Item 1.01. Entry into a Material Definitive Agreement.
The disclosure contained in Items 2.01 and 8.01 below is incorporated herein by reference.
On January 7, 2022, AcelRx Pharmaceuticals, Inc., a Delaware corporation (“AcelRx” or the “Company”), consummated the transactions (the “Closing”) contemplated by the previously announced Agreement and Plan of Merger, dated as of November 14, 2021 (the “Merger Agreement”), by and among, the Company and two of its direct wholly owned subsidiaries, AcelRx Intermediate Sub, Inc., a Delaware corporation (“Merger Sub 1”), and AcelRx Consolidation Sub, LLC, a Delaware limited liability company (“Merger Sub 2”), Lowell Therapeutics, Inc., a Delaware corporation (“Lowell”), and James Wilkie, solely in his capacity as the stockholder representative for the Lowell stockholders and option holders, pursuant to which, among other things, (a) Merger Sub 1 merged with and into Lowell with Lowell continuing as the initial surviving company and the Company’s direct wholly owned subsidiary (the “First Merger”), and (b) Lowell merged with and into Merger Sub 2 with Merger Sub 2 continuing as the surviving company and the Company’s direct wholly owned subsidiary (the “Second Merger” and, together with the First Merger, the “Mergers”).
Pursuant to the Merger Agreement, on January 7, 2022, AcelRx entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with James Wilkie (the “Stockholder Representative”), solely in his capacity as the representative of the Lowell stockholders and option holders, and Computershare Inc., a Delaware corporation, and its wholly-owned subsidiary, Computershare Trust Company, N.A., a federally chartered trust company, collectively as Rights Agent (the “Rights Agent”), governing the terms of the CVRs (as defined in the CVR Agreement). The CVRs represent an aggregate right to receive up to approximately $26.0 million, without interest and less any applicable withholding taxes, in contingent consideration, conditioned upon the achievement of regulatory milestones and specified levels of annual net sales as follows:
|
●
|
a one-time payment of $3.0 million upon the approval of NIYAD™, which may be via a pre-market approval application filed with the FDA (“PMA”) or new drug application filed via any route (“NDA”), with a label indication for use for patients in the in-patient setting for continuous renal replacement therapy;
|
|
●
|
a one-time payment of $2.0 million upon obtaining (i) the approval from the FDA, via a PMA or NDA, for NIYAD with a label indication for use for patients undergoing intermittent hemodialysis in the outpatient setting and (ii) the receipt of approval from the Centers for Medicare and Medicaid Studies (“CMS”) of NIYAD to be included in the End-Stage Renal Dialysis Prospective Payment System, as a qualified device under the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies, if approved by the FDA as a device, or the Transitional Drug Add-on Payment Adjustment, if approved by the FDA as a drug;
|
|
●
|
a one-time payment of $2.0 million upon the approval of LTX-608 with a label indication for use for patients with Acute Respiratory Distress Syndrome, Disseminated Intravascular Coagulation, or as an antiviral;
|
|
●
|
a one-time payment of $2.0 million upon obtaining ownership of an issued patent in the United States that covers LTX-608, whereby the corresponding patent information is also published in the Orange Book prior to losing exclusivity;
|
|
●
|
a one-time payment of $3.5 million upon the achievement of at least $12,000,000 in aggregate net sales of NIYAD and LTX-608 during any calendar year ending on or before December 31, 2026;
|
|
●
|
a one-time payment of $3.5 million upon the achievement of at least $25,000,000 in aggregate net sales of NIYAD and LTX-608 during any calendar year ending on or before December 31, 2027; and
|
|
●
|
a one-time payment of $10.0 million upon the achievement of at least $100,000,000 in aggregate net sales of NIYAD and LTX-608 during any calendar year ending on or before December 31, 2030.
|
The terms of the CVRs described above reflect the parties’ agreement over the sharing of potential economic upside benefits from future regulatory milestones and revenues of product candidates and do not necessarily reflect anticipated regulatory milestones or sales of such candidates. There can be no assurance that such regulatory milestones or levels of net sales will occur or that any or all of the payments in respect of the CVRs will be made.
AcelRx may elect to pay such contingent consideration in AcelRx common stock or cash, provided however that, absent stockholder approval, the total number of shares of AcelRx common stock issuable as merger consideration in the Mergers, including the CVRs, will not exceed 19.9% of the total number of shares of AcelRx common stock that were issued and outstanding immediately prior to the closing of the First Merger. AcelRx shall use reasonable efforts to issue shares rather than cash for any payable up to an amount equal to the 19.9% threshold. AcelRx will have the ability to pay cash in lieu of shares of AcelRx common stock for any shares exceeding the 19.9% threshold.
The right to such contingent consideration as evidenced by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement, are not certificated or evidenced by any instrument and are not registered with the U.S. Securities and Exchange Commission (the “SEC”) or listed for trading on any exchange.
The foregoing description of the CVR Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the CVR Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.