ITEM 1.01 Entry into a Material Definitive Agreement.
On January 27, 2023, Quince Therapeutics, Inc. (the "Company") entered into an
Asset Purchase Agreement (the "Purchase Agreement") with Lighthouse
Pharmaceuticals, Inc. ("Purchaser") for the sale of its legacy small molecule
protease inhibitor portfolio for all uses and indications throughout the world
(the "Transaction"), including COR388, COR588, COR803 and COR852, related drug
substance, drug product and other related materials, related regulatory
materials, and related intellectual property rights and contracts. The
Transaction was also consummated on January 27, 2023.
Upon the consummation of the Transaction, the Company received shares of common
stock of Purchaser ("Common Stock") equal to seven and a half percent (7.5%) of
the currently issued and outstanding Common Stock. The issuance is governed by a
Stock Issuance Agreement entered into by the Company and Purchaser on
January 27, 2023 (the "Stock Agreement"). The Stock Agreement contains certain
anti dilution rights of the Company and certain transfer restrictions on the
Common Stock, including a right of first offer in favor of Purchaser and certain
restrictions with respect to non U.S. persons.
Pursuant to the terms of the Purchase Agreement, the Company is eligible to
receive milestone payments up to $150 million on a product by product basis for
the achievement of certain regulatory approvals and global net sales thresholds.
Additionally, the Company is eligible to receive certain sales-based royalty
payments on a product by product basis, ranging from high single-digit to
mid-teens of annual net sales related to the two existing clinical stage
programs, and low single-digit royalties for the preclinical programs, and
certain sublicense income on a product by product basis, either in addition to
milestone payments and royalties prior to Phase 2 initiation for COR588 or
COR388, or in lieu of milestones payments and royalties after initiation of
Phase 2 for COR588 or COR388 or for the preclinical programs.
Each of the Company and Purchaser have made certain covenants in the Purchase
Agreement with respect to the transfer of the assets, including requisite
filings to be made with regulatory authorities, and the milestone, royalty and
sublicense payments and have agreed to indemnify each other for any breaches of
such party's covenants, assumed liabilities (in the case of Purchaser) and
retained liabilities (in the case of the Company), subject to certain customary
survival periods and mitigation requirements. In addition, Purchaser granted to
the Company an exclusive option until June 30, 2023 to obtain worldwide,
royalty-free, fully-paid up, irrevocable and perpetual right and license under
the transferred intellectual property related to COR388 to research, develop,
manufacture, use, commercialize and otherwise exploit COR388 in any animal
health indication.
The summary above does not purport to be complete and is qualified in its
entirety by the terms of the Purchase Agreement. A copy of the Purchase
Agreement will be filed by the Company as an exhibit to its Quarterly Report on
Form 10-Q for the quarter ending March 31, 2023.
ITEM 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(e) Compensatory Arrangements of Principal Executive Officer, Principal
Financial Officer and Named Executive Officers
Bonus Information and Equity Grants
On January 24, 2023, the Compensation Committee (the "Committee") of the Board
of Directors (the "Board") of the Company determined that the executive officers
would receive no salary increase for 2023. The Committee approved stock option
grants to the Company's executive officers (the "Option Awards") with the
effective grant date of February 1, 2023. The Option Awards were made pursuant
to the Company's 2019 Equity Incentive Plan and related grant documentation
(collectively, the "2019 Plan"), previously filed with the Securities and
Exchange Commission. The Option Awards will vest in equal monthly installments
over the four-year period following the date of grant, subject to each executive
officer's continued service through each such vesting date.
2022 bonus payouts and the Option Awards for the Company's executive officers
are set forth below.
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Name 2022 Bonus Payout Option Awards
Dirk Thye
Chief Executive Officer $ 169,287 600,000
Ted Monohon
Chief Accounting Officer and Principal
Financial Officer $ 137,185 110,000
Karen Smith
Chief Medical Officer $ 116,962 225,000
Brendan Hannah
Chief Business Officer $ 104,650 225,000
The summary of the Option Awards above does not purport to be complete and is
qualified in its entirety by the terms of the 2019 Plan, as may be amended from
time to time, and each executive officer's grant documentation.
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