3. Asset Purchase Agreements

Aevitas

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Agreement with 4D Molecular Therapeutics (“4DMT”)

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On April 21, 2023, Aevitas entered into an Asset Purchase Agreement (the “4DMT APA”) with 4DMT under which 4DMT acquired Aevitas' proprietary rights to its short-form human complement factor H (“sCFH”) asset for the treatment of complement-mediated diseases. Under the terms of the 4DMT APA, 4DMT will make cash payments totaling up to $140 million if certain late-stage development, regulatory and sales milestones are met with respect to sCFH. A range of single-digit royalties on net sales are also payable. The aforementioned payments are payable solely to Aevitas, and 4DMT will be responsible for license payment obligations to the licensor of sCFH, University of Pennsylvania. 4DMT is not a related party to the Company and has assumed all ongoing development costs. The fair value of the interest in Aevitas retained by the Company is based on the risk-adjusted present value of the aforementioned potential cash payments (see Note 6, Fair Value Measurements).

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In connection with the 4DMT APA, the preferred shares of Aevitas held by the Company converted to Aevitas common shares, at which point the Company no longer maintained voting control of Aevitas. As a result, the Company deconsolidated its holdings in Aevitas. In connection with this transaction, the Company recorded a loss on deconsolidation of Aevitas on its condensed consolidated financial statements during the nine months ended September 30, 2023.  

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The Company recognized the following related to the deconsolidation of Aevitas:

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Mustang

Agreements with uBriGene (Boston) Biosciences, Inc. (“uBriGene”)

On May 18, 2023, Mustang entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with uBriGene, as amended by a first amendment thereto, dated June 29, 2023, and further amended by a second amendment thereto, dated as of July 28, 2023 (collectively the “Amended Asset Purchase Agreement”), pursuant to which Mustang agreed, subject to the terms and conditions therein, to sell its leasehold interest in its cell processing facility located in Worcester, MA (the “Facility”) and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility to uBriGene. On July 28, 2023, (the “Closing Date”), pursuant to the terms and conditions of the Amended Asset Purchase Agreement, Mustang completed the sale of Mustang’s assets primarily relating to the manufacturing and production of cell and gene therapies to uBriGene for base consideration of $6.0 million. Mustang recorded a gain of $1.4 million in connection with the sale of the assets for the three and nine months ended September 30, 2023, and recorded approximately $0.3 million of the base consideration as deferred income, to be recognized upon the transfer of the lease. Certain assets, including Mustang’s lease of the Facility and related contracts did not transfer to uBriGene on the Closing date. uBriGene will be obligated to pay to Mustang a contingent amount of $5.0 million less certain severance obligations and payments payable in connection with the transfer of certain contracts related to the transferred assets, if Mustang, within two years of the closing date: (i) completes one or more issuances of equity securities in an aggregate gross amount equal to or greater than $10.0 million after the closing and (ii) obtains consent of the landlord to the proposed lease transfer within two years after the closing date. The lease transfer would include leasehold improvements with a book value at September 30, 2023 of $3.5 million.

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The Asset Purchase Agreement contemplates that Mustang will seek to procure the consent and approval of the landlord of the Facility, WCS-377 Plantation Street, Inc. (the “Landlord”), and the Landlord informed Mustang that it will not consider the lease transfer request until receipt of the final determination letter from with the U.S. Committee on Foreign Investment in the United States (“CFIUS”), although there can be no guarantee that, even if CFIUS does approve the below-described Facility Transaction, the Landlord will approve the lease transfer. In connection with the sale of its leasehold interest in the Facility and associated assets relating to the manufacturing and production of cell and gene therapies at the Facility (the “Facility Transaction”) to uBriGene and an indirect, wholly owned subsidiary of UBriGene (Jiangsu) Biosciences Co., Ltd., a Chinese contract development and manufacturing organization, Mustang and uBriGene previously submitted a voluntary notice with CFIUS. Following an initial 45-day review period and subsequent 45-day investigation period, on November 13, 2023, CFIUS requested Mustang and uBriGene to withdraw and re-file their joint voluntary notice to allow more time for review and discussion regarding the nature and extent of national security risk posed by the Transaction, and whether and to what extent mitigation of risk would be feasible.  Upon CFIUS’s request, Mustang and uBriGene submitted a request to withdraw and re-file their joint voluntary notice to CFIUS, and on November 13, 2023, CFIUS granted this request, accepting the joint voluntary notice and commenced a new 45-day review period commencing on November 14, 2023, which may be followed by a further 45-day investigation period. Unless and until the lease is transferred to uBriGene, Mustang will retain its Facility lease and Facility personnel, and will continue to occupy the leasehold premises and manufacture there its lead product candidates, including MB-106, pursuant to the arrangements described under a manufacturing services agreement and a sub-contracting CDMO (contract development and manufacturing organization) agreement.

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As contemplated by the Amended Asset Purchase Agreement, on the Closing Date, Mustang and uBriGene entered into a Manufacturing Services Agreement (the “Manufacturing Services Agreement”). Under the Manufacturing Services Agreement, Mustang contracted uBriGene to manufacture Mustang’s lead product candidates, including MB-106, and Mustang committed to spend at least $8 million over a period of two years after the closing of the transaction to purchase manufacturing and related services (the “Manufacturing Services”) from uBriGene (the “Minimum Commitment”). Mustang paid uBriGene 25% of the Minimum Commitment at the time of signing of the Manufacturing Services Agreement and will pay the remainder of the Minimum Commitment over the following two years. Subject to Mustang’s payment of its Minimum Commitment, uBriGene will provide to Mustang a manufacturing rebate, payable in cash at the end of the second year of the Manufacturing Services Agreement term, for any amounts paid for Manufacturing Services in excess of the Minimum Commitment (but in no event will such rebate exceed $3 million). In connection with the Manufacturing Services Agreement, Mustang will provide uBriGene with the customary licenses to use intellectual property rights specific to Mustang’s cell and gene therapies to the extent reasonably necessary for uBriGene’s performance under the Manufacturing Services Agreement. Mustang intends to expense manufacturing costs under the Manufacturing Services Agreement and the sub-contracting Manufacturing Services Agreement, pursuant to which uBriGene contracted with Mustang to perform the Manufacturing Services to be performed by uBriGene under the Manufacturing Services Agreement and account for reimbursed costs associated with the agreements as an offset to

such expense. For the three months ended September 30, 2023, Mustang has expensed $1.7 million of manufacturing costs under the Manufacturing Services Agreement.

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In addition, as contemplated by the Asset Purchase Agreement, on the Closing Date, Mustang and uBriGene entered into a sub-contracting Manufacturing Services Agreement (the “Sub-Contracting CDMO Agreement”). Under the terms of the Sub-Contracting CDMO Agreement, Mustang will manufacture its lead product candidates, including MB-106, and may from time to time manufacture other products as requested by uBriGene. In addition, under the Sub-Contracting CDMO Agreement, Mustang and uBriGene agreed to establish a joint steering committee comprising two representatives from each of Mustang and uBriGene to review, discuss and decide on operational matters relating to the services to be performed by Mustang under such agreement, including matters relating to expenses. For the three months ended September 30, 2023, Mustang received $2.5 million in reimbursed costs associated with the Sub-Contracting CDMO Agreement.

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Cyprium

Agreement with Sentynl

On February 24, 2021, Cyprium entered into a development and asset purchase agreement (the “Sentynl APA”) with Sentynl, a U.S.-based specialty pharmaceutical company owned by the Zydus Group. Under the Sentynl APA, Sentynl provided certain development funding for Cyprium’s CUTX-101 program, with Cyprium remaining in control of development of such program; upon approval of the New Drug Application (“NDA”) for CUTX-101 by the U.S. Food and Drug Administration (“FDA”), Cyprium is obligated to assign the NDA and certain other assets pertaining to the CUTX-101 program to Sentynl, after which point Sentynl will commercialize the drug and owe Cyprium royalties and regulatory and sales milestones.

The Sentynl APA contains an alternative “Approval Deadline Transfer” mechanism pursuant to which, in the event that CUTX-101 NDA approval has not been obtained by September 30, 2023, then Sentynl may elect, during the subsequent 45-day period, to assume control over development of CUTX-101 by effecting a Closing under the Sentynl APA. Cyprium has received notice of Sentynl’s election to effect the Approval Deadline Transfer, with Closing of such transfer anticipated to occur in November 2023. The Approval Deadline Transfer obligates Sentynl to pay Cyprium $4.5 million in connection with the Closing. Following such Closing, Sentynl will be obligated to use commercially reasonable efforts to develop and commercialize CUTX-101, including the funding of the same. Additionally, following such Closing, Cyprium remains eligible to receive up to $133.5 million in aggregate development and sales milestones under the Agreement and royalties on net sales of CUTX-101 as follows: (i) 3% of annual net sales up to $75 million; (ii) 8.75% of annual net sales between $75 million and $100 million; and (iii) 12.5% of annual net sales in excess of $100 million.

Cyprium expects the Approval Deadline Transfer will result in a reduction in its development-related spending on the CUTX-101 program. Cyprium will retain 100% ownership over any FDA priority review voucher that may be issued at NDA approval for CUTX-101 (see Note 19, Subsequent Events).

With respect to the $8.0 million upfront payment from Sentynl, the Company recognized revenue over the period in which the development activities occurred using an input method based upon the costs incurred to date in relation to the total estimated costs to complete the development activities. For the three months ended September 30, 2023 and 2022, the Company recognized revenue from this arrangement of $0.2 million and $0.4 million, respectively. For the nine months ended September 30, 2023 and 2022, the Company recognized revenue of $0.5 million and $1.5 million, respectively.

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Avenue

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Agreements with InvaGen Pharmaceuticals Inc. (“InvaGen”)

On November 12, 2018, Avenue entered into a Stock Purchase and Merger Agreement (the “Avenue SPMA”) with InvaGen, and Madison Pharmaceuticals Inc. (the “Merger Sub”), which contemplated: (i) the purchase by InvaGen of a 33.3% stake in Avenue; and (ii) the contingent sale of Avenue to InvaGen. The first stage stock purchase closed in February 2019: InvaGen acquired approximately 0.4 million shares of Avenue’s common stock at $90.00 per share for total gross consideration of $35.0 million, representing a 33.3% stake in Avenue’s capital stock on a fully diluted basis. Under a contingent second stage closing, InvaGen could have acquired the remaining shares of Avenue’s capital stock (in some cases compulsorily and in some cases at InvaGen’s option), pursuant to a reverse triangular merger with Avenue remaining as the surviving entity. On November 1, 2021, Avenue delivered InvaGen notice of termination of the Avenue SPMA, meaning that the second stage acquisition of Avenue by InvaGen pursuant to the Avenue SPMA was no longer possible. In July 2022 Avenue entered into a Share Repurchase Agreement (the “Share Repurchase Agreement”) with InvaGen. In connection with the closing of the Share Repurchase Agreement, which occurred on October 31, 2022, all of the rights retained by InvaGen pursuant to the Stockholders Agreement entered into by and among Avenue, InvaGen and Fortress on November 12, 2018, were terminated.

In connection with the closing by Avenue of an underwritten public offering on October 11, 2022, Avenue consummated the transactions contemplated by the Share Repurchase Agreement with InvaGen, pursuant to which Avenue repurchased 100% of the shares in Avenue held by InvaGen (the “InvaGen Shares”) for a purchase price of $3 million. In addition, under the Share Repurchase Agreement Avenue agreed to pay InvaGen an additional amount as a contingent fee, payable in the form of seven and a half percent (7.5%) of the proceeds of future financings, up to $4 million. In connection with the closing of the January 2023 Avenue Registered Direct and Private Placement (see Note 13, Stockholders’ Equity), which occurred on January 31, 2023, Avenue made a payment of $0.2 million to InvaGen on February 3, 2023. In connection with the closing of an offering in November (see Note 19, Subsequent Events), Avenue owes a fee of approximately $0.3 million to InvaGen.