Item 1.01 Entry into a Material Definitive Agreement.
Development Funding Loan Agreement
On January 7, 2022, Cytokinetics, Incorporated ("Cytokinetics") entered into a
Development Funding Loan Agreement (the "Loan Agreement") with Royalty Pharma
Development Funding, LLC providing for term loans (the "Term Loans") in an
aggregate principal amount up to $300 million with $50 million drawn at the
closing. The remaining Term Loans become available, subject to customary draw
conditions, as follows:
· $50 million of Tranche 2 Term Loans during the one year period following the
receipt on or prior to December 31, 2022 of marketing approval from the U.S.
Food and Drug Administration ("FDA") of Cytokinetics' proprietary small
molecule cardiac myosin activator known as omecamtiv mecarbil;
· $25 million of Tranche 3 Term Loans during the one year period following the
commercial availability of a diagnostic test measuring levels of omecamtiv
mecarbil to support the final FDA label language applicable to such drug,
subject to such commercial availability and the conditions to the Tranche 2
Term Loans having occurred on or prior to December 31, 2022;
· $75 million of Tranche 4 Term Loans during the one year period following the
receipt on or prior to September 30, 2024 of positive results from SEQUOIA-HCM,
the Phase 3 trial for Cytokinetics' proprietary small molecule cardiac myosin
inhibitor known as aficamten; and
· $100 million of Tranche 5 Term Loans during the one year period following the
acceptance by the FDA on or prior to March 31, 2025 of an new drug application
for aficamten, subject to the conditions to the Tranche 4 Term Loans having
occurred on or prior to September 30, 2024.
Each Term Loan matures on the 10 year anniversary of the funding date for such
Term Loan and is repayable in quarterly installments of principal, interest and
fees commencing on the last business day of the seventh full calendar quarter
following the calendar quarter of the applicable funding date for such Term
Loan, with the aggregate amount payable in respect of each Term Loan (including
interest and other applicable fees) equal to 190% of the principal amount of the
term loan (such amount with respect to each Term Loan, "Final Payment Amount").
Each Term Loan bears a nominal interest rate equal to 1.9%.
Cytokinetics may prepay the Term Loans in full (but not in part) at any time at
its option by paying an amount equal to the unpaid portion of Final Payment
Amount for the outstanding Term Loans; provided that if the conditions for
either the Tranche 4 Term Loans or the Tranche 5 Term Loans have been met,
Cytokinetics must have borrowed at least $25 million principal amount of the
Tranche 4 or 5 Term Loans. In addition, the Term Loans are repayable in full at
the option of either Cytokinetics or the lender in an amount equal to the unpaid
portion of Final Payment Amount for the outstanding Term Loans upon a change of
control of Cytokinetics.
The Loan Agreement contains customary representations and warranties and
customary affirmative and negative covenants applicable to Cytokinetics and its
subsidiaries, including, among other things, restrictions on dispositions,
mergers, indebtedness, encumbrances, distributions, stock repurchases,
investments and transactions with affiliates. The Loan Agreement also includes
customary events of default, including but not limited to the nonpayment of
principal or interest, violations of covenants, material adverse changes,
attachment, levy, restraint on business, cross-defaults on material
indebtedness, bankruptcy, material judgments, misrepresentations, governmental
approvals, payment defaults under the Revenue Participation Right Purchase
Agreement and the Royalty Purchase Agreement (each as defined below), and
delisting. Upon an event of default, the lenders may, among other things,
accelerate the Term Loans (with the amount payable upon acceleration based on a
discount to the unpaid portion of the Final Payment Amount in the case of an
acceleration upon a bankruptcy event of default or between 150% and 190% of the
principal amount (less amounts previously paid) in the case of other events of
default).
In connection with the Loan Agreement, Cytokinetics repaid in full and
terminated its loan and security agreement with Oxford Finance LLC and Silicon
Valley Bank (the "Oxford Loan Agreement").
Revenue Participation Right Purchase Agreement
In addition, on January 7, 2022, Cytokinetics entered into a Revenue
Participation Right Purchase agreement (the "Revenue Participation Right
Purchase Agreement") with Royalty Pharma Investments 2019 ICAV ("RPI"), pursuant
to which RPI purchased rights to certain revenue streams from net sales of
aficamten by Cytokinetics, its affiliates and its licensees in exchange for up
to $150 million in consideration, $50 million of which was paid on the closing
date, $50 million of which is payable following the initiation of the first
pivotal trial in obstructive hypertrophic cardiomyopathy (oHCM) for aficamten
and $50 million of which is payable following the initiation of the first
pivotal clinical trial in non-obstructive hypertrophic cardiomyopathy (nHCM) for
aficamten. The agreement also provides that the parties will negotiate terms for
additional funding if Cytokinetics achieves proof of concept results in certain
other indications for aficamten, with a reduction in the applicable royalty if
the parties fail to agree on such terms in certain circumstances.
Pursuant to the Revenue Participation Right Purchase Agreement, RPI purchased
the right to receive a percentage of net sales equal to 4.5% for annual
worldwide net sales of aficamten up to $1 billion and 3.5% for annual worldwide
net sales of aficamten in excess of $1 billion, subject to reduction in certain
circumstances. The Revenue Participation Right Purchase Agreement contains
customary representations, warranties and indemnities of Cytokinetics and RPI
and customary covenants relating to the royalty payments.
In connection with the foregoing, Cytokinetics terminated that certain Funding
Agreement, dated of as July 14, 2021 (the "RTW Funding Agreement"), between
Cytokinetics and RTW Investments, L.P., including Cytokinetics' rights to obtain
funding pursuant to the RTW Funding Agreement.
Amendment to 2017 Royalty Purchase Agreement
On January 7, 2022, Cytokinetics also entered into an amendment to the Royalty
Purchase Agreement, dated as of February 1, 2017 (the "Royalty Purchase
Agreement") with RPI Finance Trust to reflect the termination of Cytokinetics'
collaboration agreement with Amgen and to reflect that RPI Finance Trust's
rights to the royalty payments provided for under the Royalty Purchase Agreement
will be based on net sales by Cytokinetics, its affiliates and licensees of
omecamtiv mecarbil.
The foregoing descriptions of the Loan Agreement, the Revenue Participation
Right Purchase Agreement and the amendment to the Royalty Purchase Agreement do
not purport to be complete and are qualified in their entirety by reference to
the complete text of the Loan Agreement, the Revenue Participation Right
Purchase Agreement and the amendment to the Royalty Purchase Agreement, copies
. . .
Item 1.02. Termination of a Material Definitive Agreement
The information in Item 1.01 above with respect to the Oxford Loan Agreement and
the RTW Funding Agreement is incorporated by reference into this Item 1.02.
Item 2.01 Completion of Acquisition or Disposition of Assets
The information in Item 1.01 relating to the Revenue Participation Right
Purchase Agreement is incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 above is hereby incorporated by
reference into Item 2.03.
© Edgar Online, source Glimpses