Business Context and Reporting Period
Company: Akebia Therapeutics, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 9, 2017
Event: Entry into a Material Definitive Agreement and issuance of unregistered equity securities.
Key Financial Metrics and Transaction Terms
This filing details a strategic partnership rather than periodic financial performance. Key financial terms of the agreement include:
- Upfront Payment: $1 million payable to Janssen within 30 days of execution.
- Development Milestones: Up to $16.5 million in aggregate payments on a product-by-product basis.
- Commercial Milestones: Up to $215 million in aggregate payments on a product-by-product basis.
- Royalties: Tiered, escalating royalties ranging from low to mid-single digit percentages of net sales.
- Equity Issuance: Issuance of a warrant for 509,611 shares of common stock at an exercise price of $9.81 per share.
Note: The filing does not provide current revenue, profit, cash flow, or debt figures for the company.
Material Changes and Agreements
On February 9, 2017, Akebia entered into a Research and License Agreement with Janssen Pharmaceutica NV (a Johnson & Johnson affiliate). Key changes include:
- Licensing Rights: Akebia received an exclusive license to develop and commercialize worldwide certain hypoxia-inducible factor (HIF) prolyl hydroxylase-targeted compounds.
- Specific Asset: The agreement includes a license for JNJ5169, a preclinical compound for inflammatory bowel disease.
- Research Term: A three-year initial research term, extendable by up to two additional one-year periods upon payment of a fee.
- Responsibility: Akebia assumes sole responsibility for development and commercialization costs once a compound is designated.
Outlook, Risks, and Contingencies
- Warrant Terms: The warrant issued to Johnson & Johnson Innovation - JJDC, Inc. is exercisable for five years. It was issued under Section 4(a)(2) and Rule 506 exemptions.
- Termination Rights: Akebia may terminate the agreement in whole or in part with 180 days' prior written notice. Both parties retain customary termination rights for material breach.
- Expiration: The agreement expires on a product-by-product and country-by-country basis upon the longer of patent expiry, regulatory exclusivity expiry, or 10 years from first commercial sale.
- Documentation: Full copies of the Agreement and Warrant are expected to be filed in the Form 10-Q for the quarter ended March 31, 2017.
Investor Verification Checklist
- Verify the exact terms of the extension fees for the research term in the full agreement.
- Confirm the specific tiered royalty percentages and net sales definitions in the full agreement.
- Review the Form 10-Q for the quarter ended March 31, 2017, for the complete text of the Agreement and Warrant.
- Assess the impact of the $1 million upfront payment on Akebia's current cash position (data not in this filing).
- Monitor the progress of JNJ5169 and other designated compounds through the preclinical and clinical stages.