Third Party contract manufacturer. Regeneron shall have the right to review and comment on the draft agreement or amendment with each such Third Party contract manufacturer to the extent applicable to the manufacture and supply of one or more Regeneron Products hereunder, and Intellia shall consider in good faith the comments of Regeneron thereon (provided that Regeneron shall timely provide such review and comment). If any such materials are manufactured by such Third Party contract manufacturer, Intellia shall pass through to Regeneron such Regeneron Product specific warranties as Intellia receives from such Third Party contract manufacturer with respect thereto solely to the extent permitted under Intellia’s agreement with such Third Party contract manufacturer or, if not permitted, Intellia shall provide substantially similar warranties with respect to any supply hereunder as are provided by any such Third Party contract manufacturer to Intellia.
8.3 Supply Beyond Pre-Clinical. During the Product R&D Program for a given Regeneron Product, the JSC shall discuss alternatives for the manufacture and supply of Regeneron Product beyond pre-clinical supply, including GMP manufacturing needed to support an IND for a Regeneron Product. At the request of Regeneron, the Parties shall engage in good faith negotiations regarding Intellia continuing to supply a given Regeneron Product to Regeneron beyond pre-clinical supply; provided, that neither Party shall be required to enter into any continuing supply relationship unless agreed to by such Party, in such Party’s sole discretion. Notwithstanding the foregoing, in the event that Intellia (or its Affiliate) seeks to engage a Third Party contract manufacturer during the Term to manufacture CPs, Intellia shall notify Regeneron thereof in writing, and, at the written request of Regeneron, Intellia shall use good faith efforts to coordinate with Regeneron in the negotiation of such manufacturing relationship (including consulting with Regeneron in connection therewith), and, to the extent requested by Regeneron, Intellia will use reasonable, good faith efforts to assist Regeneron in its efforts to enter into a supply arrangement with such Third Party contract manufacturer for the supply of Regeneron Products to Regeneron.
8.4 Manufacturing Process Technology Transfer.
(a) Generally. Following the end of the Product R&D Program with respect to Regeneron Products Directed to a given Regeneron Target, or at such earlier time as mutually agreed by the Parties or reasonably requested by Regeneron, to the extent necessary to or useful for Regeneron to assume and perform manufacturing of such Regeneron Products, Intellia will (and will cause its contract manufacturers to) conduct a technology transfer [***] for such Regeneron Product to Regeneron or Regeneron’s designated contract manufacturer to enable Regeneron (or its designated contract manufacturer) to assume responsibility for the manufacture of such Regeneron Product, including for clinical and commercial purposes as applicable. [***]
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(b) Plan and Costs. At the request of Regeneron, the Parties shall enter into a mutually agreed and commercially reasonable technology transfer plan and schedule for such manufacturing technology transfer; provided, that Regeneron will reimburse Intellia the reasonable costs incurred by Intellia in providing such transition assistance, including Intellia’s internal costs at the FTE Rate, as and to the extent set forth in the technology transfer plan.
ARTICLE 9
PAYMENTS
9.1 Upfront Payment. Regeneron shall pay Intellia seventy five million dollars ($75,000,000) within [***] Business Days after receipt of an invoice therefor from Intellia (provided that Intellia shall not deliver such invoice until the Effective Date).
9.2 Development and Commercial Milestones.
(a) Milestones and Payments. On a Regeneron Target-by-Regeneron Target basis, Regeneron shall pay Intellia the milestone payments set forth in the table below upon the first achievement by Regeneron of the corresponding milestone event set forth in the table below for the first Regeneron Product Directed to such Regeneron Target. For clarity, each milestone event (and the corresponding milestone payment) is payable only once with respect to a given Regeneron Target (even if the same milestone event is subsequently achieved again for the same Regeneron Target, whether by the same Regeneron Product Directed to such Regeneron Target or by a different Regeneron Product Directed to such Regeneron Target).
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Development Milestones
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Milestone Event
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Milestone Payment
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1. Initiation (first patient dosed) of the first Phase I Trial for the first Regeneron Product Directed to a particular Regeneron Target |
[***] |
2. Initiation (first patient dosed) of the first Phase II Trial for the first Regeneron Product Directed to a particular Regeneron Target |
[***] |
3. Initiation (first patient dosed) of the first Phase III Trial for the first Regeneron Product Directed to a particular Regeneron Target |
[***] |
4. First acceptance by a Regulatory Authority of filing for U.S. Marketing Approval for the first Regeneron Product Directed a particular Regeneron Target |
[***] |
5. Receipt of U.S. Marketing Approval for the first Regeneron Product Directed to a particular Regeneron Target |
[***] |
6. Receipt of U.S. Marketing Approval for the second Regeneron Product Directed to a particular Regeneron Target (i.e., a second BLA, and not a supplemental BLA) |
[***] |
7. Receipt of Marketing Approval in the first of the United Kingdom, Germany, France, Italy, Spain or Japan for the first Regeneron Product Directed to a particular Regeneron Target |
[***] |
8. Receipt of Marketing Approval in the first of United Kingdom, Germany, France, Italy, Spain or Japan for the second Regeneron Product Directed to a particular Regeneron Target |
[***] |
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Sales Milestones
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|
Milestone Event
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Milestone Payment
|
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***]
(b) Payment Timing. Regeneron shall notify Intellia in writing of the achievement of a given milestone event under Section 9.2(a) within [***] days after the milestone event is achieved; provided that, with respect to sales milestones, Regeneron shall provide such notice within [***] days after the end of the Quarter during which the corresponding milestone event is achieved. Following such written notice to Intellia, Intellia shall invoice Regeneron for the corresponding milestone payment and Regeneron shall pay the corresponding milestone payment to Intellia within [***] days after receipt of an invoice therefor.
[***]
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9.3 Royalty Payments for Regeneron Products.
(a) Royalty Rate. From and after the First Commercial Sale of a given Regeneron Product in a given country, for each Quarter during the applicable Royalty Term for such Regeneron Product in such country, Regeneron or its Affiliate will make royalty payments to Intellia on aggregate worldwide annual Net Sales by it, its Affiliates, or any of their sublicensees of such Regeneron Product, on a Regeneron Product-by-Regeneron Product basis, at the following royalty rates (the “Royalties”):
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Worldwide Annual Net Sales* of a Regeneron Product in any calendar year during the Royalty Term
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Royalty
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|
|
[***] |
[***] |
|
|
[***] |
|
[***]
(b) Know-How Royalty Reduction. Notwithstanding the provisions of Section 9.3(a) but subject to Section 9.5, during the Royalty Term in the event the manufacture, use or sale of a given Regeneron Product by Regeneron (or its Affiliate or sublicensee) in a given country of sale (and, solely for the purposes of calculating whether royalties are owed under the UC Technology License the country of manufacture) does not infringe a Valid Claim [***], then the royalty rates in such country for such Regeneron Product as set forth in Section 9.3(a) will be reduced to [***].
(c) Compulsory License Reduction. If a court or a governmental agency of competent jurisdiction requires Regeneron or any of its Affiliates or its or their sublicensees to grant, or Regeneron or any of its Affiliates or its or their sublicensees reasonably determines in advance of any such requirement and in order to minimize further court or governmental action to grant, a compulsory license to a Third Party permitting such Third Party to sell a Regeneron Product in a country, and such license is granted and the royalty rate contained in such license for sales of such Regeneron Product in such country is lower than the royalty rate provided by the foregoing Section 9.3(a) or 9.3(b), as applicable, then the Royalties to be paid by Regeneron on Net Sales in such country for such Regeneron Product shall be the rate [***] For clarity, following the expiration or termination of such compulsory license during the Royalty Term for such Regeneron Product in such country, the full Royalty otherwise required to be paid under this Agreement pursuant to this Section 9.3 shall apply for the remainder of such Royalty Term.
[***]
9.4 Payments to Third Parties.
(a) In the event that Regeneron (or its Affiliate or sublicensee) are required to make any [***] payments to a Third Party as a result of a license (or other rights) granted to Regeneron (or its Affiliate or sublicensee) by such Third Party under such Third Party’s Intellectual Property [***], then Regeneron shall be entitled to deduct from any Royalties payable to Intellia under Section 9.3 [***] percent [***] of such Third Party [***] payments paid by Regeneron (or its Affiliate or sublicensee) with respect to such Regeneron Product in the Field [***].
(b) In the event that Regeneron (or its Affiliate or sublicensee) are required to make any [***] payments to a Third Party as a result of a license (or other right) granted to Regeneron (or its Affiliate or sublicensee) by such Third Party under such Third Party’s Intellectual Property [***], then Regeneron shall be entitled to deduct from any Royalties payable to Intellia under Section 9.3 (with the right to carryforward any unused balance) [***] percent [***] of such Third Party [***] payments paid by Regeneron (or its Affiliate or sublicensee) with respect to such Regeneron Product in the Field [***].
9.5 Royalty Floor. Regeneron shall be entitled to aggregate together the various reductions in the Royalties pursuant to Section 9.4; provided that, in no event shall such aggregation pursuant to Section 9.4 reduce the Royalties otherwise payable under Section 9.3(a), during any given Quarter, to an effective royalty rate that is less than [***]. In addition, the aggregate reductions in Royalties pursuant to Section 9.4 and Section 9.3(b) shall not reduce the Royalties otherwise payable under section 9.3(a) during any given Quarter to an effective royalty rate that is less [***].
9.6 Royalty Conditions. All Royalties pursuant to Section 9.3 are subject to the following conditions:
[***]
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9.7 Royalty Term. The Royalties payable under Section 9.3 shall be paid on a Regeneron Product-by-Regeneron Product and country-by-country basis, commencing on the First Commercial Sale of such Regeneron Product in such country and continuing until the later of (i) the expiration of the last Valid Claim within the Intellia Patent Rights or Regeneron Product Inventions that Covers such Regeneron Product in such country of sale (and, solely for the purposes of calculating whether royalties are owed under the UC Technology License the country of manufacture) or (ii) twelve (12) years from the First Commercial Sale of such Regeneron Product in such country, or (iii) expiration of Regulatory Exclusivity for the applicable Regeneron Product in such country (the applicable period of time during which Royalties are payable being referred to as the applicable “Royalty Term”). For purposes of the Royalty Term, the term “Regulatory Exclusivity” means any exclusive marketing rights or data exclusivity rights conferred by any Regulatory Authority with respect to a Regeneron Product other than Patent Rights, including rights conferred in the U.S. to an NDA holder under the Hatch-Waxman Act or the FDA Modernization Act of 1997 (including pediatric exclusivity), or rights similar thereto outside the United States.
9.8 Periodic Royalty Reports and Royalty Payment. Within [***] days following the end of [***], Regeneron shall deliver electronically to Intellia a written report [***]. Within [***] days of Intellia’s receipt of such report, Regeneron shall deliver the Royalties payment, if any, due to Intellia under Section 9.3 for the applicable Quarter. [***]
9.9 Payment Method and Currency. All payments under this Agreement shall be made by bank wire transfer in immediately available funds to an account designated by the Party to which such payments are due. All sums due under this Agreement shall be payable in United States Dollars. In those cases where the amount due in United States Dollars is calculated based upon one or more currencies other than United States Dollars, such amounts shall be converted to United States Dollars [***].
9.10 Taxes. Either Party may withhold from payments due to the other Party amounts for payment of any withholding tax that is required by Applicable Law to be paid to any taxing authority with respect to such payments. In such case, the payor Party will provide the payee Party all relevant documents and correspondence, and will also provide to the payee Party any other cooperation or assistance on a commercially reasonable basis as may be necessary to enable the payee Party to claim exemption from such withholding taxes and to receive a refund of such withholding tax or claim a foreign tax credit. The payor Party will give proper evidence from time to time as to the payment of any such tax. The Parties will cooperate with each other in seeking deductions under any double taxation or other similar treaty or agreement from time to time in force. Such cooperation may include the payor Party making payments from a single source in the U.S., where possible. [***] the payor Party will have no obligation to pay any additional amount to the extent that the withholding tax would not have been imposed but for (i) the failure by the payee Party to take advantage of an otherwise available exemption from or reduction in the rate of withholding tax under any applicable income tax convention between the United States and any applicable jurisdiction or (ii) the assignment by the payee Party of its rights or obligations hereunder (including to Affiliates) under this Agreement or any redomiciliation of the payee Party or any of its Affiliates outside of the United States. [***] Apart from any withholding permitted under this Section 9.10 and those deductions expressly included in the definition of Net Sales, the amounts payable hereunder will not be reduced on account of any taxes, charges, duties or other levies.
9.11 Resolution of Payment Disputes. In the event there is a dispute relating to any payment obligations or reports hereunder, the Party with the dispute shall have its representative on the JSC provide the other Party’s representative on the JSC with written notice setting forth in reasonable detail the nature and factual basis for such good faith dispute and the Parties, through the JSC, will seek to resolve the dispute as promptly as possible, but no later than [***] days after such written notice is received. If the JSC is unable to resolve such payment dispute within such period then either Party may pursue such remedies as are available under Section 17.1. The Parties agree that if there is a dispute regarding any payment amount, only the disputed amount shall be withheld from the payment, and the undisputed amount shall be paid within the applicable timeframes.
9.12 Late Fee. A late fee of [***] on the date that the applicable payment was due may be charged by the Party to whom payment is due with respect to any payment amount from the date such payment amount was originally due under the terms of this Agreement (provided that if the payment is disputed, then the foregoing late fee shall commence from the date that the disputed amount was originally due) until such payment amount is actually paid by one Party to another Party.
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ARTICLE 10
INTELLECTUAL PROPERTY
10.1 Newly Created Intellectual Property.
(a) Ownership of Newly Created Intellectual Property. Inventorship of Intellectual Property invented through the performance of activities under this Agreement shall be determined in accordance with United States patent laws (regardless of where the applicable activities occurred) and ownership of such Intellectual Property shall follow inventorship. Notwithstanding the previous sentence, all right, title and interest in any [***] Regeneron Materials Improvements, [***] Intellia CRISPR-Cas IP, Intellia Materials Improvements, Regeneron Product Inventions, [***], in each case, shall be determined in accordance with the following terms and conditions:
(i) the Parties shall jointly own all [***];
(ii) Intellia shall solely own all Intellia Materials Improvements and Intellia CRISPR-Cas IP; and
(iii) Regeneron shall solely own all Regeneron Materials Improvements, [***] and Regeneron Product Inventions, provided that if at any time (i) any given Target that was previously a Regeneron Target is no longer a Regeneron Target hereunder,(ii) any given Target that was previously a Regeneron Evaluation Target becomes a Declined Target or Intellia Liver Target hereunder or (iii) any given Target that was previously a Regeneron Evaluation Target becomes a Drafted Expired Target pursuant to the last sentence of Section 4.1(a)(iv)(1)hereunder, then in either such case, Regeneron shall assign an equal undivided ownership interest in the Regeneron Product Inventions solely related to such Target [***]).
[***]
(c) Treatment. All Intellia Materials Improvements shall be treated as Intellia Patent Rights or Intellia Know-How, as applicable, for purposes of this ARTICLE 10. All Regeneron Materials Improvements shall be treated as Regeneron Product Inventions for purposes of this ARTICLE 10.
(d) Invention Assignment; Assistance. To the extent that any right, title or interest in or to any Intellectual Property invented under this Agreement vests in a Party or its Affiliate, by operation of law or otherwise, in a manner contrary to the agreed upon ownership as set forth in Section 10.1(a), such Party (or its Affiliate) shall, and hereby does, irrevocably assign to the other Party any and all such right, title and interest in and to such Intellectual Property to the other Party without the need for any further action by any Party. In furtherance of the foregoing, each Party shall, upon request by the other, promptly undertake and perform (or cause its Affiliates and its and their respective employees or agents to promptly undertake and perform) such further actions as are reasonably necessary for Regeneron and Intellia, as between the Parties, to each perfect its title in any such Intellectual Property as set forth in Section 10.1(a), including by causing the execution of any assignments or other legal documentation, or providing the other Party or its patent counsel with reasonable access to any employees or agents who may be inventors of such Intellectual Property.
(e) Joint Ownership [***]. The Parties shall each own an equal, undivided interest in, and, subject to the other applicable provisions of this Agreement [***], each Party shall otherwise enjoy an equal undivided right to exploit any and all [***] including the right to use, practice and otherwise exploit for research, development, manufacturing, commercial and other purposes (including to grant licenses or other similar rights under) [***], without the need to seek consent from or account to the other Party (and, for clarity, neither Party shall be required to obtain the consent of the other Party with respect to the exploitation thereof anywhere in the world and, to the extent that such consent is required in any country in the world, such consent is hereby granted). The foregoing joint ownership rights shall not be construed as granting, conveying or creating any license or other rights to any of the other Party’s other intellectual property, unless otherwise expressly set forth in this Agreement. Subject to any licenses granted under this Agreement and subject to the other applicable provisions of this Agreement [***], each Party shall grant and hereby grants its consent to the other Party to exploit, (sub)license, assign [***] and enforce any [***] where such consent is required under Applicable Law, and further shall confirm the foregoing in writing at the other Party’s reasonable request. [***]
(f) Other Intellectual Property. The Parties agree that nothing in this Agreement, and no use by a Party of the other Party’s Intellectual Property pursuant to this Agreement, shall vest in a Party any right, title or interest in or to the other Party’s Intellectual Property, other than the license rights expressly granted hereunder and the assignments expressly made hereunder.
(g) Employees and Consultants. Each Party shall ensure that all of the employees and consultants of each Party that are supporting the performance of its obligations or exercise of its rights under this Agreement shall have executed agreements assigning
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to such Party all inventions and intellectual property made during the course of and as the result of their association with such Party with respect to the performance of activities under this Agreement, and obligating the individual upon request to sign any documents to confirm or perfect such assignment and to cooperate in the preparation and prosecution of any Patent Applications claiming or otherwise covering such inventions and obligating the individual to obligations of confidentiality and non-use regarding Confidential Information, that are at least as stringent as those undertaken by the Parties pursuant to Article 13 hereof.
(g) Disclosure. Each Party shall promptly disclose to the other Party all Intellectual Property that (i) is invented by such Party, its employees, agents and consultants pursuant to this Agreement and (ii) that is (r) [***], (s) [***], (t) [***], (u) [***], (v) a Regeneron Product Invention, (w) a Regeneron Materials Improvement, (x) an Intellia Material Improvement, (y) [***] or (z) Intellia CRISPR-Cas IP.
10.2 Prosecution and Maintenance of Patent Rights.
(a) Intellia Patent Rights. Intellia shall use Commercially Reasonable Efforts to prepare, file, prosecute and maintain the Intellia Patent Rights [***]. Intellia shall be solely responsible for all fees and costs incurred for the preparation, filing, prosecution and maintenance of such Intellia Patent Rights [***].
(b) [***]. Intellia shall, through counsel it selects and who has been approved by Regeneron (such approval not be unreasonably withheld, conditioned or delayed), use Commercially Reasonable Efforts to prepare, file, prosecute and maintain Patents and Patent Applications within [***] in the countries mutually agreed upon by the Parties. All such Patents and Patent Applications shall be jointly in the names of both Intellia and Regeneron and Intellia shall bear the costs thereof.
(c) Regeneron Product Inventions. Regeneron shall use Commercially Reasonable Efforts to prepare, file, prosecute and maintain Patents and Patent Applications within Regeneron Product Inventions. All such Patents and Patent Applications shall be in the name of Regeneron and Regeneron shall bear the costs thereof. [***]
(d) Consultation Rights.
(i) Each Party shall confer with and keep the other Party reasonably informed regarding the status of such Party’s activities under Section 10.2(a), 10.2(b) or 10.2(c), as applicable (the Party with primary responsibility under each such Section, the “Responsible Party”, and the other Party, the “Consultation Party”). The Responsible Party shall have the following obligations with respect to the filing, prosecution and maintenance thereof: [***] the Responsible Party shall consult with the Consultation Party a reasonable time prior to taking or failing to take any substantive action (including making any filings) with respect to such Patent Applications or Patents under Section 10.2(a),10.2(b) or 10.2(c), as applicable, including any action that would materially affect the scope or validity of rights under any Patent Applications or Patents (such as substantially narrowing or canceling any claim without reserving the right to file a continuing or divisional Patent Application, abandoning any Patent or not filing or perfecting the filing of any Patent Application in any country) and the Responsible Party shall consider in good faith and discuss all reasonable comments thereto from the Consultation Party.
(ii) If either Party desires to file a patent application that discloses the Confidential Information of the other Party (including Confidential Information that is treated by this Agreement as the Confidential Information of both Parties), within a reasonable period of time prior to the anticipated filing date, a notice that specifies the Confidential Information to be disclosed within such patent application shall be provided to the other Party and, upon the request of the other Party, the filing Party shall be obliged at the other Party’s discretion to either (A) remove the Confidential Information belonging solely to the other Party [***] from such patent application or (B) provide the other Party reasonably sufficient time (not to exceed [***] days) to file a Patent Application claiming or otherwise covering such Confidential Information (including Confidential Information that is treated by this Agreement as the Confidential Information of both Parties), as applicable (unless any disclosure resulting from such filing under this clause (B) is prohibited by any Third Party obligations of such other Party, in which case this clause (B) shall not be available and only clause (A) shall apply). Confidential Information of Regeneron includes the Regeneron Materials unless subject to the exceptions set forth in Section 13.2. Confidential Information of Intellia includes the Intellia Materials unless subject to the exceptions set forth in Section 13.2.
(e) Step-In Rights.
(i) In the event that the Responsible Party desires not to file or to abandon any Patent Right or Patent Application that would otherwise be subject to Section 10.2(a),10.2(b) or 10.2(c), as applicable, and which results in a material loss of Patent Rights, the Responsible Party shall provide reasonable prior written notice to the Consultation Party of such intention to not to file or to abandon (which notice shall, in any event, be given no later than [***] days prior to the next deadline for any action that may be taken with respect to such Patent or Patent Application with the applicable patent office).
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(ii) With respect to any Intellia Patent Rights [***] that Intellia (as the Responsible Party) desires not to file or to abandon which results in a material loss of Patent Rights, Regeneron (as the Consultation Party) shall have the right, but not the obligation, at its expense, to assume responsibility for the filing, prosecution and maintenance of such Patents and Patent Applications within the Intellia Patents Rights in Intellia’s (or the applicable Third Party’s) name, unless, with respect to any such Patent Applications that are unpublished, Intellia notifies Regeneron that Intellia would prefer to maintain the subject matter of such Patent Application as a trade secret.
(iii) With respect to any Patent or Patent Application within [***] that Intellia (as the Responsible Party) desires not to file or to abandon which results in a material loss of Patent Rights, Regeneron (as the Consultation Party) shall have the right, but not the obligation, at its expense, to prepare, file, prosecute and maintain such Patents and Patent Applications within [***] in the names of both Parties.
(iv) With respect to any Patent or Patent Application within Regeneron Product Inventions that Regeneron (as the Responsible Party) desires not to file or to abandon which results in a material loss of Patent Rights, Intellia (as the Consultation Party) shall have the right, but not the obligation, at its expense, to prepare, file, prosecute and maintain such Patents and Patent Applications within Regeneron Product Inventions, in the name of Regeneron, unless, with respect to any such Patent Applications that are unpublished, Regeneron notifies Intellia that Regeneron would prefer to maintain the subject matter of such Patent Application as a trade secret.
(f) Regeneron Contributed IP, [***] and Regeneron Materials Improvements. As between the Parties, Regeneron shall have the sole and exclusive right, in its discretion and at its expense, to prepare, file, prosecute and maintain Patents and Patent Applications within the Regeneron Contributed IP and Regeneron Materials Improvements [***], and Intellia shall have no right to do so.
(g) Cooperation. Each Party agrees to reasonably cooperate with the other with respect to the preparation, filing, prosecution and maintenance of Patents and Patent Applications pursuant to this Section 10.2 [***].
(h) Cooperative Research and Technology Enhancement Act. Neither Party shall have the right, without the prior written consent of the other Party, to invoke the Cooperative Research and Technology Enhancement Act of 2004, 35 U.S.C. 103(c)(2)-(c)(3) with respect to any invention that is developed pursuant to this Agreement.
(i) Payments. All undisputed amounts payable by a Party to the other Party under this Section 10.2 shall be paid within [***] days of the payor Party’s receipt of invoice, including appropriate supporting documentation (e.g., copies of receipts) from the payee Party with respect to such amounts.
10.3 Administrative Patent Proceedings.
(a) Proceedings. Each Party will notify the other within [***] days after receipt by such Party of information concerning the request for, or filing or declaration of, any reissue, post-grant review, inter partes review, derivation proceeding, supplemental examination, interference, opposition, reexamination or other administrative proceeding relating to (i) any Intellia Patent Rights or (ii) any Patent or Patent Application within [***]
(b) Product Infringement. If any proceeding under Section 10.3(a) involves Patents or Patent Applications involved in a Product Infringement under Section 10.4, then notwithstanding the provisions of Section 10.3(a), any decisions on whether to initiate or how to respond to such a proceeding, as applicable, and the course of action in such proceeding, shall be made by the Party controlling such Product Infringement action pursuant to Section 10.4 in consultation with the other Party [***].
(c) Cost. All out-of-pocket fees and costs incurred in connection with any proceeding under Section 10.3(a) shall be borne [***].
(d) Regeneron Contributed IP, [***] and Regeneron Materials Improvements. As between the Parties, Regeneron shall have the sole and exclusive right, in its discretion and at its expense, to handle any reissue, post-grant review, inter partes review, derivation proceeding, supplemental examination, interference, opposition, reexamination or other administrative proceeding relating to (i) Patents and Patent Applications within the Regeneron Contributed IP and (ii) Patents and Patent Applications claiming or otherwise covering Regeneron Materials Improvements [***].
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10.4 Third Party Infringement Suits.
(a) Product Infringement. In the event that either Party or any of its Affiliates becomes aware of an actual or suspected infringement or misappropriation by a Third Party of (i) [***] or (ii) [***] (collectively (i) and (ii), “Product Infringement”), the Party that became aware of the Product Infringement shall promptly notify the other Party in writing of this actual or suspected infringement and shall provide such other Party with all available evidence in such Party’s possession (and that is not subject to a binding contractual confidentiality obligation to a Third Party)supporting such actual or suspected infringement.
(b) Lead Litigation Party. The Parties will consult and cooperate fully in an effort to determine a mutually agreeable course of action with respect to any Product Infringement; provided, that:
[***] The Party initiating the litigations shall be referred to as the “Lead Litigation Party”. The Lead Litigation Party cannot require the non-Lead Litigation Party to join in the suit, provided, however that, [***].
(c) Costs. Except as set forth in the last sentence of Section 10.4(b), all out-of-pocket costs incurred in the connection with the enforcement of a Product Infringement shall be borne [***].
(d) Recoveries. The amount of any recovery from any Product Infringement suit shall first be used to pay each of the Party’s reasonable costs, including attorneys’ fees, relating to such legal proceedings and the balance of any such recovery shall be retained by the Lead Litigation Party; provided, however, that with respect to any amounts of such recovery from any such Product Infringement suit (other than those amounts used to pay a Party’s reasonable costs) that have been awarded (as reimbursement for lost sales or lost royalties) of Regeneron Products, such amounts shall flow to Regeneron or be retained by Regeneron, as applicable, regardless of which Party is the Lead Litigation Party and included in the calculation of Net Sales for purposes of the payment of Royalties pursuant to Section 9.3.
(e) Assistance. In the event either Party initiates a proceeding pursuant to this Section 10.4, without any effect as to who is the Lead Party pursuant to the terms of Section 10.4(b), the other Party shall provide all assistance reasonably requested by the Lead Litigation Party [***].
(f) Settlements; Admissions. The Parties agree not to make any admission concerning claim invalidity or enforceability concerning such Patents or Patent Applications, without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed, until such action is finally resolved, terminated or settled.
(g) Step-In Rights. If either Party declines to initiate or fails to initiate litigation with respect to a particular Product Infringement within [***] days following notice of the Product Infringement, then (absent prior settlement by such Party) the other Party may thereafter commence an infringement action and be the Lead Litigation Party with respect to such Product Infringement after delivering written notice and reasonably sufficient supporting evidence to the non-initiating Party.
(h) Biosimilar Applications. Notwithstanding the foregoing Section 10.4, in the event of a Biosimilar Application, Section 10.5(b) shall control.
(i) Regeneron Contributed IP, [***] and Regeneron Materials Improvements. As between the Parties, Regeneron shall have the sole and exclusive right, in its discretion and at its expense, to handle enforcement relating to the Regeneron Contributed IP, [***] and Regeneron Materials Improvements.
10.5 BPCIA and Biosimilar Applications.
(a) BPCIA Listings. Regeneron will have sole decision-making authority with respect to the determination of which Intellia Patents Rights or Patent Rights Controlled by Regeneron or its Affiliates to submit to a Third Party that files a Biosimilar Application, or any other act of patent information exchange or listing as required by the BPCIA or other similar measure in any other country worldwide (provided that with respect to Intellia Background Patent Rights, if such Patent Rights cover one or more products of Intellia or its (sub)licensees, then any such determination shall discussed in good faith by the Parties with respect to such Patent Rights); provided, that to the extent permitted by Applicable Law, Regeneron shall confer in good faith with Intellia regarding which, if any, such Intellia Patent Rights are listed pursuant to 42 U.S.C. § 262(l)(3)(A) (or any successor legislation) (or other similar measure in any other country worldwide), or otherwise included in any litigation with such a Third Party applicant.
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(b) Biosimilar Applications. Notwithstanding anything to the contrary herein, if either Party receives a copy of a Biosimilar Application referencing a Regeneron Product or otherwise becomes aware that such a Biosimilar Application has been submitted to a Regulatory Authority for marketing approval (such as in an instance described in 42 U.S.C. §262(l)(9)(C)), such Party shall within [***] Business Days notify the other Party. The owner of the relevant Patent Rights shall then seek permission to view the application and related confidential information from the filer of the Biosimilar Application if necessary under 42 U.S.C. §262(l)(1)(B)(iii). If either Party receives any equivalent or similar communication or notice in the United States or any other jurisdiction, either Party shall within [***] Business Days notify and provide the other Party copies of such communication to the extent permitted by Applicable Laws. Promptly thereafter, the Parties shall enter into an appropriate joint defense agreement. Regeneron shall have the right to be the Lead Litigation Party. A Party that is not the Lead Litigation Party in a litigation shall consent to being joined in a litigation or being named as the plaintiff in a litigation if such being joined or named as a plaintiff is necessary to confer standing to bring the litigation or is otherwise necessary for the pendency of the litigation, and in such instance the joined Party shall provide reasonable cooperation and assistance to the Lead Litigation Party, all at the Lead Litigation Party’s expense.
(c) Coordination. With regard to issues related to potential Biosimilar Applications referencing a Regeneron Product, the Parties shall conduct and maintain ongoing and regular communications between their legal/intellectual property departments.
10.6 Extensions and Other Protections. Regeneron shall have the sole right to apply for supplementary protection certificates, patent term extensions, patent term restorations or any other exclusivity, including as may be available under the provisions of the Drug Price Competition and Patent Term Restoration Act of 1984 or comparable laws outside the United States of America), in respect of a Regeneron Product. At Regeneron’s reasonable request, Intellia will provide reasonable assistance to Regeneron in connection with any such applications. [***]
10.7 Patent Marking. Each Party shall comply with the patent marking statutes in each country in which a Regeneron Product or Reversion Product, as applicable, is made, offered for sale, sold or imported by such Party, its Affiliates or sublicensees.
10.8 Third Party Claims Related to Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or Product R&D Program. If either Party or its Affiliates shall learn of a Third Party claim, assertion or certification that the activities under the Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or Product R&D Program infringe or otherwise violate the intellectual property rights of any Third Party, then such Party shall promptly notify the other Party in writing of this claim, assertion or certification. As soon as reasonably practical after the receipt of such notice, the Parties shall [***].
10.9 Infringement of Third Party Patent Rights or Third Party Know-How. If any Regeneron Product manufactured, used or sold by Regeneron, its Affiliates or sublicensees becomes the subject of a Third Party’s claim or assertion of infringement of a Patent Right or misappropriation of Know-How, the Party first having notice of the claim or assertion shall promptly notify the other Party. Regeneron shall have the sole right, but not the obligation, to defend any such Third Party claim or assertion of infringement of a Regeneron Product. Intellia shall provide reasonable cooperation and assistance to Regeneron [***].
10.10 Third Party Rights. Notwithstanding the foregoing provisions of this Article 10, the Parties acknowledge and agree that each Party’s rights and obligations with respect to any Patent Rights under this Article 10 will be subject to the terms and conditions of any Intellia Existing In-Licenses [***] and as may be amended or restated in accordance with Section 12.4(a)(iv) [***], or New Intellia Platform License [***] and as may be amended or restated in accordance with Section 12.4(a)(iv) [***]. In the event that Regeneron is not fully able to enjoy any rights granted Regeneron under this Article 10 as a result of the provisions of this Section 10.10, then Intellia shall use diligent efforts to afford and allow Regeneron to exercise and enjoy such rights to the maximum extent possible under the applicable Third Party agreement [***].
ARTICLE 11
BOOKS, RECORDS AND INSPECTIONS; AUDITS AND ADJUSTMENTS
11.1 Books and Records. Each Party shall keep proper books of record and account in which full, true and correct entries (in conformity with GAAP) shall be made for the purpose of determining the amounts payable or owed pursuant to this Agreement. Each Party shall keep such books of record and account for at least [***] years following the Contract Year to which they pertain (or such longer period to the extent required by applicable law). Upon reasonable advance notice, each Party shall, and shall cause each of its respective Affiliates to, permit auditors, as provided in Section 11.2, to visit and inspect and examine no more than [***] per Contract Year, during regular business hours and under the guidance of officers of the Party being inspected, the books of record and account of such Party or such Affiliate to the extent relating to this Agreement and, in connection with such audit, to allow such auditors to discuss the results of such audit with, and be advised as to the same by, its and their officers and independent accountants.
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11.2 Audits and Adjustments.
(a) Audit. Each Party shall have the right, upon no less than [***] days’ advance written notice and at such reasonable places, times and intervals and to such reasonable extent as the Party shall request, not more than [***] during any Contract Year, to have the books of record and account of the other Party to the extent relating to this Agreement for the preceding [***] Contract Years audited by an independent and recognized accounting firm of its choosing under reasonable and reasonably acceptable to such other Party, appropriate confidentiality provisions, for the sole purpose of verifying the accuracy of all financial, accounting and numerical information and calculations provided, and payments made, under this Agreement; provided, that no period may be subjected to audit more than [***] time unless a material discrepancy is found in any such audit of such period, in which case an additional audit of such period may be conducted.
(b) Results; Costs; Confidentiality. The results of any such audit shall be delivered in writing to each Party and shall be final and binding upon the Parties, unless disputed by a Party by notice to the other Party within [***] days after delivery. If a Party over-billed or underpaid an amount due under this Agreement resulting in a cumulative discrepancy during any Contract Year of more than [***], it shall also reimburse the other Party for the costs of the accounting firm to conduct such audit (with the cost of the audit to be paid by the Party initiating the audit in all other cases). Such accountants shall not reveal to the Party requesting the audit the details of its review, except for the results of such review and such information as is required to be disclosed under this Agreement, and shall be subject to the confidentiality provisions contained in Article 13. At the request of the Party being audited prior to the audit, the auditing Party shall cause its accounting firm to enter into a reasonably acceptable confidentiality agreement with the audited Party obligating such accounting firm to retain all such information in confidence pursuant to such confidentiality agreement.
(c) Reconciliation. If any examination or audit of the records described above discloses an overbilling or underpayment of amounts due hereunder, then unless the result of the audit is contested pursuant to Section 11.2(b) above, the Party that over-billed or underpaid shall pay the same to the Party entitled thereto within [***] days after receipt of the written results of such audit pursuant to this Section 11.2.
(d) Disputes. Any disputes with respect to the results of any audit conducted under Section 11.2 above shall be elevated to the JSC.
(e) Binding and Conclusive. Upon the expiration of the [***] year period following the end of any Contract Year, the calculation of the amounts payable with respect to such Contract Year shall be binding and conclusive upon the Parties.
11.3 GAAP. Except as otherwise provided herein, all costs and expenses and other financial determinations with respect to this Agreement shall be determined in accordance with GAAP, as generally and consistently applied.
ARTICLE 12
REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1 Joint Representations and Warranties. Each Party hereto represents and warrants to the other Party, as of the Effective Date, as follows: (a) it is duly organized, validly existing, and in good standing under the laws of its jurisdiction of incorporation; (b) it has full corporate power and authority to execute, deliver, and perform this Agreement, and has taken all corporate action necessary to enter into, deliver, and perform this Agreement; (c) the execution and performance by it of its obligations hereunder will not constitute a breach of, or conflict with, its organizational documents nor any other material agreement or arrangement, whether written or oral, by which it is bound or requirement of Applicable Laws; (d) this Agreement is its legal, valid and binding obligation, enforceable in accordance with the terms and conditions hereof (subject to Applicable Laws of bankruptcy and moratorium); (e) such Party is not prohibited by the terms of any agreement to which it is a party from performing the Technology Collaboration, Regeneron Target Evaluation Program, Intellia Target Evaluation Program or the Product R&D Program or granting the rights or licenses hereunder; (f) no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee in connection with this Agreement or the transactions contemplated hereby based on arrangements made by it or on its behalf; and (g) it has obtained all necessary consents, approvals and authorizations of all Governmental Authorities and other Persons required to be obtained by it as of the Effective Date, as applicable, in connection with the execution, delivery and performance of this Agreement.
12.2 Additional Intellia Representations, Warranties and Covenants of Intellia. Intellia additionally represents and warrants to Regeneron as of the Effective Date that, except as set forth on Schedule 12.2:
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(a) There are no claims, judgments or settlements against or owed by Intellia (or any of its Affiliates) and no pending or, to Intellia’s knowledge, threatened (in writing) claims or litigation, in each case, to which Intellia (or its Affiliates, or, to its or their knowledge, any of the counterparties to the Intellia Existing Third Party Agreements) is a party or threatened (in writing) party relating to the Intellia Intellectual Property or otherwise challenging Intellia’s ownership or control of the Intellia Intellectual Property;
(b) Schedule 1.47 sets forth a true, correct and complete list of Intellia Patent Rights existing as of the Effective Date. To the knowledge of the individuals listed on Schedule 12.2(b) [***], the Intellia Patent Rights exist and are not invalid or unenforceable, in whole or in part;
(c) Intellia solely owns all Intellia Intellectual Property, except for such Intellia IP as Intellia Controls pursuant to the Intellia Existing Third Party Agreements; and Intellia Controls all of the Patent Rights set forth on Schedule 1.47; and with respect to any Patent Rights owned by Caribou (as set forth on Schedule 1.47), Intellia has exclusive rights to license such Patent Rights as set forth in this Agreement and no Third Party (including Caribou and UC) has rights to practice such Patent Rights to make, have made, import, use, sell, offer to sell, develop, manufacture, commercialize, other otherwise exploit CPs within the licensed field as described in the Caribou-Intellia License Agreement;
(d) The Intellia Existing Third Party Agreements constitute all the agreements with Third Parties pursuant to which Intellia has in-licensed, or otherwise obtained rights, with respect to activities hereunder, including CRISPR-Cas, Targets, delivery technologies and CPs and Schedule 1.50 sets forth a true, correct and complete list of all agreements pursuant to which Intellia has in-licensed any Intellectual Property related to activities hereunder, including CRISPR-Cas, Targets, delivery technologies and CPs;
(e) Intellia is not aware of any claim made in writing against it asserting the invalidity, misuse, unregisterability, unenforceability or non-infringement of any of the Intellia Patent Rights;
(f) Neither Intellia nor any of its Affiliates is or has been a party to any agreement with the U.S. federal government or an agency thereof pursuant to which the U.S. federal government or such agency provided funding for the development of the Intellia Intellectual Property;
(g) Neither Intellia nor any of its Affiliates has received any written notification from a Third Party that the use of any Intellia Intellectual Property infringes or misappropriates the Patent Rights or Know-How owned or controlled by such Third Party,;
(h) The Intellia Intellectual Property is not subject to any liens or encumbrances or other grants in favor of any Third Party that conflicts with the rights or licenses granted to Regeneron under this Agreement;
(i) To the knowledge of the individuals listed on Schedule 12.2(b) [***], the conception, discovery, development or reduction to practice of Intellia Intellectual Property has not constituted or involved misappropriation of Intellectual Property or rights of any Person;
(j) Except with respect to lack of agreement among the co-owners of the Intellectual Property covered by the UC Technology Agreement (e.g., Regents of the University of California, University of Vienna and Emmanuelle Charpentier) and their licensees (e.g., Caribou, Intellia, CRISPR Therapeutics and/or Tracr Hematology) resolving ownership of, and licensing rights regarding, the Intellectual Property covered by the UC Technology Agreement, Intellia has a right and license to use the Patent Rights that are licensed to Intellia (directly or indirectly) under the UC Technology License on a worldwide basis, and Intellia is granting a sublicense to such Patent Rights to Regeneron for use on a worldwide basis;; and
(k) Neither Intellia nor any of its Affiliates has granted any rights to any Liver Targets (or any products that may be Directed to any Liver Target) to any Third Party in the Field.
12.3 Covenants.
(a) Each Party hereby covenants to the other Party as follows: (i) it will not during the Term grant any right or license to any Third Party which would be in conflict with the rights granted to the other Party under this Agreement, and (ii) neither Party will use the Patent Rights, Know-How, materials, or Confidential Information of the other Party outside the scope of the licenses and rights granted to it under this Agreement.
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(b) Intellia (on behalf of itself and its Affiliates) hereby further covenants to Regeneron that it (and they) shall not assign, transfer, convey or otherwise grant to any Person or otherwise encumber (including through lien, charge, security interest, mortgage, encumbrance or otherwise) any rights to any Intellia Know-How or Intellia Patent Rights, in any manner that would conflict with, or would adversely interfere with, the grant of the rights or licenses to Regeneron hereunder.
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12.4 Intellia Third Party Agreements.
(a) With respect to the Intellia Existing Third Party Agreements, Intellia hereby represents and warrants as of the Effective Date, and with respect to each New Intellia Platform License, Intellia hereby represents and warrants as of the date that Regeneron provides notice that each such New Intellia Platform License should be included in the license granted hereunder, subject to any exceptions set forth in the applicable written notice required by Section 7.3(d) for such New Intellia Platform License, and, to the extent applicable, covenants during the Term, to Regeneron that:
(i) Intellia has the right, power and authority to grant to Regeneron the rights granted to Regeneron hereunder with respect to the Intellia Existing Third Party Agreements and New Intellia Platform Licenses, as applicable. In particular, the grant of such sublicense requires no consent, waiver or other action [***] by any party to the Intellia Existing Third Party Agreements or New Intellia Platform Licenses (except, with respect to the New Intellia Platform Licenses, as disclosed to Regeneron in writing by Intellia [***]), as applicable, and the rights and obligations of Regeneron set forth in this Agreement do not contravene nor are they inconsistent with or in conflict with the terms of any Intellia Existing Third Party Agreement or New Intellia Platform License, as applicable;
(ii) Intellia has provided to Regeneron an accurate, true and complete copy of each of the Intellia Existing Third Party Agreements and New Intellia Platform Licenses, as applicable, as amended to date, and each of the Intellia Existing Third Party Agreements [***], New Intellia Platform Licenses, as applicable, is in full force and effect and Intellia is not in breach or default in the performance of its obligations under any of the Intellia Existing Third Party Agreements or New Intellia Platform Licenses, as applicable. Intellia has not received any notice from any Third Party of any breach, default or non-compliance of Intellia under the terms of any of the Intellia Existing Third Party Agreements or New Intellia Platform Licenses, as applicable. There have been no amendments or other modification to any of the Intellia Existing Third Party Agreements or New Intellia Platform Licenses, as applicable, except as have been disclosed to Regeneron in writing;
(iii) Intellia shall fulfill all of its material obligations, including its payment obligations, under any Intellia Existing Third Party Agreement and New Intellia Platform License, as applicable; and
(iv) Intellia shall not terminate, waive, amend or take any action or omit to take any action [***] that would alter any of Intellia’s rights under any Intellia Existing Third Party Agreement or New Intellia Platform License, as applicable, in any manner that adversely affects, or would reasonably be expected to adversely affect, Regeneron’s rights and benefits under this Agreement or would otherwise impose additional obligations on Regeneron. [***]
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12.5 Compliance with Laws. Each Party agrees, in its performance of this Agreement, to comply, and to cause its Affiliates to comply, with all Applicable Laws, including the FCPA, U.S. Export Control Laws and Anti-Corruption Laws. Each Party shall take no action that would cause the other Party to be in violation of the FCPA, U.S. Export Control Laws or any other applicable Anti-Corruption Laws. Further, each Party shall immediately notify the other Party if such Party has any information or suspicion that there may be a violation of the FCPA or any other Anti-Corruption Law in connection with the performance of this Agreement.
12.6 Disclaimer of Warranties. EXCEPT AS OTHERWISE SPECIFICALLY AND EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, CONCERNING THE SUCCESS OR POTENTIAL SUCCESS OF THE TECHNOLOGY COLLABORATION OR THE DEVELOPMENT, COMMERCIALIZATION, MARKETING OR SALE OF ANY REGENERON PRODUCT. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
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12.7 Exclusivity. The Parties hereby agree as follows:
(a) Liver Exclusivity. During the Target Draft Period, except with respect to (i) Intellia Liver Products, (ii) Intellia CPs Directed to Declined Targets, (iii) Intellia CPs Directed to Intellia Reserved Liver Targets, and (iv) the conduct of activities by Intellia hereunder in accordance with an applicable Plan, neither Intellia nor any of its Affiliates shall, on its or their own or with or through a Third Party assist or work with or through any Third Party to, or grant any licenses or other rights to any Third Party to, research, develop, manufacture or commercialize any Liver Product (or any portion thereof, and whether alone or in combination with other products). For clarity, nothing in this Section 12.7(a) shall restrict or limit or otherwise be deemed to restrict or limit Intellia’s rights to research, develop, manufacture, commercialize or otherwise exploit (whether alone or through a Third Party) Intellia CPs (other than Regeneron Products) Directed to Declined Targets and Intellia Reserved Liver Targets.
(b) Regeneron Target Exclusivity. Except with respect to (i) the Reserved Ex-Vivo Field and (ii) the conduct of activities by Intellia hereunder in accordance with an applicable Plan, Intellia and its Affiliates will not, on its or their own, or by assisting or working with or through any Third Party (or otherwise granting any licenses or other rights to any Third Party to), research, develop, manufacture or commercialize any CP, whether in the Field or in the Ex-Vivo Field, but not the Reserved Ex-Vivo Field, that is Directed to any Regeneron Target or any Regeneron Evaluation Target. Nothing in this Section 12.7(b) shall be deemed to restrict Intellia or its Affiliates from researching, developing, manufacturing or commercializing any CP Directed to a Target other than a Regeneron Target or Regeneron Evaluation Target [***].
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ARTICLE 13
CONFIDENTIALITY
13.1 Confidential Information.
(a) Each Party and its Affiliates (in such capacity, collectively, the “Receiving Party”) shall keep confidential, and other than as provided herein, shall not disclose, directly or indirectly, any proprietary or confidential information, including any proprietary data, inventions, documents, ideas, information, discoveries, or materials, Controlled by the other Party or its Affiliates (in such capacity, collectively, the “Disclosing Party”), whether in tangible or intangible form, including Regeneron Contributed IP and Intellia Know-How, that is disclosed pursuant to this Agreement (the “Confidential Information”).
(b) Each Party and its Affiliates shall use the Confidential Information of the other Party and its Affiliates solely for the purpose of exercising its rights and performing its obligations hereunder. For purposes of this Agreement, all proprietary or confidential information disclosed by a Party under the terms of the Confidentiality Agreement between the Parties [***] (“CDA”) is hereby deemed Confidential Information of such Party and treated as if disclosed hereunder and shall be subject to the terms of this Agreement.
(c) Each Party covenants that neither it nor any of its respective Affiliates shall disclose any Confidential Information of the other Party to any Third Party except (i) to its directors, officers, employees, agents, consultants and subcontractors to the extent necessary to perform such Party’s obligations, or exercise such Party’s rights, hereunder, provided such directors, officers, employees, agents, consultants, subcontractors or other Persons are subject to confidentiality obligations applicable to such Confidential Information no less strict than those set forth herein, (ii) as approved by the Disclosing Party hereunder in writing, (iii) as set forth elsewhere in this Agreement, including to subcontractors and sublicensees in accordance with Section 7.2, (iv) to file or prosecute Patent Rights in accordance with this Agreement, (v) to prosecute or defend litigation as permitted by this Agreement, (vi) to any Governmental Authority or other Regulatory Authority in order to gain or maintain approval to conduct clinical trials or to market Regeneron Products, but such disclosure may be only to the extent reasonably necessary to obtain such approvals (subject to the applicable provisions of Articles 3, 4, 5 and 6, as and to the extent applicable), or (vii) as required by Applicable Law, valid order of a court of competent jurisdictions, or other judicial or administrative proceedings of any Governmental Authority requires to be disclosed, provided that in the case of (v), (vi) or (vii) the Receiving Party gives the Disclosing Party reasonable advance notice (if practical) of such required disclosure in sufficient time to enable the Disclosing Party to seek confidential treatment for such information, and provided further that the Receiving Party provides all reasonable cooperation to assist the Disclosing Party to protect such information and limits the disclosure to that information which is required by Applicable Law to be disclosed, and also provided that, such information shall still be treated as Confidential Information for all purposes other than satisfaction of such disclosure requirement.
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(d) [***] Regeneron Product Inventions to the extent jointly owned by the Parties as provided in Section 10.1(a), [***] shall be Confidential Information of both Parties [***] may be utilized as provided in (c) above, as well as, the following: (i) used by either Party (or their respective subcontractors, licensees or sublicensees) but not disclosed to Third Parties except as other Confidential Information may be disclosed by the Receiving Party (a) as expressly permitted herein (including through the publication procedures set forth in Section 13.4) or (b) with the prior written consent of the other Party; (ii) disclosed under commercially reasonable confidentiality terms and solely to the extent reasonably necessary to any potential or actual investor, advisor, lender, investment banker, financing partner, or acquirer; and (iii) disclosed under confidentiality obligations at least as restrictive as, or substantially the same as, those set forth herein (except with respect to the duration of such obligations, which shall not be less than [***] years from the date that the agreement under which such information is disclosed), to any actual or prospective subcontractor, licensee or sublicensee. Notwithstanding the foregoing or anything to the contrary contained herein, (I) Regeneron Materials Improvements, Regeneron Product Inventions to the extent solely owned by Regeneron, and [***] and (II) any other Confidential Information to the extent related to Regeneron Products or Regeneron Targets or Regeneron Evaluation Targets, shall be the Confidential Information of Regeneron, and Intellia Know-How [***], Intellia CRISPR-Cas IP and Intellia Material Improvements shall be the Confidential Information of Intellia. The information in any Option Package delivered by Intellia shall be the Confidential Information of Intellia and the information in any Option Package delivered by Regeneron shall be the Confidential Information of Regeneron.
13.2 Exceptions. Notwithstanding Section 13.1, Confidential Information shall not be deemed to include information (and such information shall not be considered Confidential Information under this Agreement) to the extent that it can be established by written documentation by the Receiving Party that such information: (i) was already in the public domain prior to time of disclosure by the Disclosing Party or becomes publicly known through no act, omission or fault of the Receiving Party or any Person to whom the Receiving Party provided such information; (ii) is or was already lawfully, and not under an obligation of confidentiality owed to the Disclosing Party, in the possession of the Receiving Party prior to the time of disclosure by the Disclosing Party; provided that the Receiving Party did not initially generate such information and assign its rights to such information to the Disclosing Party in accordance with the terms of this Agreement; (iii) is disclosed to the Receiving Party on an unrestricted basis from a Third Party not under an obligation of confidentiality to the Disclosing Party with respect to such information; or (iv) has been independently created by the Receiving Party, as evidenced by written or electronic documentation, without any aid, application or use of the Disclosing Party’s Confidential Information. Specific aspects or details of Confidential Information will not be deemed to be within the public knowledge or in the prior possession of a Person merely because such aspects or details of the Confidential Information are embraced by general disclosures in the public domain. Further, any combination of Confidential Information will not be considered in the public domain or in the possession of the Receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the Receiving Party unless the combination and its principles are in the public domain or in the possession of the Receiving Party.
13.3 Injunctive Relief. The Parties hereby acknowledge and agree that the rights of the Parties under this Article 13 are special, unique and of extraordinary character, and that if any Party refuses or otherwise fails to act, or to cause its Affiliates to act, in accordance with the provisions of this Agreement, such refusal or failure may result in irreparable injury to the other Party, the exact amount of which would be difficult to ascertain or estimate and the remedies at law for which would not be reasonable or adequate compensation. Accordingly, if any Party refuses or otherwise fails to act, or to cause its Affiliates to act, in accordance with the provisions of this Article 13, then, in addition to any other remedy which may be available to any damaged Party at law or in equity, such damaged Party will be entitled to seek specific performance and injunctive relief, without posting bond or other security, and without the necessity of proving actual or threatened damages, which remedy such damaged party will be entitled to seek in any court of competent jurisdiction.
13.4 Publications.
(a) Technology Collaboration. Subject to the prior written consent of the JSC and subject further to Sections 13.4(b) and 13.4(c), either Party may issue publications in scientific journals and make scientific presentations regarding [***] with the order and inclusion of Intellia and Regeneron authors to be agreed upon in accordance with International Committee of Medical Journal Editors (ICJME) Standards or other mutually agreed upon applicable standards and in compliance with any applicable rules or policies of the publisher of such publication.
(b) Regeneron Product, Regeneron Targets and Regeneron Product Inventions. Subject to Section 13.4(c), Regeneron shall have the sole right to issue and control all publications in scientific journals and make scientific presentations regarding Regeneron Products, Regeneron Targets and the Regeneron Product Inventions that are solely owned by Regeneron.
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(c) Review Rights. If the JSC approves a publication under Section 13.4(a), or Regeneron intends to make a publication under Section 13.4(b), the publishing Party shall provide the non-publishing Party an advance copy of any such proposed publication prior to submission for publication or disclosure. The non-publishing Party shall have a reasonable opportunity to (i) recommend any changes to prevent disclosure of its Confidential Information (including any joint Confidential Information) and (ii) file a Patent Application related to such Confidential Information, if any. The publishing Party shall remove any such Confidential Information, and shall not make any such publication if the non-publishing Party requests a delay of up to sixty (60) days to enable it to file Patent Applications until expiration of such [***] day period.
13.5 Disclosures Concerning this Agreement.
(a) Press Releases. The Parties, acting reasonably, will mutually agree upon the contents of separate press releases announcing this Agreement. Intellia and Regeneron agree not to (and to ensure that their respective Affiliates do not) issue any other press releases or public announcements concerning this Agreement or any other activities contemplated hereunder without the prior written consent of the other Party (which shall not be unreasonably conditioned, withheld or delayed), except as required by a Governmental Authority or Applicable Law (including the rules and regulations of any stock exchange or trading market on which a Party’s (or its parent entity’s) securities are or will be traded); provided, that the Party required to disclose such information shall (i) use reasonable efforts to provide the other Party advance notice of such required disclosure and an opportunity to review and comment on such proposed disclosure (which comments shall be considered in good faith by the disclosing Party), (ii) reasonably cooperate with the other Party to assist the other Party to protect the confidential information of the other Party and (iii) limit the disclosure to that information which is required to be disclosed. Notwithstanding the foregoing, without prior submission to or approval of the other Party, either Party may issue press releases or public announcements which incorporate information concerning this Agreement or any activities contemplated hereunder which information was included in a press release or public disclosure which was previously disclosed in accordance with the terms of this Agreement.
(b) Agreement Terms. Except as required by a Governmental Authority or Applicable Law (including the rules and regulations of any stock exchange or trading market on which a Party’s (or its parent entity’s) securities are or will be traded), or in connection with the enforcement of this Agreement, neither Party (or their respective Affiliates) shall disclose to any Third Party, under any circumstances, any terms of this Agreement [***] that have not been previously disclosed publicly in accordance with this Article 13 without the prior written consent of the other Party, which consent shall not be unreasonably conditioned, withheld or delayed; except for disclosures thereof pursuant to Section 7.3(f) or (i) to potential or actual investors, advisors, lenders, investment bankers, financing partners, acquirers, subcontractors, licensees or sublicensees that are bound by obligations of confidentiality and nonuse substantially equivalent in scope to those included herein with a term of at least [***] years (but of shorter duration if customary in connection with any disclosure to a potential or actual investor, advisor, lender, investment banker or financing partner) or (ii) to Persons that are identified in Section 13.1(c)(i) who are subject to the confidentiality obligations specified therein; provided that, in the event of any such disclosure to a Third Party who is a potential or actual investor, advisor, lender, financing partner, acquirer, licensee or sublicensee (A) this Agreement shall only be initially disclosed in the Redacted Agreement form to such Third Party and its advisors and (B) after negotiations with any such Third Party have progressed so that the Disclosing Party reasonably and in good faith believes it will execute a definitive agreement with such Third Party within [***] Business Days, this Agreement may be disclosed in an unredacted form to such Third Party and its advisors as and to the extent relevant to such Third Party [***].
(c) Communications General. The Parties, through the JSC, shall establish mechanisms and procedures to ensure that there are coordinated timely corporate communications relating to this Agreement, including the Regeneron Products.
(d) Publicly Traded Company. Intellia acknowledges that Regeneron, as a publicly traded company, is legally obligated to make timely disclosures of all material events relating to its business. Regeneron acknowledges that in the future, Intellia may become a publicly traded company, and upon such occurrence, Intellia shall be legally obligated to make timely disclosures of all material events relating to its business. Therefore, the Parties acknowledge that either or both Parties may be obligated to file a copy of this Agreement with the United States Securities and Exchange Commission or its equivalent (the “SEC”). The Parties agree that the form of the redacted version of this Agreement shall be mutually agreed by the Parties in good faith within [***] days of the Effective Date (the “Redacted Agreement”) may be used as its filing (or submission) of this Agreement to the SEC, and the Parties shall cooperate with one another and use reasonable efforts to obtain confidential treatment of confidential information (including any information that constitutes a trade secret or a sensitive commercial term), including with respect to any comments received from the SEC with respect to the proposed redactions. The Parties further agree that, following the initial filing (or submission) of the Redacted Agreement, the filing Party will (i) promptly deliver to the non-filing Party any written correspondence received by the filing Party or its representatives from the SEC with respect to such confidential treatment request and promptly advise the non-filing Party of any other communications between the filing Party or its representatives with the SEC with respect to such confidential treatment request, allowing a reasonable time for the non-filing Party to review and comment; (ii) upon the written request of the non-filing Party, request an appropriate extension of the term of the confidential treatment period; and (iii) if the SEC requests any changes to the
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redactions set forth in the Redacted Agreement, to the extent reasonably practicable, not agree to any changes to the Redacted Agreement without first discussing such changes with the non-filing Party and taking the non-filing Party’s comments into consideration when deciding whether to agree to such changes. In addition, each Party will provide the other Party with an advance copy of any securities filings in which the Agreement is discussed or disclosed, in each case only to the extent describing this Agreement or referencing the other Party, allowing a reasonable time (but in no event less than [***] Business Days) for the other Party to review and comment, and will reasonably consider and, to the extent permitted by a Governmental Authority, or Applicable Law (including the rules and regulations of any stock exchange or trading market on which a Party’s (or its parent entity’s) securities are or will be traded), incorporate the other Party’s timely comments thereon [***].
ARTICLE 14
INDEMNITY
14.1 Indemnity and Insurance.
(a) Intellia’ s Indemnification Obligations. Intellia will indemnify and hold harmless Regeneron, its Affiliates and their respective officers, directors, employees and agents (“Regeneron Indemnitees”) from and against all loss, liabilities, damages, penalties, fines and expenses, including reasonable attorneys’ fees and costs (collectively, “Damages”), incurred by any Regeneron Indemnitee as a result of a Third Party’s claim, action, suit, settlement, or proceeding (each, a “Claim”) against a Regeneron Indemnitee that arises out of or results from:
(i) [***] of Intellia or any other Intellia Indemnitee(s) in its performance under the Technology Collaboration, Regeneron Target Evaluation Program, the Intellia Target Evaluation Program or Product R&D Program or other activity under this Agreement;
(ii) breach by Intellia of this Agreement (including the inaccuracy of any representation or warranty made by Intellia in this Agreement); or
(iii) the research, development, manufacture or commercialization of any CP by or on behalf of Intellia (or any of its Affiliates or (sub)licensees) (but excluding such activities, if any, conducted by or on behalf of Regeneron or its Affiliate);
in each case, except to the extent such Claim (A) arises out of or results from (1) a breach of this Agreement by Regeneron (including the inaccuracy of any representation or warranty made by Regeneron in this Agreement), or (2) [***] by Regeneron or any other Regeneron Indemnitee or (B) is subject to Regeneron’s indemnification obligations under Section 14.1(b)(i) or (ii) below.
(b) Regeneron’s Indemnification Obligations. Regeneron will indemnify and hold harmless Intellia, its Affiliates and their respective officers, directors, employees and agents (“Intellia Indemnitees”) from and against all Damages incurred by any Intellia Indemnitee as a result of a Claim against an Intellia Indemnitee that arises out of or results from:
(i) [***] of any Regeneron or any other Regeneron Indemnitee(s) in its performance under the Technology Collaboration, Regeneron Target Evaluation Program, the Intellia Target Evaluation Program or Product R&D Program or other activity under this Agreement;
(ii) breach by Regeneron of this Agreement (including the inaccuracy of any representation or warranty made by Regeneron in this Agreement); or
(iii) the research, development, manufacture or commercialization of any Regeneron Product by or on behalf of Regeneron (or any of its Affiliates) (but excluding such activities conducted by or on behalf of Intellia or its Affiliate);
in each case, except to the extent such Claim (A) arises out of or results from (1) a breach of this Agreement by Intellia (including the inaccuracy of any representation or warranty made by Intellia in this Agreement), or (2) [***] by Intellia or any other Intellia Indemnitee or (B) is subject to Intellia’s indemnification obligations under Section 14.1(a)(i) or (ii) above.
14.2 Indemnity Procedure.
(a) Notification. The Party entitled to indemnification under this ARTICLE 14 (an “Indemnified Party”) shall notify the Party potentially responsible for such indemnification (the “Indemnifying Party”) within [***] Business Days of becoming aware of any Claim asserted or threatened in writing against the Indemnified Party which could give rise to a right of indemnification under this
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Agreement; provided, however, that the failure to give such notice shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that such failure materially prejudices the Indemnifying Party.
(b) Control of Defense. If the Indemnifying Party elects in writing to the Indemnified Party that it will assume control of the defense of such Claim, then except as otherwise set forth in Section 10.9, the Indemnifying Party shall have the right to defend, at its sole cost and expense, such Claim by all appropriate proceedings, which proceedings shall be prosecuted diligently by the Indemnifying Party to a final conclusion or settled at the discretion of the Indemnifying Party; provided, however, that the Indemnifying Party may not enter into any compromise or settlement unless (i) such compromise or settlement includes as an unconditional term thereof, the giving by each claimant or plaintiff to the Indemnified Party of a release from all liability in respect of such claim; and (ii) the Indemnified Party consents to such compromise or settlement, which consent shall not be conditioned, withheld or delayed unless such compromise or settlement involves (A) any admission of legal wrongdoing by the Indemnified Party, (B) any payment by the Indemnified Party that is not indemnified hereunder or (C) the imposition of any equitable relief against the Indemnified Party. If the Indemnifying Party does not elect to assume control of the defense of such Claim within [***] days of its receipt of notice thereof, or if the Indemnifying Party elects in writing to the Indemnified Party to cease maintaining control of the defense of such Claim, the Indemnified Party shall have the right, at the expense of the Indemnifying Party, upon at least [***] Business Days’ prior written notice to the Indemnifying Party of its intent to do so, to undertake the defense of such Claim for the account of the Indemnifying Party (with counsel reasonably selected by the Indemnified Party and approved by the Indemnifying Party, such approval not unreasonably conditioned, withheld or delayed), provided, that the Indemnified Party shall keep the Indemnifying Party apprised of all material developments with respect to such Claim and promptly provide the Indemnifying Party with copies of all correspondence and documents exchanged by the Indemnified Party and the opposing party(ies) to such Claim. The Indemnified Party may not compromise or settle such Claim without the prior written consent of the Indemnifying Party, such consent not to be unreasonably conditioned, withheld or delayed.
(c) Indemnified Party’s Participation. The Indemnified Party shall cooperate with the Indemnifying Party in, and may participate in, but not control, any defense or settlement of any Claim controlled by the Indemnifying Party pursuant to this Section 14.2 and shall bear its own costs and expenses with respect to such participation; provided, however, that the Indemnifying Party shall bear such costs and expenses if counsel for the Indemnifying Party shall have reasonably determined that such counsel may not properly represent both the Indemnifying Party and the Indemnified Party.
14.3 Insurance. During the Term and for a minimum period of [***] years thereafter and for an otherwise longer period as may be required by Applicable Law, each of Regeneron and Intellia will (i) use Commercially Reasonable Efforts to procure and maintain appropriate commercial general liability and product liability insurance in amounts appropriate for the industry and considering the activities being conducted or (ii) with respect to Regeneron as of the Effective Date, or Intellia as such time as Intellia and its Affiliates have annual revenue in excess of [***], procure and maintain adequate insurance by means of self-insurance in such amounts and on such terms as are consistent with normal business practices of large pharmaceutical companies in the life sciences industry. Such insurance shall insure against liability arising from this Agreement on the part of Regeneron or Intellia, respectively, or any of their respective Affiliates, due to injury, disability or death of any person or persons, or property damage arising from activities performed in connection with this Agreement. It is understood that such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under Section 14.1 or otherwise. Any insurance proceeds received by a Party in connection with any Damages shall be retained by such Party and shall not reduce any obligation of the other Party.
ARTICLE 15
FORCE MAJEURE
Neither Party will be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including embargoes, acts of terrorism, acts of war (whether war be declared or not), insurrections, change in Applicable Law, strikes, riots, civil commotions or acts of God (“Force Majeure”). Such excuse from liability and responsibility shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the affected Party has not caused such event(s) to occur. The affected Party will notify the other Party of such Force Majeure circumstances as soon as reasonably practical and will make every reasonable effort to mitigate the effects of such Force Majeure circumstances.
ARTICLE 16
TERM AND TERMINATION
16.1 Term. The “Term” of this Agreement shall begin on the Effective Date and will expire on the expiration of the final Product Term, unless this Agreement is earlier terminated in its entirety in accordance with this ARTICLE 16, in which event the
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Term shall end on the effective date of such termination. For purposes of this ARTICLE 16, the “Product Term” shall mean, with respect to a given Regeneron Product, the expiration of the Royalty Term with respect to such Regeneron Product. Upon the expiration of the Product Term for a given Regeneron Product the licenses and rights under Sections 6.3 and 6.4 with respect to such Regeneron Product shall become fully paid-up, perpetual and irrevocable licenses.
16.2 Termination for Insolvency. A Party shall have the right to terminate this Agreement in its entirety immediately upon written notice to the other Party if, at any time, (a) the other Party shall file in any court or agency pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the other Party or of its assets, or (b) if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within [***] days after the filing thereof, or (c) if the other Party shall propose or be a party to any dissolution or liquidation proceedings, or (d) if the other Party shall make an assignment for the benefit of creditors. In the event that this Agreement is terminated or rejected by a Party or its receiver or trustee under applicable bankruptcy laws due to such Party’s bankruptcy, then all rights and licenses granted under or pursuant to this Agreement by such Party to the other Party are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code and any similar laws in any other country, licenses of rights to “intellectual property” as defined under Section 101(52) of the U.S. Bankruptcy Code. The Parties agree that all intellectual property rights licensed hereunder, including any Patent Rights in any country of a Party covered by the license grants under this Agreement, are part of the “intellectual property” as defined under Section 101(35(A)) of the Bankruptcy Code subject to the protections afforded the non-terminating Party under Section 365(n) of the Bankruptcy Code, and any similar law or regulation in any other country.
16.3 Termination of Regeneron Target by Regeneron for Convenience. At any time, upon [***] days advanced written notice, on a Regeneron Target-by-Regeneron Target basis, Regeneron may terminate this Agreement with respect to such Regeneron Target; provided, that, Regeneron’s obligation to use Commercially Reasonably Efforts to develop and commercialize Regeneron Products with respect to a given Regeneron Target shall be immediately suspended (and shall be of no further force or effect) following its delivery of such a notice of termination with respect to such terminated Regeneron Target. For clarity, this Agreement will remain in full force and effect with respect to any other Regeneron Target not terminated. In the event that Regeneron terminates all Regeneron Targets pursuant to this Section 16.3, then this Agreement shall terminate in its entirety.
16.4 Breach of the Agreement.
(a) Either Party may terminate this Agreement in accordance with the remainder of this Section 16.4, either in its entirety or with respect to the Technology Collaboration or one or more Regeneron Targets, if, as applicable, the other Party commits a material breach of this Agreement (in its entirety or with respect to the Technology Collaboration or with respect to one or more Regeneron Targets, as applicable), [***] as follows:
(i) if such material breach of this Agreement is with respect to the Agreement in its entirety, then this Agreement may be terminated in its entirety (but only if the material breach affects the entirety of this Agreement);
(ii) if such material breach of this Agreement is with respect to the Technology Collaboration, then this Agreement may be terminated only with respect to the Technology Collaboration; or
(iii) if such material breach of this Agreement is with respect to one or more Regeneron Targets, then this Agreement may be terminated only with respect to such Regeneron Target(s). For clarity, when a material breach relates only to certain Regeneron Targets, termination pursuant to this Section 16.4(a)(iii) shall be solely with respect to the relevant Regeneron Target(s) to which the material breach relates.
(b) In the event that one Party (the “Alleging Party”) believes that the other Party (the “Alleged Party”) has committed a material breach, the Alleging Party shall provide written notice (“Breach Notice”) to the Alleged Party describing in an appropriate detail the nature of such material breach and whether the Alleging Party proposes to terminate this Agreement pursuant to Section 16.4(a)(i), 16.4(a)(ii), or 16.4(a)(iii).
(i) The Alleged Party shall have [***] days from its receipt of the Breach Notice to cure such material breach; provided that if such breach is not curable within the foregoing cure period, then such cure period will be extended for a period of up to [***] additional days (for a total cure period of [***] days) if the Alleged Party prepares and provides to the Alleging Party a reasonable written plan for curing such breach and uses Commercially Reasonable Efforts to cure such breach in accordance with such written plan. In the event such breach is not cured within such [***] day period, as applicable, this Agreement or portion thereof, as applicable, may be terminated immediately by the Alleging Party.
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(c) In the event of a good faith dispute as to the existence or materiality of a breach specified in such notice, including any good faith dispute as to payments due under this Agreement, and the Alleged Party provides the Alleging Party notice of such dispute within such [***] day period, the cure period will be tolled from the date the Alleged Party notifies the Alleging Party of such good faith dispute and through the diligent resolution of such dispute in accordance with the applicable provisions of this Agreement (provided that if such dispute relates to payment, the cure period will only apply with respect to payment of disputed amounts, and not with respect to undisputed amounts). It is understood and agreed that during the pendency of such dispute, all of the terms and conditions of this Agreement will remain in effect and the Parties will continue to perform all of their respective obligations, and retain their respective rights, hereunder. Termination will become effective, if at all, following a final and conclusive determination pursuant to Section 17.1 (c)that the Alleged Party committed such material breach and failed to cure the same during the applicable cure period.
16.5 Termination for IP Challenge. If Regeneron or any of its Affiliates Challenges an Intellia Background Patent Right or any Patent Rights within the Intellia CRISPR-Cas IP in any country in the world (such Patent Right, a “Challenged Patent Right”), then Intellia may, following written notice to Regeneron and provided that Regeneron or its Affiliate (and without reference to Section 17.1(b)) does not withdraw such Challenge within [***] days of receipt of such notice, in its sole discretion either (a) exclude such Challenged Patent Right from the scope of the Patent Rights licensed hereunder or (b) except to the extent the following is unenforceable under the law of a particular jurisdiction where a patent application within the Challenged Patent Rights is pending or a patent within the Challenged Patent Rights is issued, terminate this Agreement solely with respect to all Regeneron Products Directed to a Regeneron Target that is Covered by such Challenged Patent Right, by providing written notice of termination to Regeneron. For purposes of this Section 16.5, (i) “Challenge” means [***].
16.6 Termination for Suspension of Development.
(a) On a Regeneron Target-by-Regeneron Target basis, if during the period after selection of such Target as a Regeneron Target but prior to the First Commercial Sale of a Regeneron Product Directed to such Regeneron Target, Regeneron elects to permanently discontinue the development of all Regeneron Products Directed to such Regeneron Target (other than pursuant to Section 4.2(b)) it shall provide written notice to Intellia which will automatically be treated as Regeneron’s submission of written notice pursuant to Section 16.3 with respect to such Regeneron Target (a “Discontinuation Notice”).
(b) [***].
(c) Within [***] days of Regeneron’s provision of the Discontinuation Notice [***], Intellia may deliver written notice to Regeneron [***] indicating that that the Agreement be terminated with respect to such Regeneron Target (“Termination for Suspension Notice”).
(d) If Intellia delivers the Termination for Suspension Notice in accordance with Section 16.6(c) for the applicable Regeneron Target, then this Agreement shall terminate solely with respect to such Regeneron Target, which termination shall be effective [***] days after the delivery of the Termination for Suspension Notice [***]. If Intellia does not deliver the Termination for Suspension Notice in accordance with Section 16.6(c) for the applicable Regeneron Target, then this Agreement shall continue in full force and effect with respect to such Regeneron Target.
(e) For clarity, and notwithstanding anything to the contrary herein, this Section 16.6 shall be of no further force or effect, on a Regeneron Target-by-Regeneron Target basis, from and after the First Commercial Sale of a Regeneron Product Directed to such Regeneron Target.
16.7 Effects of Termination of Agreement with respect to a given Regeneron Target. Without limiting any other legal or equitable remedies that either Party may have, if this Agreement is terminated for any reason, then the provisions of this Section 16.7 will apply (but if this Agreement is terminated in part solely with respect to a Regeneron Target, then this Section 16.7 shall apply only with respect to such Terminated Regeneron Target) (each Regeneron Target that is subject to such termination, a “Terminated Regeneron Target”):
(a) The licenses granted to the Parties with respect to the Terminated Regeneron Target(s) under Sections [***], as and to the extent applicable, shall terminate and, as and to the extent applicable, the Product R&D Program pertaining to the Terminated Regeneron Target shall immediately terminate. In addition to the licenses that terminate pursuant to this Section 16.7(a) above and Section 16.8(a) below, in the event this Agreement is terminated as a whole, the licenses granted to the Parties under Sections [***] shall terminate.
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(b) All Intellia Options granted under this Agreement will terminate with respect to any Terminated Regeneron Targets, and all Regeneron Options and all Intellia Options shall terminate upon termination of this Agreement as a whole (unless earlier expired or terminated in accordance herewith).
(c) Effective upon the effective date of termination, Regeneron will grant (without any further action required on the part of Intellia) to Intellia, a worldwide license, with the right to grant sublicenses through multiple tiers (in accordance with Section 7.2(c), provided further that Intellia shall only have the right to sublicense to Third Parties for those Reversion Products that are Intellia CPs), under the applicable Reversion IP, to research, develop, make, have made, use, sell, offer for sale, import and commercially exploit the applicable Reversion Products Directed to the Terminated Regeneron Target (i.e., such license grant is specific to Reversion Products Directed to the Terminated Regeneron Target) for use in the Reversion Field (the “Reversion License”), subject to the following terms and conditions:
(i) For purposes hereof, “Reversion IP” means any Patents or Know-How Controlled by Regeneron or any its Affiliates as of the date of notice of termination that [***] For purposes hereof, “Reversion Products” shall mean [***].
(ii) The Reversion License shall be (i) exclusive (even as to Regeneron) with respect to all Reversion IP [***], and (ii) non-exclusive with respect to all other Reversion IP [***].
(iii) Except as expressly provided for in this Section 16.7(c), nothing in this Agreement grants Intellia any right, title or interest in or to any intellectual property rights, materials or Confidential Information of Regeneron or any of its Affiliates (either expressly or by implication or estoppel) with respect to the Terminated Regeneron Targets and Reversion Products (except, to the extent applicable, Sections 3.6, 4.1(a)(v)(3)(c) or 10.1(b)). Except as expressly provided in this Section 16.7(c), Intellia will not be deemed by this Section 16.7(c) to have been granted any license or other rights to Regeneron’s Patent Rights or Know-How, either expressly or by implication, estoppel or otherwise (except, to the extent applicable, Sections 3.6, 4.1(a)(v)(3)(c) or 10.1(b)).
(iv) The Reversion License shall be subject to the payment by Intellia to Regeneron of the royalties on Net Sales of a Reversion Product at the rate set forth in the table below based on the stage of the most advanced Reversion Product Directed to the applicable Terminated Regeneron Target under such Reversion License as of the effective date of termination with respect to such Terminated Regeneron Target:
|
|
Stage of Development
|
Royalty Rate
|
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
(v) Royalties due under Section 16.7(c)(v) will be paid by Intellia to Regeneron and subject to and in accordance with the terms and conditions of Section 9.6, 9.7, 9.8, 9.9, 9.10, 9.11 and 9.12 and Article 11 and the defined term “Net Sales”, applied mutatis mutandis with references to (1) “Regeneron” being deemed to be references to “Intellia”, “Intellia” being deemed to be references to “Regeneron,” (3) “Regeneron Product” being deemed to be references to “Reversion Products” and (4) and other defined terms used in such Sections being appropriately modified consistent with the foregoing. Royalties shall be due and payable on a Reversion Product-by-Reversion Product basis for a period of twelve (12) years after first commercial sale of such Reversion Product, provided that if during such period there is no valid claim of any Patents within such Reversion IP that claims or covers such Reversion Product, then the applicable royalty rate shall be reduced by [***].
(vi) In addition to the royalties due under Section 16.7(c)(v), Intellia will be responsible for [***].
(vii) Intellia will indemnify and hold harmless the Regeneron Indemnitees from and against all Damages incurred by any Regeneron Indemnitee as a result of a Claim against a Regeneron Indemnitee that arises out of or results from any research, development, manufacture or commercialization by Intellia (or its Affiliates or sublicensees) after the effective date of termination with respect to the Terminated Regeneron Target or Reversion Product or Intellia’s or its Affiliates or sublicensees exercise of a Reversion License or election not to take a license to In-Licensed Reversion IP. Section 14.2 shall apply mutatis mutandis to any indemnification matters arising under this Section 16.7(c)(vii).
(d) Regeneron will, as promptly as practicable, and subject to Intellia’s reasonable assistance, to the extent legally permissible (including to the extent permitted under Regeneron’s obligations to Third Parties on the effective date of termination), (i) use Commercially Reasonable Efforts to transfer and assign to Intellia or Intellia’s designee Regeneron’s right, title and interest in and to all material governmental or regulatory filings and approvals (including all Regulatory Approvals and pricing approvals, in all
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cases, specifically and exclusively relating to the development, manufacture or commercialization of the Reversion Products for use in the Reversion Field, and (ii) transfer to Intellia or Intellia’s designee copies of all material clinical data and safety data in Regeneron’s possession and Control to the extent specifically and exclusively related to and required for the research, development, manufacture or commercialization of the Reversion Products in each case of (i) and (ii) to the extent owned by Regeneron or its Affiliates as of the Effective Date of termination. In the event of (x) failure to obtain assignment or (y) with respect to regulatory items that would otherwise fall within (i) or (ii) but for such materials not being specifically and exclusively related to the Reversion Products, but nonetheless which are necessary for the development, manufacture or commercialization of the Reversion Products above, in each of (x) and (y) Regeneron hereby consents and grants to Intellia the right to reference any such item solely with respect to the exercise of the Reversion License for Reversion Products.
(e) If Regeneron or its Affiliates are manufacturing GMP finished product with respect to Reversion Products on the effective date of termination, at Intellia’s option (which must be exercised in writing to Regeneron within [***] days of the effective date of termination), Regeneron or its Affiliates will use Commercially Reasonable Efforts to supply such finished product (but solely in the form as such Reversion Product was being manufactured by Regeneron as of the effective date of termination) to Intellia at Regeneron’s fully burdened cost [***], until the earlier of (i) such time as Intellia has procured or developed its own source of such GMP finished product supply, or (ii) [***] months following the effective date of termination. The Parties will promptly negotiate a supply and related quality agreement to govern the specific terms and conditions of such supply.
(f) If Intellia so requests within [***] days of the effective date of termination, Regeneron will use Commercially Reasonable Efforts, to the extent legally permissible (including to the extent permitted under Regeneron’s obligations to Third Parties on the effective date of termination), to assign to Intellia any Third Party agreements to which Regeneron or its Affiliates is a party that are specific to and exclusively relating to the development, manufacture or commercialization of the Reversion Products to which Regeneron is a party, subject to any required consents of such Third Party.
(g) Regeneron will use Commercially Reasonable Efforts, and subject to Intellia’s reasonable assistance, to the extent legally permissible (including to the extent permitted under Regeneron’s obligations to Third Parties on the effective date of termination), to promptly transfer and assign (or, if applicable, will cause its Affiliates to assign) to Intellia all of Regeneron’s (and such Affiliates’) worldwide right, title and interest in and to any registered trademarks or registered internet domain names that are specific to and exclusively used for the terminated Reversion Products (it being understood that the foregoing will not include any trademarks or internet domain names that contain the corporate or business name(s) of Regeneron or any of its Affiliates or any other products of Regeneron or any of its Affiliates) to the extent owned by Regeneron or its Affiliates as of the Effective Date of termination.
(h) Regeneron will use Commercially Reasonable Efforts to, subject to any agreements with Third Parties and subject to Intellia’s reasonable assistance, transition to Intellia any ongoing clinical trials for Regeneron Products Directed to the Terminated Regeneron Target that are being conducted by Regeneron as of the effective date of termination, and following such transition, Intellia shall be fully responsible for the conduct of such ongoing clinical trials (provided that, for clarity, the licenses granted to Regeneron hereunder shall survive until such ongoing clinical trials are so transitioned to Intellia solely to the limited extent necessary to enable Regeneron (and its Affiliates and sublicensees) to continue such clinical trials during such transition period).
(i) Upon termination of this Agreement, the licenses granted to Regeneron hereunder shall survive for a period of [***] months solely to the limited extent necessary to enable Regeneron (and its Affiliates and sublicensees) to, at their discretion, during such [***] month period following the effective date of termination, sell-off any Regeneron Products then remaining in its or its Affiliates’ existing inventory or that are works-in-process as of the effective date of termination, in accordance with this Agreement. Following the end of such [***] month period, Regeneron will transfer to Intellia any inventory of the Reversion Products Controlled by Regeneron or its Affiliates as of the termination date at Regeneron’s fully burdened cost.
(j) Intellia will reimburse Regeneron the reasonable costs incurred by Regeneron in connection with Regeneron’s performance of this Section 16.7, within [***] days after receipt of an invoice therefor, provided that in the case of Intellia’s termination for Regeneron’s material breach pursuant to Section 16.4, Intellia shall have no such obligation to reimburse Regeneron hereunder and Regeneron shall be solely responsible for all such costs.
(k) For clarity, in the event that Intellia does not accept delivery of any of the materials or items that Regeneron is obligated to deliver under this Section 16.7, or does not provide reasonable assistance with respect thereto, Regeneron shall have no further obligation to undertake any such activities under this Section 16.7.
(l) In addition, notwithstanding the foregoing provisions of this Section 16.7, in the event of any good faith, inadvertent failure by Regeneron to provide any materials or items in this Section 16.7 to Intellia, Regeneron shall not be in breach of its
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obligations under this Section 16.7 (provided that in such case, Regeneron shall use Commercially Reasonable Efforts to provide such items in order to cure such failure in accordance with the provisions of this Section 16.7, as applicable, as soon as reasonably practicable after receipt of an undisputed written notice thereof from Intellia). All of the foregoing materials, items and grants provided by Regeneron (or its Affiliates, as applicable) pursuant to this Section 16.7 shall be provided on an “as-is” basis (without any representations or warranties).
16.8 Effects of Termination of Agreement with respect to a Technology Collaboration. Without limiting any other legal or equitable remedies that either Party may have, if this Agreement is terminated for any reason with respect to the Technology Collaboration, then the provisions of this Section 16.8 will apply (but solely with respect to the Technology Collaboration).
(a) The licenses granted to the Parties under Section 3.5 shall terminate; and
(b) The Technology Collaboration shall immediately terminate.
16.9 Regeneron Reduction of Payments in lieu of Termination. In the event that Regeneron notifies Intellia in writing that Intellia has materially breached this Agreement such that Regeneron would have a right of termination pursuant to Section 16.4 as a result of such material breach (including the application of Section 16.4(b)) [***], then, on a Regeneron Target-by-Regeneron Target basis to which such material breach relates, in lieu of Regeneron exercising such termination right pursuant to Section 16.4, Regeneron may elect to have this Agreement continue in full force and effect without such termination (which election shall be made in writing by Regeneron no later than [***] days of such determination thereof); provided, however, that if Regeneron so elects to continue this Agreement in full force and effect without such termination, then (i) solely with respect to such Regeneron Target for which Intellia has materially breached this Agreement, any milestone payments and royalty payments [***] for Regeneron Products Directed to such Regeneron Target as set forth in Article 9, that would otherwise be payable by Regeneron hereunder shall, from and after the date of such notice from Regeneron, be reduced by [***] for the remainder of the Term and (ii) solely if clause (i) applies, Regeneron shall not be entitled to seek any monetary damages against Intellia under a breach of contract or other claim to the extent that such damages arise from or are a result of the material breach giving rise to Regeneron’s termination right [***].
16.10 Survival of Obligations. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. Any expiration or termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement prior to expiration or termination. Except for the following provisions (which shall survive expiration or termination of this Agreement), upon expiration or termination of this Agreement, the rights granted to the Parties hereunder and obligations of the Parties hereunder shall terminate, and this Agreement shall cease to be of further force or effect: (I) Sections 3.3(b), 3.6, 4.1(a)(iv)(1) (last sentence only), 4.1(a)(iv)(5), 4.1(a)(v)(3)(c), 5.1(h), 5.1(i), 7.1, 7.2(a), 7.2(c), 7.3(e) and 7.3 (f) (in each case under such Sections 7.3(e) and 7.3(f), only in the event of expiration, but not termination, of this Agreement), 7.5 (for the period set forth therein), 7.7, 7.12, 9.8 (with respect to the final Quarter of the Term), 9.9, 9.10, 9.11, 9.12, 10.1 and 12.6, (II) Sections 10.2, 10.3, 10.4, 10.6, 10.7, 10.8, and 10.9 solely with respect to Intellectual Property invented under this Agreement that is jointly owned by the Parties pursuant to the terms of this Agreement, and (III) Articles 1 (to the extent necessary to give effect to other surviving provisions), 11, 13, 14, 15, 16 and 17. In addition, the other applicable provisions of Article 9 will survive such expiration or termination of this Agreement to the extent required to make final reimbursements, reconciliations or other payments incurred or accrued prior to the date of termination or expiration or after such termination or expiration with respect to Section 16.7 (including any milestone payments and royalties that become due as a result of Section 16.7(i)). For any surviving provisions requiring action or decision by a Committee or an Executive Officer, each Party will appoint representatives to act as its Committee members or Executive Officer, as applicable.
16.11 Return of Confidential Information. Confidential Information disclosed by the Disclosing Party, including permitted copies, shall remain the property of the Disclosing Party. Upon the expiration or termination of this Agreement (or the expiration of the relevant Product Term, as applicable), the Receiving Party shall promptly return to the Disclosing Party or, at the Disclosing Party’s request, destroy, all documents or other tangible materials representing the Disclosing Party’s Confidential Information (or any designated portion thereof) pertaining to the expired or terminated subject matter and, if expressly requested in writing by the Disclosing Party, provide the Disclosing Party with written certification of such destruction within [***] days; provided, that [***] copy may be maintained in the confidential files of the Receiving Party for the purpose of complying with the terms of this Agreement; further provided that the Receiving Party may retain the Disclosing Party’s Confidential Information that is necessary or useful for the practice of any license from the Disclosing Party to the Receiving Party that survives expiration or termination, as applicable.
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ARTICLE 17
MISCELLANEOUS
17.1 Governing Law; Dispute Resolution; Submission to Jurisdiction.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof that would require the application of the law of any other jurisdiction.
(b) Any dispute arising under, relating to, or in connection with this Agreement which is not a Legal Dispute (except as otherwise set forth in Section 16.9) or subject to a Party’s decision-making authority (including any dispute regarding the scope or applicability of this agreement to arbitrate) (a “Collaboration Dispute”) will be resolved exclusively through binding arbitration as set forth in this Section 17.1(b) (“Arbitration”). The Parties agree and acknowledge that any good faith dispute in Arbitration will not be deemed to be a material breach of this Agreement. For clarity, a Legal Dispute shall not be subject to Arbitration.
(i) The Arbitration will be conducted in New York, New York and shall be administered by JAMS (formerly known as J.A.M.S., which was otherwise known as Judicial Arbitration and Mediation Services, Inc.) strictly in accordance with the below-described process.
(ii) The Parties will appoint a single arbitrator to be selected by mutual agreement or, if the Parties are unable to agree on an arbitrator within [***] Business Days after such matter is referred to Arbitration, the Parties will request that JAMS select the arbitrator, in each case satisfying the criteria set forth below to the maximum extent possible.
(iii) In all cases, the arbitrator should be a person with no less than [***] years of biotechnology industry experience and expertise having occupied at least [***] senior position within a biotechnology company [***], but under no circumstances shall such person be a current or former employee or consultant of either Party or its Affiliates. If the Collaboration Dispute relates primarily to scientific matters, such as interpretation of the terms Target [***], then the arbitrator should also have relevant scientific expertise. If the Collaboration Dispute relates primarily to Intellectual Property, then the arbitrator should also have at least [***] years of relevant Patent or other Intellectual Property expertise. In all cases, the arbitrator shall be fluent in the English language.
(iv) Within [***] days after such matter is referred to Arbitration, each Party will provide the arbitrator with its one proposed resolution and a written memorandum in support of its position regarding the Collaboration Dispute and its proposed resolution (each an “Opening Brief”) which shall not exceed [***] pages in total. In connection with the submission of an Opening Brief, a Party may also submit documentary evidence in support thereof which had both (x) existed prior to commencement of such Arbitration and (y) been previously shared with the other Party. The arbitrator will provide each Party’s Opening Brief and supporting documentation, if any, or proposed Co-Co Agreement, if applicable, to the other Party after he or she receives an Opening Brief from both Parties.
(v) Within [***] days after a Party receives the other Party’s Opening Brief from the arbitrator, such receiving Party will have the right to submit to the arbitrator a response to the other Party’s Opening Brief (each, a “Response Brief”) which shall not exceed [***] pages in total. In connection with the submission of a Response Brief, a Party may also submit documentary evidence in support thereof which had both (x) existed prior to commencement of such Arbitration and (y) been previously shared with the other Party. The arbitrator will provide each Party’s Response Brief and supporting documentation, if any, to the other Party after he or she receives a Response Brief from both Parties (or at the expiration of such [***] day period if any Party fails to submit a Response Brief).
(vi) Within [***] days of the receipt by the arbitrator of each Party’s Response Brief (or expiration of such [***] day period if any Party fails to submit a Response Brief), the arbitrator will conduct a single [***] hour hearing during which each Party will have [***] hour to present its position. At the hearing, each Party will have the right to call up to [***] witnesses, [***] of whom may be an employee, consultant or other advisor to the other Party. Each Party will notify the other Party and the arbitrator of the identity of the witnesses it intends to call at least [***] days in advance of the hearing.
(vii) There shall be no discovery in the Arbitration [***]. The arbitrator will, however, have the right to perform independent research and analysis and to request any Party provide additional documentary evidence that was Controlled by such Party prior to the arbitrator making such request.
(viii) Within [***] days of such hearing, or within some other time to which the Parties and the arbitrator agree, the arbitrator will deliver his/her decision regarding the Collaboration Dispute in writing. [***]
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(ix) Each of the Parties irrevocably and unconditionally submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York solely and specifically for the purposes enforcing the decision in any Arbitration.
(c) Subject to Section 17.1(b), the Parties irrevocably and unconditionally submit to the exclusive jurisdiction of the United States District Court for the Southern District of New York (and, if such federal court rejects jurisdiction for any reason, then solely and exclusively in the state courts of the city of New York, New York) solely and specifically for the purposes of any action or proceeding arising out of or in connection with this Agreement. The Parties agree and consent to submit themselves to personal jurisdiction in any such action brought in those courts.
17.2 Waiver. Waiver by a Party of a breach hereunder by the other Party shall not be construed as a waiver of any subsequent breach of the same or any other provision. No delay or omission by a Party in exercising or availing itself of any right, power or privilege hereunder shall preclude the later exercise of any such right, power or privilege by such Party. No waiver shall be effective unless made in writing with specific reference to the relevant provision(s) of this Agreement and signed by a duly authorized representative of the Party granting the waiver.
17.3 Notices. All notices, instructions and other communications required or permitted hereunder or in connection herewith shall be in writing, shall be sent to the address of the relevant Party set forth on Schedule 17.3 attached hereto and shall be (a) delivered personally, (b) sent via a reputable nationwide overnight courier service, or (c) sent by facsimile transmission, with a confirmation copy to be sent by registered or certified mail, return receipt requested, postage prepaid, except in the event this Agreement specifies the notice may be delivered by email. Any such notice, instruction or communication shall be deemed to have been delivered upon receipt if delivered by hand, [***] Business Days after it is sent via a reputable nationwide overnight courier service or when transmitted with electronic confirmation of receipt, if transmitted by facsimile (or email, if email is permitted) (if such transmission is made during regular business hours of the recipient on a Business Day; or otherwise, on the next Business Day following such transmission). Either Party may change its address by giving notice to the other Party in the manner provided above.
17.4 Entire Agreement. This Agreement contains the complete understanding of the Parties with respect to the subject matter hereof and thereof and supersedes all prior understandings and writings relating to the subject matter hereof and thereof. For clarity, this Agreement supersedes the CDA.
17.5 Amendments. No provision in this Agreement shall be supplemented, deleted or amended except in a writing executed by an authorized representative of each of Intellia and Regeneron.
17.6 Interpretation. The captions to the several Articles and Sections of this Agreement are included only for convenience of reference and shall not in any way affect the construction of, or be taken into consideration in interpreting, this Agreement. In this Agreement: (a) the word “including” shall be deemed to be followed by the phrase “without limitation” or like expression; (b) references to the singular shall include the plural and vice versa; (c) references to masculine, feminine and neuter pronouns and expressions shall be interchangeable; (d) the words “herein” or “hereunder” relate to this Agreement; (e) the words “shall” and “will” have the same meaning; (f) references to a particular statute or regulation include all rules and regulations thereunder, in each case as amended or otherwise modified from time to time; (g) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement; (h) unless otherwise specified, “$” is in reference to United States dollars; (i) the word “or” has the inclusive meaning represented by the phrase “and/or”; and (j) with respect to the invention of Intellectual Property, the term “invent” or “invented” shall mean conceived, discovered, made or reduced to practice as would be necessary to establish inventorship under United States patent law (regardless of where the applicable activities occurred). Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP, but only to the extent consistent with its usage and the other definitions in this Agreement.
17.7 Construction. The Parties acknowledge and agree that: (a) each Party and its counsel reviewed and negotiated the terms and provisions of this Agreement and have contributed to its revision; (b) the rule of construction to the effect that any ambiguities are resolved against the drafting Party will not be employed in the interpretation of this Agreement; and (c) the terms and provisions of this Agreement will be construed fairly as to each Party and not in a favor of or against either Party, regardless of which Party was generally responsible for the preparation of this Agreement. The headings of clauses contained in this Agreement preceding the text of the sections, subsections and paragraphs hereof are inserted solely for convenience and ease of reference only and shall not constitute any part of this Agreement, or have any effect on its interpretation or construction. This Agreement has been prepared in the English language and the English language shall control its interpretation. In addition, all notices required or permitted to be given hereunder, and all written, electronic, oral or other communications between the parties regarding this Agreement shall be in the English language
17.8 Severability. Should one or more provisions of this Agreement be or become invalid, then the Parties hereto will attempt to agree upon valid provisions in substitution for the invalid provisions, which in their economic effect come so close to the invalid
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provisions that it can be reasonably assumed that the Parties would have accepted this Agreement with those new provisions. If the Parties are unable to agree on such valid provisions, the invalidity of such one or more provisions of this Agreement will not affect the validity of the Agreement as a whole, unless the invalid provisions are of such essential importance for this Agreement that it may be reasonably presumed that the Parties would not have entered into this Agreement without the invalid provisions.
17.9 Assignment. Except as otherwise expressly provided herein, neither this Agreement nor any of the rights or obligations hereunder may be assigned by either Intellia or Regeneron without (a) the prior written consent of Regeneron in the case of any assignment by Intellia or (b) the prior written consent of Intellia in the case of an assignment by Regeneron, except in each case (i) to an Affiliate of the assigning Party (provided, however, that a Party assigning to an Affiliate shall remain fully and unconditionally liable and responsible to the non-assigning Party hereto for the performance and observance of all such duties and obligations by such Affiliate), or (ii) to any Third Party who acquires all or substantially all of the business of the assigning Party to which this Agreement relates, whether by merger, Change of Control, sale of assets or otherwise, so long as such Affiliate or Third Party agrees in writing to be bound by the terms of this Agreement. Any attempted assignment in violation hereof shall be void.
17.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns.
17.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. In addition, this Agreement may be executed by facsimile or “PDF” and such facsimile or “PDF” signature shall be deemed to be an original.
17.12 Third Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including any creditor of any Party hereto. No Third Party shall obtain any right under any provision of this Agreement or shall by reason of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against any Party hereto.
17.13 Relationship of the Parties. Each Party shall bear its own costs incurred in the performance of its obligations hereunder without charge or expense to the other Party except as expressly provided in this Agreement. Neither Intellia nor Regeneron shall have any responsibility for the hiring, termination or compensation of the other Party’s employees or for any employee compensation or benefits of the other Party’s employees. No employee or representative of a Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever, or to create or impose any contractual or other liability on the other Party without said Party’s approval. For all purposes, and notwithstanding any other provision of this Agreement to the contrary, Regeneron’s legal relationship under this Agreement to Intellia, and Intellia’s legal relationship under this Agreement to Regeneron, shall be that of an independent contractor. Nothing in this Agreement shall be construed to establish a relationship of partners or joint ventures between the Parties or any of their respective Affiliates.
17.14 Limitation of Damages. IN NO EVENT SHALL REGENERON OR INTELLIA BE LIABLE FOR SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, LOSS OF PROFITS) SUFFERED BY THE OTHER PARTY, REGARDLESS OF THE THEORY OF LIABILITY (INCLUDING CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE) AND REGARDLESS OF ANY PRIOR NOTICE OF SUCH DAMAGES. HOWEVER, NOTHING IN THIS SECTION 17.14 IS INTENDED TO LIMIT OR RESTRICT (A) LIABILITY FOR BREACH OF SECTION 12.7 OR SECTION 13.1 OR (B) THE INDEMNIFICATION RIGHTS AND OBLIGATIONS OF EITHER PARTY HEREUNDER AS SET FORTH IN SECTION 14.1 WITH RESPECT TO THIRD PARTY CLAIMS.
17.15 Injunctive or Other Equity Relief. Nothing contained in this Agreement shall deny any Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any other ongoing proceeding.
17.16 Non-Exclusive Remedies. The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as and to the extent expressly set forth herein.
[Remainder of page intentionally left blank; signature page follows]
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IN WITNESS WHEREOF, Regeneron and Intellia have caused this Agreement to be executed by their duly authorized representatives as of the day and year first above written.
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REGENERON PHARMACEUTICALS, INC. |
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By |
/s/ Michael Aberman
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Name: |
Michael Aberman |
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Title: |
SVP, Strategy and I.R. |
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INTELLIA THERAPEUTICS, INC. |
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By |
/s/ Nessan Bermingham
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Name: |
Nessan Bermingham |
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Title: |
CEO and President |
[Signature Page to License and Collaboration Agreement]
[***]
Schedule 1.47
Intellia Background Patent Rights as of the Effective Date
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Title
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Patent Family (including patents and applications claiming priority to listed documents)
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Applicable In-License
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Ownership and Foreign Filing Information
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Schedule 1.50
Intellia Existing Third Party Agreements
[***]
Schedule 1.58
Intellia Reserved Liver Targets
Intellia Reserved Liver Targets
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Entrez ID
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Target Symbol (HUGO)
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Indication
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Alias
|
NA |
NA |
HBV |
The HBV Genome |
ID: 5265 |
SERPINA1 |
Alpha 1 antitrypsin deficiency |
A1A, A1AT, AAT, PI, PI1, PRO2275, alpha1AT |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***]
Schedule 1.119
Regeneron Target Evaluation Plan
[***]
Schedule 5.1(e)(iii)
[***] Target and Development Plan
|
|
|
|
Entrez ID
|
Target Symbol (HUGO)
|
Indication
|
Alias
|
ID: 7276 |
TTR |
Transthyretin-related amyloidosis |
CTS, CTS1, HEL111, HsT2651, PALB, TBPA |
[***]
[***]
Schedule 5.3
Key Terms for Co- Co Agreement
Capitalized terms set forth herein but not otherwise defined herein shall have the meaning set forth in the Agreement.
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|
I. GENERAL TERMS |
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|
General Terms |
The Parties intend to enter into a Co-Development and Co-Promotion Agreement within [***] of the effective date of the Agreement. Upon execution of the Co-Development and Co-Promotion Agreement, the Co-Development and Co-Promotion Agreement will apply to the TTR Target. Future Intellia Liver Targets and Regeneron Targets will be added to the Co-Development and Co-Promotion Agreement upon exercise of the Regeneron Option or Intellia Option as applicable for such Targets (a “Profit Share Target”) and all CPs Directed to such Profit Share Targets (“Profit Share Products”).
[***] |
|
|
Option Exercise Payment |
Within [***] days after the date on which a Profit Share Target is added to the Co-Development and Co-Promotion Agreement (but for clarity, not with respect to TTR), the Party exercising the Intellia Option or Regeneron Option, as applicable, shall pay to the other Party an amount equal to [***] as compensation [***] under the Co-Development and Co-Promotion Agreement. |
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Territory |
[***] |
|
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II. GOVERNANCE |
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|
Joint Development and Commercialization Committee |
The Parties shall form a Joint Development and Commercialization Committee (“JDCC”) to oversee all Profit Share Products under the Co-Development and Co-Promotion Agreement. The JDCC will have responsibility for overseeing the development, manufacture, regulatory matters, and commercialization (including pricing and reimbursement) of the Profit Share Product.
The [***] shall prepare a [***] development plan and associated budget (“Development Plan”) for JDCC approval.
[***] the [***] shall prepare a [***] commercialization plan[***] and associated budget (“Commercial Plan”) for JDCC approval. |
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Decision-Making |
Decisions of the JDCC with respect to Profit Share Products shall be resolved in accordance with procedures consistent with those described in Sections 2.2(b) of the Agreement[***]. |
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III. DEVELOPMENT, Regulatory, and Manufacturing |
|
|
|
Development |
The [***] shall have the [***] right and shall use Commercially Reasonable Efforts to conduct development activities for its Profit Share Product in accordance with the Development Plan. |
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|
Regulatory |
[***] shall [***] prepare and make regulatory submissions and engage in regulatory communications to Regulatory Authorities with respect to the Profit Share Product[***]. |
|
|
Manufacturing |
Unless otherwise agreed to between the Parties [***] shall have the [***] right and responsibility to manufacture (or have manufactured) the clinical and commercial supply of the Profit Share Product. [***] |
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|
IV. COMMERCIALIZATION |
|
|
|
Commercialization |
Subject to the co-promotion rights described below, [***] shall [***] commercialize the Profit Share Product [***] in accordance with the Commercial Plan for such Profit Share Product. |
|
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V. financial terms |
|
|
|
Cost/Profit/Loss Sharing |
From and after the date each Profit Share Product is included under the Co-Development and Co-Promotion Agreement, the Parties shall each share in [***] of all [***] costs as specified in the Co-Development and Co-Promotion Agreement and [***] all profits (or losses as the case may be), in each case associated with the Profit Share Product in the Territory.
[***]
[***] |
|
|
|
|
VI. TERM AND TERMINATION |
|
|
|
Term |
The term of the Co-Development and Co-Promotion Agreement (the “Profit Share Term”) shall become effective on its effective date and shall remain in effect for the time in which [***] Party is developing or commercializing Profit Share Product, unless earlier terminated as set forth below. |
|
|
Termination |
• Convenience: Either Party can terminate for convenience with upon [***] months prior notice [***]
• Material Breach: Either Party has a right to terminate the Agreement for a material breach of the Profit-Share Agreement by the other Party and the standard for material breach and termination shall be consistent with the standard in the Agreement.
[***]
• Economics of Post-Termination Licenses. The Parties shall agree in the Co-Development and Co-Promotion Agreement to the economics of post-termination licenses [***]. |
|
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VII. ADDITIONAL TERMS |
|
|
|
Sublicensing |
[***] |
|
|
Exclusivity |
During the term of the Co-Development and Co-Promotion Agreement, neither Party nor any of their respective Affiliates shall [***].
[***] |
|
|
US Co-Promotion Right |
[***] will be granted an option to co-promote the Profit Share Products in the US. The [***] will provide notice of its exercise its option no later than [***] months prior to the date of [***] |
Schedule 7.3(b)
Non-Exclusively Licensed Patent Rights
[***]
[***]
[***]
Schedule 9.4
Certain Third Party Patent Rights
[***]
Schedule 12.2
Disclosures
[***]
[***]
|
|
Title
|
Patent Family (including patents and applications claiming priority to listed documents)
|
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
|
[***] |
[***] |
|
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[***] |
[***] |
Schedule 17.3
Notice Information
|
|
To Intellia: |
Intellia Therapeutics, Inc. 130 Brookline St., Suite 201 Cambridge, MA 02139 Attention: President and CEO |
|
|
To Regeneron: |
Regeneron Pharmaceuticals, Inc. 777 Old Saw Mill Road Tarrytown, NY 10591 Attention: General Counsel
|
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
RULE 13a-14(a) / RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, John M. Leonard, M.D., certify that:
Date: May 5, 2022
/s/ John M. Leonard |
John M. Leonard, M.D. |
President and Chief Executive Officer |
(Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
RULE 13a-14(a) / RULE 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Glenn Goddard, certify that:
Date: May 5, 2022
/s/ Glenn Goddard |
Glenn Goddard |
Executive Vice President, Chief Financial Officer |
(Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATIONS OF CEO AND CFO PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report on Form 10-Q of Intellia Therapeutics, Inc. (the “Company”) for the period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, John M. Leonard, M.D., President and Chief Executive Officer (Principal Executive Officer) of the Company, and Glenn Goddard, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) of the Company, hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: May 5, 2022
/s/ John M. Leonard |
John M. Leonard, M.D. |
President and Chief Executive Officer |
(Principal Executive Officer) |
|
/s/ Glenn Goddard |
Glenn Goddard |
Executive Vice President and Chief Financial Officer |
(Principal Financial and Accounting Officer) |
|