Item 1.01 Entry into a Material Definitive Agreement.
Amendment to Collaboration and License Agreement
On November 15, 2023, Arcellx, Inc. (“Arcellx”) entered into an amendment (the “License Amendment”) to its Collaboration and License Agreement with Kite Pharma, Inc., a Gilead Company (“Kite”), dated December 8, 2022 (the “Collaboration Agreement”). In connection with and pursuant to the License Amendment, Kite exercised its option to negotiate a license for Arcellx’s ARC-SparX program, ACLX-001, in multiple myeloma, which is comprised of ARC-T cells and SparX proteins that target BCMA. The companies have also expanded the scope of the collaboration for Arcellx’s CART-ddBCMA to include lymphomas.
Following the consummation of the License Amendment, Arcellx will receive an upfront non-dilutive cash payment of $85 million at closing and will be eligible for potential milestone payments, including for the advancement of lymphoma and the license for ARC-SparX, as well as additional milestones, to offset prespecified development costs over a limited period of time. Except as specifically modified or amended by the License Amendment, the Collaboration Agreement will remain in full force and effect.
The consummation of the License Amendment is subject to obtaining any necessary consents and approvals, including review by the appropriate regulatory agencies under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “Hart-Scott-Rodino Act”).
The foregoing description of the terms of the License Amendment is not complete and is qualified in its entirety by reference to the full text of the License Amendment, a copy of which Arcellx intends to file as an exhibit to a subsequent periodic report.
Common Stock Purchase Agreement
In connection with the License Amendment, Arcellx entered into a common stock purchase agreement (the “2023 Purchase Agreement”) with Gilead Sciences, Inc. (“Gilead”) on November 15, 2023, pursuant to which Arcellx agreed to issue and sell, and Gilead has agreed to purchase, 3,242,542 shares of Arcellx’s common stock (the “Shares”) for an aggregate purchase price of $200 million pursuant to the terms and conditions thereof. The parties expect to close the sale of the Shares around year-end 2023, within three business days following the satisfaction of the closing conditions set forth in the 2023 Purchase Agreement, which includes consummation of the License Amendment and the satisfaction of customary closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Act.
Amended and Restated Standstill Agreement
In connection with the 2023 Purchase Agreement, Arcellx also amended and restated its standstill and stock restriction agreement, dated December 8, 2022, with Gilead (as amended, the “Amended Standstill Agreement”). The Amended Standstill Agreement is applicable to all shares acquired to date in connection with the Collaboration Agreement and the License Amendment (collectively, the “Collaboration Shares”). Pursuant to the terms of the Amended Standstill Agreement, Gilead agreed to certain transfer and standstill restrictions, including restrictions on transferring the Collaboration Shares or acquiring beneficial ownership of Arcellx’s capital stock up to a certain percentage, and agreed to vote the Collaboration Shares in the same manner and proportion as the votes cast by the other holders of Arcellx’s common stock on certain matters, in each case for a period of eighteen months following the closing of the sale of the Shares, or earlier upon a change of control of Arcellx, termination of the Collaboration Agreement, as amended, or, in the case of the standstill restrictions and voting agreement, upon the date on which Gilead and its controlled affiliates together beneficially own less than five percent of Arcellx’s outstanding stock. In addition, Gilead will be entitled to certain registration rights with respect to the Collaboration Shares following termination of the transfer restrictions.