UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
|
|
|
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
|
|
For the quarterly period ended September 30, 2020 |
|
|
|
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to _____________.
Commission file number 0-20713
CASI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
|
|
|
|
Delaware |
58-1959440 |
|
(State or other jurisdiction of |
(I.R.S. Employer Identification No.) |
|
incorporation or organization) |
|
9620 Medical Center Drive, Suite 300
Rockville, Maryland
(Address of principal executive offices)
20850
(Zip code)
(240) 864-2600
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
|
Title of each class |
|
Trading Symbol(s) |
|
Name of exchange on which registered |
|
Common Stock |
|
CASI |
|
Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ⌧ NO ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES ⌧ NO ◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
Large accelerated filer ◻ |
Accelerated filer þ |
Non-accelerated filer ◻ |
Smaller reporting company þ |
|
|
|
|
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ◻ NO ⌧
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most recent practicable date.
|
|
|
|
|
|
|
|
|
Class |
|
Outstanding at November 6, 2020 |
|
Common Stock $.01 Par Value |
|
123,943,829 |
CASI PHARMACEUTICALS, INC.
Table of Contents
|
|
|
|
|
|
|
|
PAGE |
|
|
|
4 |
||
|
|
|
|
|
|
|
4 |
||
|
|
|
||
|
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 |
|
4 |
|
|
|
|
||
|
|
5 |
||
|
|
|
||
|
|
6 |
||
|
|
|
||
|
|
7 |
||
|
|
|
||
|
Notes to Unaudited Condensed Consolidated Financial Statements |
|
8 |
|
|
|
|
||
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
26 |
|
|
|
|
||
|
|
34 |
||
|
|
|
||
|
|
34 |
||
|
|
|
||
|
|
34 |
||
|
|
|
|
|
|
|
34 |
||
|
|
|
||
|
|
34 |
||
|
|
|
||
|
|
35 |
||
|
|
|
||
|
|
35 |
||
|
|
|
||
|
|
35 |
||
|
|
|
||
|
|
35 |
||
|
|
|
||
|
|
35 |
||
|
|
|
||
|
|
36 |
||
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements also may be included in other statements that we make. All statements that are not descriptions of historical facts are forward-looking statements. These statements can generally be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” or “anticipates” or similar terminology. These forward-looking statements include, among others, statements regarding the timing of our clinical trials, our cash position and future expenses, and our future revenues.
Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and we assume no duty to update forward-looking statements. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.
Actual results could differ materially from those currently anticipated due to a number of factors, including: the risk that we may be unable to continue as a going concern as a result of our inability to raise sufficient capital for our operational needs; the possibility that we may be delisted from trading on The Nasdaq Capital Market; the volatility in the market price of our common stock; the outbreak of the COVID-19 pandemic and its effects on global markets and supply chains; the risk of substantial dilution of existing stockholders in future stock issuances; the difficulty of executing our business strategy in China; our ability to design and implement a development plan for our ANDAs held by CASI Wuxi; our inability to enter into strategic partnerships for the development, commercialization, manufacturing and distribution of our proposed product candidates or future candidates; risks relating to the need for additional capital and the uncertainty of securing additional funding on favorable terms; risks associated with our product candidates; risks associated with any early-stage products under development; the risk that results in preclinical models are not necessarily indicative of clinical results; uncertainties relating to preclinical and clinical trials, including delays to the commencement of such trials; the lack of success in the clinical development of any of our products; dependence on third parties; risks related to our dependence on Juventas to conduct the clinical development of CNCT19 and to partner with us to co-market CNCT19; risks related to our dependence on Juventas to ensure the patent protection and prosecution for CNCT19; risks relating to the commercialization, if any, of our proposed products (such as marketing, safety, regulatory, patent, product liability, supply, competition and other risks); risks relating to interests of our largest stockholders and our Chairman and CEO that differ from our other stockholders; and risks related to the development of a new manufacturing facility by CASI (Wuxi). Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition.
We caution readers not to place undue reliance on any forward-looking statements, which only speak as of the date made. Additional information about the factors and risks that could affect our business, financial condition and results of operations, are contained in our filings with the SEC, including, but not limited to, our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, each of which is available at www.sec.gov.
3
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
See accompanying condensed notes.
4
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30 |
|
Nine Months Ended September 30 |
|
||||||||
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
||||
|
|
|
|
|
(Note 1) |
|
|
|
(Note 1) |
|
||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product sales |
|
$ |
4,205 |
|
$ |
2,749 |
|
$ |
10,215 |
|
$ |
2,749 |
|
|
Lease income |
|
|
37 |
|
|
38 |
|
|
104 |
|
|
38 |
|
|
Total revenues |
|
|
4,242 |
|
|
2,787 |
|
|
10,319 |
|
|
2,787 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs of revenues |
|
|
1,828 |
|
|
2,648 |
|
|
7,556 |
|
|
2,648 |
|
|
Research and development |
|
|
2,803 |
|
|
1,829 |
|
|
7,682 |
|
|
7,375 |
|
|
General and administrative |
|
|
5,347 |
|
|
7,977 |
|
|
13,490 |
|
|
20,669 |
|
|
Selling and marketing |
|
|
2,062 |
|
|
975 |
|
|
4,879 |
|
|
975 |
|
|
(Gain) loss on disposal of intangible assets |
|
|
— |
|
|
— |
|
|
(450) |
|
|
48 |
|
|
Impairment of intangible assets |
|
|
— |
|
|
— |
|
|
1,537 |
|
|
— |
|
|
Acquired in-process research and development |
|
|
10,862 |
|
|
— |
|
|
11,943 |
|
|
5,849 |
|
|
Total costs and expenses |
|
|
22,902 |
|
|
13,429 |
|
|
46,637 |
|
|
37,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(18,660) |
|
|
(10,642) |
|
|
(36,318) |
|
|
(34,777) |
|
|
Non-operating income/(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
|
432 |
|
|
414 |
|
|
775 |
|
|
783 |
|
|
Other income |
|
|
20 |
|
|
— |
|
|
47 |
|
|
— |
|
|
Foreign exchange (losses) gains |
|
|
(526) |
|
|
719 |
|
|
(278) |
|
|
1,269 |
|
|
Change in fair value of investment in equity securities |
|
|
1,978 |
|
|
(160) |
|
|
2,287 |
|
|
(355) |
|
|
Net loss |
|
|
(16,756) |
|
|
(9,669) |
|
|
(33,487) |
|
|
(33,080) |
|
|
Less: (loss)/income attributable to redeemable noncontrolling interest |
|
|
(309) |
|
|
(23) |
|
|
(584) |
|
|
53 |
|
|
Accretion to redeemable noncontrolling interest redemption value |
|
|
506 |
|
|
245 |
|
|
1,185 |
|
|
406 |
|
|
Net loss attributable to CASI Pharmaceuticals, Inc. |
|
$ |
(16,953) |
|
$ |
(9,891) |
|
$ |
(34,088) |
|
$ |
(33,539) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share (basic and diluted) |
|
$ |
(0.14) |
|
$ |
(0.10) |
|
$ |
(0.32) |
|
$ |
(0.35) |
|
|
Weighted average number of common shares outstanding (basic and diluted) |
|
|
117,940 |
|
|
95,891 |
|
|
105,922 |
|
|
95,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(16,756) |
|
$ |
(9,669) |
|
$ |
(33,487) |
|
$ |
(33,080) |
|
|
Foreign currency translation adjustment |
|
|
2,383 |
|
|
(1,836) |
|
|
1,221 |
|
|
(2,636) |
|
|
Total comprehensive loss |
|
$ |
(14,373) |
|
$ |
(11,505) |
|
$ |
(32,266) |
|
$ |
(35,716) |
|
|
Less: Comprehensive (loss)/income attributable to redeemable noncontrolling interest |
|
|
(309) |
|
|
(23) |
|
|
(584) |
|
|
53 |
|
|
Comprehensive loss attributable to common stockholders |
|
$ |
(14,064) |
|
$ |
(11,482) |
|
$ |
(31,682) |
|
$ |
(35,769) |
|
See accompanying condensed notes.
5
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
Other |
|
|
|
|
|
|
|||
|
|
|
Preferred Stock |
|
Common Stock |
|
Paid-in |
|
Treasury |
|
Comprehensive |
|
Accumulated |
|
|
|
||||||||||||
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Stock |
|
Loss |
|
Deficit |
|
Total |
|||||||||
|
Balance at July 1, 2020 |
|
|
— |
|
$ |
— |
|
|
100,928,829 |
|
$ |
1,010 |
|
$ |
614,617 |
|
$ |
(8,034) |
|
$ |
(3,890) |
|
$ |
(540,364) |
|
$ |
63,339 |
|
Issuance of common stock for options exercised |
|
|
— |
|
|
— |
|
|
15,000 |
|
|
— |
|
|
22 |
|
|
— |
|
|
— |
|
|
— |
|
|
22 |
|
Issuance of common stock pursuant to financing agreements |
|
|
— |
|
|
— |
|
|
23,000,000 |
|
|
230 |
|
|
43,470 |
|
|
— |
|
|
— |
|
|
— |
|
|
43,700 |
|
Stock issuance costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,757) |
|
|
— |
|
|
— |
|
|
— |
|
|
(2,757) |
|
Stock-based compensation expense, net of forfeitures |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
1,793 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,793 |
|
Foreign currency translation adjustment |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,383 |
|
|
— |
|
|
2,383 |
|
Net loss attributable to CASI Pharmaceuticals, Inc. |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(506) |
|
|
— |
|
|
— |
|
|
(16,447) |
|
|
(16,953) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at September 30, 2020 |
|
|
— |
|
$ |
— |
|
|
123,943,829 |
|
$ |
1,240 |
|
$ |
656,639 |
|
$ |
(8,034) |
|
$ |
(1,507) |
|
$ |
(556,811) |
|
$ |
91,527 |
See accompanying condensed notes.
6
CASI Pharmaceuticals, Inc.
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
||||
|
|
|
|
|
September 30, 2019 |
|
||
|
|
|
September 30, 2020 |
|
(Note 1) |
|
||
|
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(33,487) |
|
$ |
(33,080) |
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization for property and equipment |
|
|
389 |
|
|
561 |
|
|
Net loss on disposal of property and equipment |
|
|
— |
|
|
1 |
|
|
Amortization of intangible assets |
|
|
1,095 |
|
|
1,182 |
|
|
Reduction in the carrying amount of the right-of-use assets |
|
|
973 |
|
|
742 |
|
|
(Gain) loss on disposal of intangible assets |
|
|
(450) |
|
|
48 |
|
|
Impairment of intangible assets |
|
|
1,537 |
|
|
— |
|
|
Stock-based compensation expense |
|
|
5,685 |
|
|
5,320 |
|
|
Acquired in-process research and development |
|
|
11,943 |
|
|
5,849 |
|
|
Change in fair value of investment in equity securities |
|
|
(2,287) |
|
|
355 |
|
|
Non-cash interest |
|
|
— |
|
|
1 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(2,785) |
|
|
(2,643) |
|
|
Inventories |
|
|
3,822 |
|
|
(2,282) |
|
|
Prepaid expenses and other assets |
|
|
(434) |
|
|
2,796 |
|
|
Accounts payable |
|
|
(2,434) |
|
|
3,877 |
|
|
Accrued liabilities and other liabilities |
|
|
(1,398) |
|
|
(1,152) |
|
|
Deferred income |
|
|
(23) |
|
|
— |
|
|
Net cash used in operating activities |
|
|
(17,854) |
|
|
(18,425) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from disposal of intangible assets |
|
|
1,700 |
|
|
— |
|
|
Purchases of property and equipment |
|
|
(367) |
|
|
(390) |
|
|
Loan to a related party |
|
|
(10,033) |
|
|
— |
|
|
Receipt of repayment of loan from a related party |
|
|
10,033 |
|
|
— |
|
|
Cash paid for acquired in-process research and development |
|
|
(11,678) |
|
|
(5,849) |
|
|
Cash paid to acquire equity securities in Black Belt Tx Limited |
|
|
— |
|
|
(2,250) |
|
|
Cash paid to acquire debt securities in Black Belt Tx Limited |
|
|
(83) |
|
|
— |
|
|
Cash paid to acquire equity securities in Juventas Cell Therapy Ltd |
|
|
— |
|
|
(11,788) |
|
|
Receipt of government grants related to land use right |
|
|
2,278 |
|
|
— |
|
|
Net cash used in investing activities |
|
|
(8,150) |
|
|
(20,277) |
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from notes payable |
|
|
466 |
|
|
— |
|
|
Repayment of notes payable |
|
|
— |
|
|
(1,500) |
|
|
Stock issuance costs |
|
|
(2,800) |
|
|
(8) |
|
|
Proceeds from issuance of common stock |
|
|
45,099 |
|
|
— |
|
|
Cash contribution from redeemable noncontrolling interest |
|
|
— |
|
|
20,000 |
|
|
Proceeds from exercise of stock options |
|
|
3,874 |
|
|
114 |
|
|
Repurchase of stock options to satisfy tax withholding obligations |
|
|
(251) |
|
|
(12) |
|
|
Proceeds from exercise of warrants |
|
|
— |
|
|
1,668 |
|
|
Payment of deferred offering costs |
|
|
— |
|
|
(369) |
|
|
Net cash provided by financing activities |
|
|
46,388 |
|
|
19,893 |
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate change on cash and cash equivalents |
|
|
587 |
|
|
(2,155) |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
20,971 |
|
|
(20,964) |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
|
53,621 |
|
|
84,205 |
|
|
Cash and cash equivalents at end of period |
|
$ |
74,592 |
|
$ |
63,241 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
— |
|
$ |
30 |
|
|
Income taxes paid |
|
$ |
— |
|
$ |
— |
|
See accompanying condensed notes.
7
CASI Pharmaceuticals, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. The Company is focused on acquiring, developing and commercializing products that augment its hematology oncology therapeutic focus as well as other areas of unmet medical need. The Company intends to execute its plan to become a leader by launching medicines in the greater China market leveraging the Company's China-based regulatory and commercial competencies and its global drug development expertise. The Company's operations in China are conducted through its wholly-owned subsidiary, CASI Pharmaceuticals (China) Co., Ltd. ("CASI China"), which is located in Beijing, China. The Company has built a commercial team of over 70 hematology and oncology sales and marketing specialists based in China.
In August 2019, the Company launched its first commercial product, EVOMELA® (Melphalan for Injection). EVOMELA is indicated for use as a high-dose conditioning treatment prior to hematopoietic progenitor (stem) cell transplantation in patients with multiple myeloma and also indicated for the palliative treatment of patients with multiple myeloma for whom oral therapy is not appropriate. Other core hematology/oncology assets in the Company’s pipeline include:
| ● | An autologous CD19 CAR-T investigative product (CNCT19) being developed by Juventas Cell Therapy Ltd (“Juventas”) as a treatment for patients with B-cell acute lymphoblastic leukemia (“B-ALL”) and B-cell non-Hodgkin lymphoma (“B-NHL"). The Company has commercialization rights for CNCT19 with profit-sharing to Juventas. Phase 1 studies has been substantially completed and Juventas expects the Phase II studies will start by the end of 2020. |
| ● | CID-103, an anti-CD38 monoclonal antibody being developed for the treatment of patients with multiple myeloma. The Company intends to initiate the Phase 1 study of CID-103 in the first quarter of 2021. |
| ● | ZEVALIN® (Ibritumomab Tiuxetan), a CD20-directed radiotherapeutic antibody, that is approved in the U.S. to treat patients with non-Hodgkin lymphoma (“NHL”). The Company intends to begin the China registration study of ZEVALIN in 2021. |
Other assets in the Company’s pipeline for which the Company have exclusive rights in China are (i) Octreotide Long Acting Injectable (“LAI”), and (ii) a novel formulation of Thiotepa. Octreotide LAI formulations, which are approved in various European countries, are considered a standard of care for the treatment of acromegaly and the control of symptoms associated with certain neuroendocrine tumors. The Company plans to begin the China registration study for Octreotide LAI in 2020. Thiotepa is a conditioning treatment for allogeneic haemopoietic stem cell transplants. The Company’s partner for the novel formulation of Thiotepa plans to begin the China registration study in 2021.
In October 2020, we added to our portfolio of assets BI-1206 which has a novel mode-of-action, blocking the single inhibitory antibody checkpoint receptor FcγRIIB to unlock anti-cancer immunity in both hematological malignancies and solid tumors. BI-1206 is BioInvent's lead drug candidate and is being investigated in a Phase I/II trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in solid tumors, and in a Phase I/IIa trial in combination with MabThera® (rituximab) for the treatment of non-Hodgkin lymphoma (NHL).
The Company intends to continue to pursue building a robust pipeline of drug candidates for development and commercialization in China as its primary market and, if rights are available, for the rest of the world. For in-licensed products, the Company uses a market-oriented approach to identify pharmaceutical candidates that it believes have the potential for gaining widespread market acceptance, either globally or in China, and for which development can be accelerated under the Company’s drug development strategy. The Company’s strategy focuses on product candidates with proven targets or product candidates that have low clinical risk.
8
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries, in which CASI, directly or indirectly, has a controlling financial interest. These subsidiaries include Miikana Therapeutics, Inc. (“Miikana”), CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”), CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”), and CASI Biopharmaceuticals (WUXI) Co., Ltd. (“CASI Biopharmaceuticals”). CASI China is a non-stock Chinese entity with 100% of its interest owned by CASI. CASI China received approval for a business license from the Beijing Industry and Commercial Administration in August 2012 and has operating facilities in Beijing. CASI Wuxi was established on December 26, 2018 in China to develop a future manufacturing facility in China. CASI Biopharmaceuticals is a wholly owned subsidiary of CASI Wuxi and was established in April 2019. The Company controls CASI Wuxi through 80% voting rights (see Note 11). Accordingly, the financial statements of CASI Wuxi have been consolidated in the Company’s consolidated financial statements since its inception. All inter-company balances and transactions have been eliminated in consolidation. The Company currently operates in one operating segment, which is the development of innovative therapeutics addressing cancer and other unmet medical needs for the global market.
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, such condensed consolidated financial statements do not include all of the information and disclosures required by U.S. generally accepted accounting principles for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. The accompanying December 31, 2019 financial information was derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated balance sheet of the Company as of December 31, 2019 and the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for the year then ended.
Certain line items in the 2019 consolidated balance sheet, in the September 30, 2019 unaudited condensed consolidated statement of operations and comprehensive loss and in the September 30, 2019 unaudited condensed consolidated statement of cash flows have been reclassified to conform to the current period presentation.
Liquidity Risks and Management’s Plans
Since its inception in 1991, the Company has incurred significant losses from operations and, as of September 30, 2020, has incurred an accumulated deficit of $556.8 million. In 2012, the Company shifted its business strategy to China and has since built an infrastructure in China that includes sales and marketing, medical affairs, and regulatory and clinical development. In 2014, the Company changed its name to "CASI Pharmaceuticals, Inc." The majority of the Company's operations are now located in China. The Company expects to continue to incur operating losses for the foreseeable future due to, among other factors, its continuing clinical and development activities.
On July 24, 2020, the Company closed an underwritten public offering of 23 million shares of common stock (the "Offering") and received gross proceeds of approximately $43.7 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI. Certain insiders, including CASI's Chief Executive Officer, and CASI's President, purchased shares of common stock in the Offering at the public offering price and on the same terms as the other purchasers in this Offering (see Note 12). The Company is using the net proceeds of this offering for working capital and general corporate purposes, which include, but are not limited to advancing the Company's product portfolio, acquiring the rights to new product candidates and general and administrative expenses.
Taking into consideration the cash and cash equivalents balance as of September 30, 2020, the Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the unaudited condensed consolidated financial statements are issued. As of September 30, 2020, approximately $4.2 million of the Company’s cash balance was held by CASI China, and approximately $20.4 million of the Company’s cash balance was held by CASI Wuxi. The Company intends to continue to exercise tight controls over operating expenditures and will continue to pursue opportunities, as required, to raise additional capital and will also actively pursue non- or less-dilutive capital raising arrangements.
9
Risks and Uncertainties
The Company's business has been and may continue to be adversely affected by the COVID-19 pandemic. In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a pandemic. Due to the evolving and highly uncertain nature of this event, the Company cannot predict at this time the full extent to which the COVID-19 pandemic will adversely impact its business, results and financial condition. The impact will depend on many factors that are not known at this time. These include, among others, the extent of harm to public health, the continued disruption to operations, and the impact of the global business and economic environment on liquidity and the availability of capital.
The Company has experienced operational interruptions as a result of COVID-19, including the temporary disruption of operations in China due to a Chinese government mandated quarantine protocol, including mandatory business closures, social distancing measures, and various travel restrictions. Although the Company's operations in China are beginning to normalize, there can be no assurance that such operations will continue to do so or that there will not be a renewed outbreak of COVID-19 or other significant contagious diseases in China or elsewhere. To the extent that such events occur, demand for the Company's products may decline, and the Chinese government or other governments may impose additional restrictions resulting in further shutdowns, further work restrictions, and the disruption of the Company’s supply and distribution channels.
The COVID-19 pandemic has adversely affected, and may continue to adversely affect, the economies and financial markets of many countries, which may result in a period of regional, national, and global economic slowdown or regional, national, or global recessions that could affect the Company's ability to continue to commercialize and expand distribution of EVOMELA (Melphalan For Injection) or other drugs in the Company’s existing product pipeline. The effectiveness of the Company's sales teams may be negatively impacted by the lack of travel and their reduced ability to engage with decision-makers. In the first quarter 2020, during which the peak of the pandemic occurred in China, the Company experienced some disruptions to our EVOMELA marketing and sales activities due to travel restrictions and the prioritization of hospitals and physicians to attend to patients with COVID-19 infection. During the second and third quarters, operations have returned to expected levels; however, there can be no assurance that such restrictions will not be imposed again. In addition, economic and other uncertainties may adversely affect other parties' willingness to negotiate and execute product licenses and thus hamper the Company's ability to in-license clinical-stage and late-stage drug candidates in China or elsewhere.
The Company currently relies on a single source for its supply of EVOMELA. Due to COVID-19, the Company experienced a disruption to its supply chain for EVOMELA. That disruption, along with a recent change in the manufacturer of EVOMELA, contributed to a decrease in the Company's revenue for the second quarter of 2020. The Company has returned to expected levels of sales as indicated by the increase in sales in the third quarter of 2020.
If suppliers refuse or are unable to provide products for any reason (including the occurrence of an event like the COVID-19 pandemic that makes delivery impractical), the Company would be required to negotiate an agreement with a substitute supplier, which would likely interrupt the manufacturing of EVOMELA, cause delays and increase costs.
Clinical trials, whether planned or ongoing, may be affected by the COVID-19 pandemic. The Company's partner, Juventas, experienced some delay in the conduct of the CNCT19 trials due to the COVID-19 pandemic. The COVID-19 pandemic has also impacted the Company's targeted start time of our CID-103 trial due to the lock-down of many medical facilities in Europe. Study procedures (particularly any procedures that may be deemed non-essential), site initiation, participant recruitment and enrollment, participant dosing, shipment of the Company's product candidates, distribution of clinical trial materials, study monitoring, site inspections and data analysis may be paused or delayed due to changes in hospital or research institution policies, federal, state or local regulations, prioritization of hospital and other medical resources toward COVID-19 efforts, or other reasons related to the pandemic. In addition, there could be a potential effect of COVID-19 on the operations of the health regulatory authorities, which could result in delays of reviews and approvals, including with respect to the Company's product candidates. Any prolongation or de-prioritization of the Company's clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of the Company's product candidates.
10
2. License and Distribution Agreements
Pharmathen Global BV:
On October 29, 2019, the Company entered into an exclusive distribution agreement with Pharmathen Global BV (“Pharmathen”) for the development and distribution of octreotide long acting injectable (Octreotide LAI) microsphere in China. Octreotide LAI formulations are considered a standard of care for the treatment of acromegaly and for the control of symptoms associated with certain neuroendocrine tumors. Octreotide LAI has been approved in various European countries. CASI intends to advance the development, import drug registration, and market approval of this product in China. The Company expects to initiate an Octreotide LAI registration study in China in 2020.
The terms of the agreement include an upfront payment of 1 million euros which was paid by the Company in 2019, and up to 2 million euros of additional milestone payments. During the nine months ended September 30, 2020, milestones were achieved related to Pharmathen’s approval of Octreotide in the UK, which triggered a 1 million euros payment to Pharmathen, and related to the first submission to the National Medical Products Administration in China, triggering a 500,000 euros payment to Pharmathen. The 1.5 million euros (approximately $1.7 million) was expensed as acquired in-process research and development in the accompanying unaudited condensed consolidated statement of operations and comprehensive income for the nine months ended September 30, 2020. CASI is responsible for the development, import drug registration, product approval and commercialization in China. CASI has a 10-year non-royalty exclusive distribution period after the product launch at agreed supply costs for the first three years.
Juventas Cell Therapy:
In June 2019, the Company entered into a license agreement for exclusive worldwide license to commercialize an autologous anti-CD19 T-cell therapy product (CNCT19) from Juventas Cell Therapy Ltd. (“Juventas”) (the “Juventas license agreement”). Juventas is a China-based company engaged in cell therapy. The terms of the agreement include RMB 70 million (approximately $10 million) of milestone payments upon the registration of Phase II clinical trial of CNCT19 and sales royalty payments. The milestone became probable to be met during the quarter ended September 30, 2020. As a result, the Company paid the milestone payment of RMB 70 million to Juventas in September 2020 (see Note 4).
In September 2020, Juventas and its shareholders (including CASI Biopharmaceuticals) agreed to certain terms and conditions required by a new third-party investor to facilitate the Series B financing of Juventas, pursuant to which the Company agreed to amend and supplement the original licensing agreement (the “Supplementary Agreement”) by agreeing to pay Juventas certain percentage of profits generated from commercial sales of CNCT19. The Supplementary Agreement also specifies a minimum annual target net profit to be distributed to Juventas and certain other terms and obligations. In return, Juventas issued additional equity interests to the Company (see Note 4).
CNCT19 was engineered from the CD19 CAR-T, to potentially treat patients with hematological malignancies which express CD19 including, B-cell acute lymphoblastic leukemia (B-ALL), chronic lymphocytic leukemia (CLL), and B-cell non-Hodgkin lymphoma (B-NHL). The China National Medical Products Administration (NMPA) has approved the clinical trial applications for CNCT19 in Phase 1 studies in relapsed/refractory B-NHL and B-ALL. Both trials are conducted by Juventas and are currently enrolling patients. Phase 1 studies has been substantially completed and Juventas expects the Phase II studies will start by the end of 2020.
Black Belt Therapeutics Limited:
In April 2019, the Company entered into a license agreement with Black Belt Therapeutics Limited (“Black Belt”) for exclusive worldwide rights to CID-103, an investigational anti-CD38 monoclonal antibody (Mab) (formerly known as TSK011010). The terms of the agreement include an upfront payment of €5 million and certain development milestone and sales royalty payments. CASI is responsible for all development and commercialization activities of the CID-103 program. The Company expects to initiate a Phase I study in the UK in the first quarter of 2021.
11
China Resources Guokang Pharmaceuticals Co., Ltd:
In March 2019, CASI entered into an exclusive distribution agreement with China Resources Guokang Pharmaceuticals Co., Ltd. (“CRGK” or the “distributor”), pursuant to which it is the sole customer and distributor for the sale of EVOMELA in China. Commercial sales of EVOMELA were launched in August 2019. For the three and nine months ended September 30, 2020, the Company recognized $4.2 million and $10.2 million of revenues, respectively, from sales of EVOMELA under this arrangement.
3. Summary of Significant Accounting Policies
Revenue Recognition
The Company recognizes revenue using the following steps:
| ● | Identification of the contract, or contracts, with a customer; |
| ● | Identification of the performance obligations in the contract; |
| ● | Determination of the transaction price, including the identification and estimation of variable consideration; |
| ● | Allocation of the transaction price to the performance obligations in the contract; and |
| ● | Recognition of revenue when we satisfy a performance obligation. |
The Company recognizes revenue on sales of EVOMELA when the control of the product is transferred to the distributor, which occurs upon delivery of the product to the distributor, in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for the product, excluding amounts collected on behalf of third parties (e.g. value-added taxes). Payment terms for these sales are due within 90 days. The arrangement does not include any variable consideration.
The costs of assurance type warranties that provide the customer the right to exchange purchased product that does not meet appropriate quality standards are recognized when they are probable and are reasonably estimable. As of September 30, 2020, the Company did not incur, and therefore did not defer, any material costs to obtain or fulfill contracts. The Company did not have any contract assets or contract liabilities as of September 30, 2020.
Costs of Revenues
Cost of revenues consists primary of the cost of inventories of EVOMELA and sales-based royalties related to the sale of EVOMELA.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company’s significant accounting estimates relate to recoverability of operating lease right-of-use assets, intangible assets and long-term investments, net realizable value and obsolescence allowance for inventory, deferred tax assets and valuation allowance, allowance for doubtful accounts, stock-based arrangements and fair value of investments in equity securities in Juventas. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results may differ from those estimates, and such differences may be material to the consolidated financial statements.
Accounts Receivable and Credit Concentration
CRGK is the sole customer for the sale of the Company’s EVOMELA product in China. All consolidated revenue for the three and nine months ended September 30, 2020 were generated from sales to CRGK in China. Accounts receivable consist of CRGK receivables of $4.1 million and $1.3 million as of September 30, 2020 and December 31, 2019, respectively.
12
The Company extends credit to CRGK on an unsecured basis and maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable. In establishing the required allowance, management considers the historical losses, customer’s financial condition, the amount of accounts receivables in dispute, the accounts receivables aging and the customer’s payment pattern. The Company determined that no allowance for doubtful accounts was necessary as of September 30, 2020.
Government Grants
Government grants are recognized when there is reasonable assurance that the Company will comply with required conditions and the grants will be received. Government grants related to assets are presented as deferred income that is recognized on a systematic basis over the useful life of the asset.
New Accounting Pronouncements
Recently Adopted Pronouncements
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements. The amendments applicable to the disclosures of changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial year of adoption. This ASU is effective for all entities for fiscal years beginning after December 15, 2019, including interim periods therein. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted, and an entity is also permitted to early adopt any removed or modified disclosures and delay adoption of the additional disclosures until their effective date. The Company adopted this guidance effective January 1, 2020. The adoption of this new accounting standard did not have a significant impact on the Company’s consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326) (“ASU 2016-13”) and subsequent amendments to the initial guidance including ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, and ASU No. 2019-10 (collectively, “Topic 326”). Topic 326 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This standard is effective for public business entities, excluding entities eligible to be smaller reporting companies for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For all other entities, this standard is effective for annual and interim periods beginning after December 15, 2022 and early adoption is permitted for annual and interim periods beginning after December 15, 2018. As a smaller reporting company, the Company expects to adopt this standard in fiscal year 2023.The Company is currently assessing the impact that the adoption of this ASU will have on the consolidated financial statements.
4. Investment in equity securities, at fair value and long-term investments
Investment in equity securities, at fair value
The Company has an equity investment in the common stock of a publicly traded company. The fair value of this security was measured using its quoted market price, a Level 1 input, and was approximately $1.8 million as of September 30, 2020 and $0.6 million as of December 31, 2019 (see Note 16).
The following table summarizes the Company’s investment as of September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross |
|
|
|
|
|
(In thousands) |
|
|
|
|
|
|
unrealized |
|
Aggregate fair |
||
|
Description |
|
Classification |
|
Cost |
|
gains |
|
value |
|||
|
Common stock |
|
Investment |
|
$ |
— |
|
$ |
1,796 |
|
$ |
1,796 |
13
Unrealized gains or (losses) on the Company’s equity investment for the three months ended September 30, 2020 and 2019 were $862,000 and $(160,000), respectively. Unrealized gains or (losses) on the Company’s equity investment for the nine months ended September 30, 2020 and 2019 were $1,171,000 and $(355,000), respectively. Unrealized gains or (losses) on the Company’s equity investment are recognized as change in fair value of investment in equity securities in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.
Long-term investments
Long-term investments consisted of the following:
Black Belt Tx Limited
In April 2019, in conjunction with its license agreement entered into with Black Belt (see Note 2), the Company made a 2 million euros ($2,249,600) equity investment in the ordinary shares of a newly established, privately held UK Company, Black Belt Tx Ltd ("Black Belt Tx"), representing a 14.1% equity interest with the right to appoint a non-voting board observer.
In July 2020, the Company entered into a three-year convertible loan agreement with Black Belt Tx (the "Black Belt Tx Loan") in the amount of 211,800 euros (approximately $250,000) with a non-compounding annual interest rate of 6% payable at maturity. The principal balance is also due at maturity. The proceeds will support and advance Black Belt Tx's programs and general operations. The loan principal will be disbursed in three equal installments of 70,600 euros (approximately $83,000). The first tranche was disbursed upon execution of the loan agreement in August 2020. The second and third tranche will be disbursed only under certain operational circumstances and with Black Belt Tx’s Board of Directors' approval. In the event that Black Belt Tx, on or prior to the maturity date, completes an equity financing round of at least 5,000,000 euros (approximately $5.9 million), then the outstanding principal amount shall be automatically converted into such shares at 80% of the price per share issued divided by a compensating factor based on the number of years that the Black Belt Tx Loan has been outstanding. The investment in convertible loan is accounted for as investment in debt securities as available-for-sale instrument.
As the Company does not have significant influence over operating and financial policies of Black Belt Tx, and the debt and equity interests do not have readily determinable fair value, the investment in Black Belt Tx is stated at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment. The Company did not record any adjustments or impairments during the three and nine months ended September 30, 2020 related to this investment.
14
Juventas Cell Therapy Limited
In June 2019, in conjunction with its license agreement entered into with Juventas (see Note 2), the Company, through CASI Biopharmaceuticals, made an RMB 80 million ($11,788,000) investment in Juventas, a privately held, China-based company, in Juventas’ Series A plus equity, which represented a 16.327% equity interest on a fully diluted basis, and the right to appoint a non-voting board observer. The Company was entitled with substantive liquidation preference over the founding shareholder of Juventas. In addition, the Juventas’ founding shareholder provided a put option to the Company pursuant to which the Company can put the equity investment to the founding shareholder at a fixed return of 8% per annum upon occurrence of certain events. The investment in the equity interests of the Juventas and the investment in put option to the founding shareholder were accounted for as investments in equity securities using the measurement alternative at its cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, as the fair value of the equity securities of Juventas is not readily determinable. The consideration of RMB 80 million ($11,788,000) was allocated into investment in equity interests and investment in put option based on their relative fair value on the transaction date.
In September 2020, in conjunction with the Supplementary Agreement entered into with Juventas (see Note 2), Juventas issued additional Series A plus equity to the Company with substantive liquidation preference over Juventas’ founding shareholder, resulting in the Company’s equity ownership increasing to 19.652% (post-Juventas Series B financing) on a fully diluted basis. CASI Biopharmaceuticals is also entitled to appoint a director to Juventas’ board of directors. Juventas’ founding shareholder also provided a put option to the Company pursuant to which the Company can put the additional equity investment to the founding shareholder at RMB 70 million plus a fixed return of 8% per annum upon occurrence of certain events. The transaction closed on September 29, 2020. The fair value of the Company’s additional equity interest in Juventas and the new put option was RMB 83.7 million ($12.3 million) and RMB 0.4 million ($64,000) on September 29, 2020, respectively.
Since the equity interest with substantive liquidation preference is not in-substance common stock, the investment in the additional equity interests of Juventas was accounted for as an investment in equity securities at transaction date fair value with a corresponding credit to Other Liabilities. The profit-sharing liability represents the Company’s obligation to pay an increased share of future profits pursuant to the Supplementary Agreement (see Note 2) which was conveyed by the Company in exchange for the additional equity interests in Juventas. The Company views this as a payment from a vendor that should reduce cost of revenues over the period of royalty payments. The long-term liability will be derecognized as payments are made on a systematic and rational basis representing the pattern in which the Company expects to settle the profit-sharing payment during the commercialization period of CNCT19.
The investments are measured using the measurement alternative at its cost, minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, as the fair value of the equity securities of Juventas is not readily determinable. In addition, the changes in the fair value of the original investment in equity interests and put option in the amount of $1,116,000 resulting from the observable price in this transaction was recognized during the three and nine months ended September 30, 2020.
In June 2020, the Company entered into a one-year loan agreement with Juventas in the amount of RMB 30,000,000 (approximately $4,243,000) with an annual interest rate of 20%. In August 2020, the Company entered into another one-year loan with Juventas in the amount of RMB 40 million (approximately USD $5,790,000) for one year with an annual interest rate of 20%. In September 2020, the Company received early repayments for both principals and accrued interest from Juventas. For the three and nine months ended September 30, 2020, the Company recognized interest income of $351,000 and $375,000, respectively.
5. Inventories
Inventories at September 30, 2020 and December 31, 2019 consisted of the following:
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
September 30, 2020 |
|
December 31, 2019 |
|
||
|
Finished goods |
|
$ |
720 |
|
$ |
4,514 |
|
|
Raw materials |
|
|
— |
|
|
28 |
|
|
Total |
|
$ |
720 |
|
$ |
4,542 |
|
No provisions to write down the carrying amount of inventory have been recorded in the three and nine months ended September 30, 2020 and 2019.
15
6. Leases
Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term.
Operating lease liabilities (see below) are included in accrued liabilities and other liabilities (noncurrent) in the unaudited condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019.
All of the Company’s existing leases as of September 30, 2020 are classified as operating leases. As of September 30, 2020, the Company had seven material operating leases for land, facilities and office equipment with remaining terms expiring from 2021 through 2069 and a weighted average remaining lease term of36.36 years. The Company has fair value renewal options for five of the Company’s existing leases, none of which are considered reasonably certain of being exercised or included in the minimum lease term. Weighted average discount rates used in the calculation of the lease liability is 4.2%. The discount rates reflect the estimated incremental borrowing rate, which includes an assessment of the credit rating to determine the rate that the Company would have to pay to borrow, on a collateralized basis for a similar term, an amount equal to the lease payments in a similar economic environment.
In November 2019, CASI Wuxi entered into a fifty-year lease agreement for the right to use state-owned land in China for the construction of a manufacturing facility. The land parcel is 74,028.40 square meters. The Company classifies this lease as an operating lease. The Company prepaid all of the lease payments for the land use right in 2019 in the amount of RMB 45 million (equivalent to US$6.6 million). In April 2020, CASI Wuxi received RMB 15.9 million (equivalent to approximately US$2.2 million) from the Jiangsu Province Wuxi Huishan Economic Development Zone as government grant for this development project which was recorded as deferred income in April 2020 (See Note 9). On August 27, 2020, CASI Wuxi entered into the Construction Project Contract for RMB 74,588,000 (equivalent to approximately $10,923,000) to complete the phase 1 project of CASI Wuxi's research and development production base (see Note 19). The estimated completion date is October 2023.
In the third quarter of 2020, the Company entered into two 3-year lease agreements for office space in China each of which continue through August 2023 and September 2023, respectively. The Company recorded right-of-use assets of $1.1 million and related lease liabilities of $1.0 million at lease commencement date. The Company classifies these leases as operating leases.
Rent expense for the nine months ended September 30, 2020 and 2019 was approximately $1,153,000 and $957,000, respectively. There were no variable lease costs or sublease income for leased assets for the nine months ended September 30, 2020.
Right of use assets and liabilities as of September 30, 2020 and December 31, 2019 in the condensed consolidated balance sheets were as follows:
Supplemental cash flow information related to leases was as follows:
A maturity analysis of our operating leases as of September 30, 2020 follows:
16
Future undiscounted cash flows:
7. Intangible Assets
Intangible assets include ANDAs that were acquired as part of 2018 asset acquisitions of US marketed generic products and capitalized costs related to a cloud computing arrangement (CCA).
The ANDAs are amortized over their estimated useful lives of 13 years, using the straight-line method. The CCA is being amortized over its useful life of 5 years.
In February 2020, the Company entered into an agreement with Chartwell Rx Sciences, LLC (“Chartwell”) in which the Company sold and transferred the control of seven U.S. FDA-approved ANDAs to Chartwell in exchange for $450,000 in cash, which the Company received in March 2020. These ANDAs had a net book value of $0 at the time of sale. The Company is entitled to an additional $1 million, contingent upon Chartwell receiving certain FDA approvals relating to certain of these ANDAs. The Company recognized a gain on disposal of intangible assets in the amount of $450,000 in the accompanying unaudited condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2020. The additional $1 million is treated as variable consideration. Because the amount of variable consideration is highly susceptible to factors outside the Company's influence and the Company’s experience with similar types of contracts is limited, the Company did not include the amount of variable consideration in recognition of gain on disposal of intangible assets for the nine months ended September 30, 2020. The Company will recognize the variable consideration and additional gain on disposal of intangible assets when the constraint on variable consideration is resolved, i.e., Chartwell receives relevant FDA approvals.
Intangible assets at September 30, 2020 consists of the following:
Expected future amortization expense, is as follows:
|
|
|
|
|
|
(In thousands) |
|
|
|
|
2020 (remaining three months) |
|
$ |
318 |
|
2021 |
|
|
1,271 |
|
2022 |
|
|
1,271 |
|
2023 |
|
|
1,271 |
|
2024 |
|
|
1,237 |
|
2025 and thereafter |
|
|
7,647 |
17
8. Assets Held for Sale
During the nine months ended September 30, 2020, the Company classified 14 ANDAs as assets held for sale as it committed to plans to sell these assets within one year and actively market the assets in their current condition at a price that is reasonable in relation to their estimated fair value. The held for sale criteria were met during the nine months ended September 30, 2020. Assets held for sale are reported at the lower of cost or fair value less costs to sell and are recorded in a single line in the unaudited condensed consolidated balance sheets. The Company recorded an impairment of assets held for sale of $1.5 million in the nine months ended September 30, 2020. The Company reclassified the comparable balance sheet amounts related to these fourteen ANDAs in the amount of approximately $3.2 million as of December 31, 2019 from intangible assets to assets held for sale.
In July 2020, the Company entered into an agreement with Rubicon Research Private Limited (“Rubicon”) in which the Company sold and transferred the control of four U.S. FDA-approved ANDAs to Rubicon in exchange for $1.25 million in cash, which the Company received in July 2020. These ANDAs had a net book value of $1.25 million at the time of sale resulting on no gain or loss on the sale.
Assets held-for-sale at September 30, 2020 consists of the following:
In October 2020, the Company entered into an agreement with Chartwell in which the Company sold and transferred the control of 10 ANDAs to Chartwell in exchange for $1.0 million in cash, which the Company will receive in the fourth quarter of 2020. These ANDAs had a net book value of $0.3 million at the time of sale, resulting in a gain on sale of assets of $0.7 million in the fourth quarter of 2020.
9. Grants
In November 2019, CASI Wuxi entered into a fifty-year lease agreement for the right to use state-owned land in China for the construction of a manufacturing facility (see Note 6). In November 2019, the Company entered into a grant agreement with the Administrative Committee of Wuxi Huishan Economic Development Zone, under which, the Company is eligible for grants up to RMB 25 million (equivalent to approximately $3.6 million) to support the development of CASI Wuxi’s manufacturing site.
In April 2020, CASI Wuxi received RMB 15.9 million (equivalent to approximately $2.2 million) from the Jiangsu Province Wuxi Huishan Economic Development Zone as a government grant for this development project which was recorded as deferred income in April 2020. The grant will be amortized over the term of the lease of the land. The Company recognized $12,000 and $23,000 of other income during the three and nine months ended September 30, 2020, respectively.
10. Note Payable
On April 27, 2020, M&T Bank approved a $465,595 loan to the Company under the Paycheck Protection Program (PPP) pursuant to the Coronavirus Aid, Relief and Economic Security (CARES) Act that was signed into law on March 27, 2020. The loan, evidenced by a promissory note to M&T Bank as lender and dated April 29, 2020, has a term of two years, is unsecured, and is guaranteed by the Small Business Administration (SBA). The loan bears interest at a fixed rate of one percent per annum, with the first six months of interest and principal deferred. Some or all of the loan may be forgiven if the Company complies with certain relevant conditions. Interest expense of approximately $1,200 and $1,900 was recorded in the three and nine months ended September 30, 2020.
A maturity analysis of the note payable as of September 30, 2020 follows:
18
Future undiscounted cash flows:
11. Redeemable Noncontrolling Interest
On December 26, 2018, the Company, together with Wuxi Jintou Huicun Investment Enterprise, a limited partnership organized under Chinese law (“Wuxi LP”) established CASI Wuxi to build and operate a manufacturing facility in the Wuxi Huishan Economic Development Zone in Jiangsu Province, China. The Company holds 80% of the equity interests in CASI Wuxi and will invest, over time, $80 million in CASI Wuxi. The Company’s investment will consist of (i) $21 million in cash (paid in February 2019), (ii) a transfer of selected ANDAs valued at $30 million (transferred in May 2019), and (iii) an additional $29 million cash payment within three years from the date of establishment of CASI Wuxi. Wuxi LP holds 20% of the equity interest in CASI Wuxi through its investment in RMB of $20 million in cash (paid in March 2019). As the transfer of ANDAs valued at $30 million was to the Company’s consolidated subsidiary (CASI Wuxi), the Company recognized the transfer of the ANDAs at their carrying value and did not recognize a gain on the transfer.
The investment of Wuxi LP in CASI Wuxi is treated as redeemable noncontrolling interest and is classified outside of permanent equity on the consolidated balance sheets because (1) the noncontrolling interest is not mandatorily redeemable financial instruments, and (2) it is redeemable at the option of the holder, or upon the occurrence of an event that is not solely within the control of the Company. Accretion of the carrying amount of redeemable noncontrolling interest to the redemption value is recorded in additional paid-in capital.
Changes in redeemable noncontrolling interest during the three and nine month periods ended September 30, 2020 and 2019 are as follows:
12. Stockholders’ Equity
July 2020 Underwritten Public Offering
On July 24, 2020, the Company closed an underwritten public offering of 23 million shares of common stock (the "Offering") and received gross proceeds of approximately $43.7 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI. Certain insiders, including CASI's Chief Executive Officer, and CASI's President, purchased shares of common stock in the Offering at the public offering price and on the same terms as the other purchasers in this Offering.
19
Common Stock Sales Agreements
The Company has a Common Stock Sales Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”). On July 19, 2019, the Company entered into an amendment to the Sales Agreement reducing the maximum amount that may be sold under the Sales Agreement to $20 million. As of September 30, 2020, approximately $19.5 million remained available under the Sales Agreement.
On July 19, 2019, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC (the “Open Market Agreement”) in which the Company may elect to sell from time to time, at its option, up to $30 million in shares of the Company’s common stock, through Jefferies LLC, as sales agent.
For the nine months ended September 30, 2020, there were approximately 434,000 shares issued under the Open Market Agreement with net proceeds of approximately $1,357,000. As of September 30, 2020, the Company has issued approximately 493,000 shares with net proceeds of approximately $1,539,000. As of September 30, 2020, approximately $28.4 million remained available under the Open Market Agreement.
Stock purchase warrants activity for the nine months ended September 30, 2020 is as follows:
All outstanding warrants are equity classified.
13. Net Loss Per Share
The following table sets forth the basic and diluted net loss per share computation and provides a reconciliation of the numerator and denominator for the periods presented:
As of September 30, 2020, and 2019, outstanding stock options totaling 15,956,030 and 18,663,581, respectively, and outstanding warrants totaling 8,271,709 and 10,794,172, respectively, were anti-dilutive, and therefore, were not included in the computation of weighted average shares used in computing diluted loss per share.
14. Stock-Based Compensation
As of September 30, 2020, a total of 10,875,131 shares remained available for grant under the Company’s 2011 Long-Term Incentive Plan.
20
The Company’s net loss for the nine months ended September 30, 2020 and 2019 includes $5.7 million and $5.3 million, respectively, of non-cash compensation expense related to the Company’s share-based compensation awards. The compensation expense related to the Company’s share-based compensation arrangements is recorded as components of general and administrative expense and research and development expense, as follows:
Compensation expense related to stock options is recognized over the requisite service period, which is generally the option vesting term of up to five years. Awards with performance conditions are expensed when it is probable that the performance condition will be achieved. For the nine month periods ended September 30, 2020 and 2019, approximately $13,000 and $58,000 was expensed for stock option awards with performance conditions that were probable during the period, respectively.
The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of service based and performance-based stock options granted to employees. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant date fair value of an award. These assumptions include the risk-free interest rate, expected dividend yield, expected volatility, and the expected life of the award.
Following are the weighted-average assumptions used in valuing the stock options granted to employees during the nine month periods ended September 30, 2020 and 2019:
The weighted average fair value of stock options granted during the nine month periods ended September 30, 2020 and 2019 were $1.96 and $2.20, respectively.
A summary of changes in options under the Company’s stock option plans during the nine month period ended September 30, 2020 is as follows:
Cash received from option exercises under all share-based payment arrangements for the nine month periods ended September 30, 2020 and 2019 was $3.9 million and $114,000, respectively.
21
15. Income Taxes
At December 31, 2019, the Company had a $2.6 million unrecognized tax benefit. The Company recorded a full valuation allowance on the deferred tax asset after offsetting unrecognized tax benefit recognized in the consolidated financial statements as of December 31, 2019.
During the nine months ended September 30, 2020, there were no material changes to the measurement of unrecognized tax benefits in various tax jurisdictions. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense.
16. Fair Value Measurements
The majority of the Company’s financial instruments (consisting of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and notes payable) are carried at cost which approximates their fair values due to the short-term nature of the instruments. The Company’s investment in equity securities at fair value, and investment in convertible loan-AFS are carried at fair value (see Note 4).
U.S. GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include:
| ● | Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. |
| ● | Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities. |
| ● | Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. |
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company evaluates financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. This determination requires the Company to make subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the hierarchy.
The Company has an equity investment in the common stock of a publicly traded company. The Company’s investment in this equity security is carried at its estimated fair value, with changes in fair value reported in the consolidated statement of operations and comprehensive loss each reporting period (see Note 4). The fair value of the common stock is based on quoted market price for the investee’s common stock, a Level 1 input.
The following tables present the Company’s financial assets and liabilities accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, by level within the fair value hierarchy:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Fair Value at |
|
|
|
|
|
|
|
|
|
|
|
Description |
|
December 31, 2019 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
||||
|
Investment in common stock |
|
$ |
625 |
|
$ |
625 |
|
$ |
— |
|
$ |
— |
22
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company measures equity investments without readily determinable fair values at its cost, minus impairment, if any, plus or minus changes resulting from observable transactions of identical or similar securities of the same issuer. On September 29, 2020, the Company remeasured the investments in equity securities in Juventas (see Note 4) to the fair value. The Company estimated the fair value of these securities based on the transaction price of similar securities issued by the investee adjusted for contractual rights and obligations of the securities it holds.
Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
As of June 30, 2020, the intangible assets and assets held for sale with a total carrying amount of $3,087,000 were written down to their fair value of $1,550,000, resulting in an impairment charge of $1,537,000, which represents the difference between the carrying value of the intangible asset and assets held for sale and its fair value. The Company estimated the fair value using Level 2 inputs based on quoted price. Related intangible assets were reclassified as assets held for sale during the quartered ended September 30, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Fair Value at |
|
|
|
|
|
|
|
|
|
|
|
Description |
|
December 31, 2019 |
|
Level 1 |
|
Level 2 |
|
Level 3 |
||||
|
Long-lived assets |
|
$ |
287 |
|
$ |
— |
|
$ |
— |
|
$ |
287 |
The long-lived assets represent equipment leased to Juventas (Note 17).
As of December 31, 2019, equipment leased to Juventas with a total carrying amount of $673,000 were written down to their fair value of $287,000, resulting in an impairment charge of $386,000, representing the difference between total carrying amount and fair value of these long-lived assets, which was calculated based on Level 3 Inputs.
17. Related Party Transactions
On July 1, 2019 the Company entered into a one-year equipment lease with Juventas in the amount of RMB 80,000 (approximately $15,000) a month, which is classified as an operating lease. Transactions with Juventas are considered to be related party transactions as the Company’s CEO and Chairman is the chairman and one of the founding shareholders of Juventas. In August 2020, the lease was renewed for another year with the same monthly lease income. During the nine months ended September 30, 2020, the Company recognized lease income of $104,000.
For license, investment and loan transactions with Juventas please refer to Note 2 and Note 4.
In 2018, the Company entered into commercial purchase obligation commitments for EVOMELA from Spectrum Pharmaceuticals, Inc. (“Spectrum”) totaling approximately $9.2 million under a short-term supply agreement for EVOMELA. All of these EVOMELA purchase commitments have been delivered as of October 2019. Spectrum is a greater than a 7.45% shareholder of the Company. There were no transactions with Spectrum during the nine months ended September 30, 2020. For the year ended December 31, 2019, the transactions relating to the manufacturing and purchase of the EVOMELA commercial product supply amounted to $7.8 million. The amount due to Spectrum was $0.2 million as of December 31, 2019. The Company also accrued approximately $2.6 million for material costs related to EVOMELA during the year ended December 31, 2019. As of September 30, 2020, all amounts due to Spectrum have been settled.
18. Acrotech License Arrangements
The Company has certain product rights and perpetual exclusive licenses from Acrotech Biopharma L.L.C. (“Acrotech”) to develop and commercialize the following commercial oncology drugs and drug candidates in the greater China region (which includes China, Taiwan, Hong Kong and Macau) (the “Territories”):
| ● | EVOMELA® (Melphalan Hydrochloride For Injection) |
| ● | ZEVALIN® (Ibritumomab Tiuxetan); and |
23
| ● | MARQIBO® (Vincristine Sulfate Liposome Injection) |
CASI is responsible for developing and commercializing these three drugs in the Territories, including the submission of import drug registration applications and conducting confirmatory clinical trials as needed.
On December 3, 2018 the Company received NMPA’s approval for importation, marketing and sales in China for EVOMELA. The Company has in place an experienced commercial team with a successful track record to execute the commercial sales of EVOMELA that launched in August 2019. The Company has initiated an NMPA required post-marketing study in 2020.
On February 12, 2019, the Company received NMPA’s approval of the Company’s clinical trial application (CTA) to conduct a registration trial to evaluate the efficacy and safety of ZEVALIN. The Company expects to initiate a ZEVALIN registration study in China in 2021.
19. Commitments
In conjunction with the Black Belt agreement entered into during 2019 (see Note 2), the Company is responsible for certain milestone and royalty payments. As of September 30, 2020, no milestones have been met.
In conjunction with the Pharmathen agreement entered into during 2019 (see Note 2), the Company is responsible for one remaining milestone payment. As of September 30, 2020, the remaining milestone has not been met.
In conjunction with the Laurus Labs agreement entered into during 2018 related to the certain ANDAs, the Company is responsible for certain remaining milestone payments. As of September 30, 2020, the remaining milestones have not been met.
In November 2019, CASI Wuxi entered into a lease agreement for the right to use state-owned land in China for the construction of a manufacturing facility. Pursuant to the agreement, CASI Wuxi commits to invest land use right and property, plant and equipment of RMB 1 billion (equivalent to US$143 million) within three years from the date of establishment of CASI Wuxi. On August 27, 2020, CASI Wuxi entered into a Construction Project Contract (the "Construction Contract") with China Electronic System Engineering No. 2 Construction Co., Ltd. ("China Engineering"). Pursuant to the Construction Contract, CASI Wuxi will pay a contract price of approximately RMB 74,588,000 (equivalent to approximately USD $10,923,000) to retain China Engineering to complete the phase 1 project of CASI Wuxi's research and development production base, consisting of construction and installation of a combined factory building, warehouse, guard house and public works. The estimated completion date is October 2023.
The Company is subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
20. Subsequent Event
In October 2020, the Company and BioInvent International AB (“BioInvent”) entered into an exclusive licensing agreement for the development and commercialization of novel anti-FcγRIIB antibody, BI-1206, in mainland China, Taiwan, Hong Kong and Macau. BioInvent is a biotechnology company focused on the discovery and development of first-in-class immune-modulatory antibodies for cancer immunotherapy.
Under the terms of the agreement, BioInvent and CASI will develop BI-1206 in both hematological malignancies and solid tumors, with CASI responsible for commercialization in China and associated markets. BioInvent received a $5 million upfront payment made in November 2020 and is eligible to receive up to $83 million in development and commercial milestone payments plus tiered royalties in the high-single to mid-double-digit range on net sales of BI-1206.
Under the terms of the Agreement, in addition to the upfront payment, CASI will also make a $7.0 million investment (approximately SEK 61.4 million) in approximately 29.4 million new shares in BioInvent at a subscription price of SEK 2.09 per share, which corresponds to 130% of the average volume weighted price for the share during the ten trading days prior to October 27, 2020, and approximately 14.7 million new warrants, each warrant with a right to subscribe for an equal number of new shares in BioInvent within a period of five years and at a subscription price of SEK 3.14 per share. The investment is subject to the approval of an Extraordinary Shareholders’ Meeting in BioInvent to be held on November 27, 2020.
24
BI-1206 is a novel mode-of-action, single inhibitory antibody that blocks the FcγRIIB receptor to unlock anti-cancer immunity in both hematological malignancies and solid tumors. BI-1206 is BioInvent’s lead drug candidate and is being investigated in a Phase I/II trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in solid tumors, and in a Phase I/IIa trial in combination with MabThera® (rituximab) for the treatment of non-Hodgkin lymphoma (NHL).
25
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
CASI Pharmaceuticals, Inc. (“CASI” or the “Company”) is a U.S. biopharmaceutical company focused on developing and commercializing innovative therapeutics and pharmaceutical products in China, the United States, and throughout the world. We are focused on acquiring, developing and commercializing products that augment our hematology oncology therapeutic focus as well as other areas of unmet medical need. We intend to execute our plan to become a leader by launching medicines in the greater China market leveraging our China-based regulatory and commercial competencies and our global drug development expertise. Our operations in China are conducted through our wholly-owned subsidiary, CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”), which is located in Beijing, China. We have built a commercial team of over 70 hematology and oncology sales and marketing specialists based in China.
In August 2019, we launched our first commercial product, EVOMELA® (Melphalan for Injection). In China, EVOMELA is approved for use as a conditioning treatment prior to stem cell transplantation in the multiple myeloma setting. Other core hematology/oncology assets in our pipeline include:
Other assets in our pipeline for which we have exclusive rights in China are Octreotide Long Acting Injectable (“LAI”), for which our partner plans to begin the China registration study in 2020, and a novel formulation of Thiotepa, for which we plan to begin the China registration study in 2021. Thiotepa is used as a conditioning treatment for certain allogeneic haemopoietic stem cell transplants. Octreotide LAI formulations, which are approved in various European countries, are considered a standard of care for the treatment of acromegaly and the control of symptoms associated with certain neuroendocrine tumors.
In October 2020, we added to our portfolio of assets BI-1206 which has a novel mode-of-action, blocking the single inhibitory antibody checkpoint receptor FcγRIIB to unlock anti-cancer immunity in both hematological malignancies and solid tumors. BI-1206 is BioInvent’s lead drug candidate and is being investigated in a Phase I/II trial, in combination with anti-PD1 therapy Keytruda® (pembrolizumab), in solid tumors, and in a Phase I/IIa trial in combination with MabThera® (rituximab) for the treatment of non-Hodgkin lymphoma (NHL).
We intend to continue to pursue building a robust pipeline of drug candidates for development and commercialization in China as our primary market and, if rights are available, for the rest of the world. For in-licensed products, we use a market-oriented approach to identify pharmaceutical candidates that we believe have the potential for gaining widespread market acceptance, either globally or in China, and for which development can be accelerated under our drug development strategy. We have focused on US/EU approved product candidates, and product candidates with proven targets or product candidates that have low clinical risk.
We believe the China operations offer a significant market and growth potential due to the extraordinary increase in demand for high quality medicine coupled with regulatory reforms in China that facilitate the entry of new pharmaceutical products into the country. We will continue to in-license clinical-stage and late-stage drug candidates, and leverage our cross-border operations and expertise, and hope to be the partner of choice to provide access to the China market. We expect the implementation of our plans will include leveraging our resources and expertise in both the U.S. and China so that we can maximize regulatory, development and clinical strategies in both countries.
26
The Company’s EVOMELA, ZEVALIN and MARQIBO assets were originally licensed from Spectrum Pharmaceuticals, Inc. (“Spectrum”) and the Company had supply agreements with Spectrum to support the Company’s application for import drug registration and for commercialization purposes. On March 1, 2019, Spectrum completed the sale of its portfolio of FDA-approved hematology/oncology products including EVOMELA, ZEVALIN and MARQIBO to Acrotech Biopharma L.L.C. (“Acrotech”). The original supply agreements with Spectrum were assumed by Acrotech; Spectrum agreed to continue with a short-term supply agreement for EVOMELA for the initial commercial product supply in connection with the Company’s launch, with the long-term supply assumed by Acrotech. During the second quarter 2020, the Company completed a plan to change the manufacturing site for EVOMELA to an alternative manufacturer that significantly reduced the cost of revenue since third quarter 2020.
As part of the long-term strategy to support our future clinical and commercial manufacturing needs and to manage our supply chain for certain products, on December 26, 2018, we established CASI Pharmaceuticals (Wuxi) Co., Ltd. (“CASI Wuxi”) to develop a future manufacturing facility in China to be located in the Wuxi Huishan Economic Development Zone in Jiangsu Province, China. On August 27, 2020, CASI Wuxi entered into the Construction Project Contract for RMB 74,588,000 (equivalent to approximately $10,923,000) to complete the phase 1 project of CASI Wuxi's research and development production base (see Note 19). The estimated completion date is October 2023.
Since its inception in 1991, the Company has incurred significant losses from operations and, as of September 30, 2020, has incurred an accumulated deficit of $556.8 million. In 2012, the Company shifted its business strategy to China and has since built an infrastructure in China that includes sales and marketing, medical affairs, and regulatory and clinical development. In 2014, the Company changed its name to “CASI Pharmaceuticals, Inc.” The majority of the Company’s operations are now located in China. The Company expects to continue to incur operating losses for the foreseeable future due to, among other factors, its continuing clinical and development activities. Our operations in China are conducted through our wholly-owned subsidiary, CASI Pharmaceuticals (China) Co., Ltd. (“CASI China”), which is located in Beijing, China. Through CASI China, we will focus on the China market devoting more resources and investment going forward.
Taking into consideration the cash and cash equivalents balance as of September 30, 2020, the Company believes that it has sufficient resources to fund its operations at least one year beyond the date that the unaudited condensed consolidated financial statements are issued. As of September 30, 2020, the Company had a cash balance of $ 74.6 million of which approximately $4.2 million was held by CASI China, and approximately $20.4 million was held by CASI Wuxi. The Company intends to continue to exercise tight controls over operating expenditures and will continue to pursue opportunities, as required, to raise additional capital and will also actively pursue non- or less-dilutive capital raising arrangements.
During the second quarter 2020, the Company completed the plan to change the manufacturing site for EVOMELA to an alternative manufacturer that has significantly reduced the cost of revenue for the third quarter of 2020. Due to the manufacturer change, and to the effects of COVID-19 to our marketing and sales activities and supply chain, revenues for the second quarter of 2020 experienced an expected temporary decrease. We have returned to expected levels of sales as indicated by the increase in sales in the third quarter of 2020.
Our partner, Juventas, experienced some delay in the start of the CNCT19 trials in the first quarter of 2020 but is currently back on track with both trials underway. The COVID-19 pandemic has impacted our targeted start time of our CID-103 trial due to the lock down of many medical facilities in Europe. We expect to initiate this trial in the first quarter of 2021. As the pandemic continues to unfold, the extent of the pandemic’s effect on our operations will depend in large part on future developments, which cannot be predicted with confidence at this time.
On June 15, 2019, we entered into a license agreement with Juventas pursuant to which we obtained commercialization rights to CNCT19 in exchange for a development milestone payment of RMB 70 million upon registration of phase II clinical trial by Juventas and sales royalties after commercialization. In addition, as a part of the transaction, CASI Biopharmaceuticals invested RMB 80 million in Juventas’ Series A financing, representing an approximately 16.3% equity stake in Juventas on a fully-diluted basis upon the closing of such equity financing.
On September 22, 2020, Juventas and its shareholders (including CASI Biopharmaceuticals) agreed to certain terms and conditions demanded by a new third-party investor in connection with Juventas’ Series B financing. In order to facilitate the Series B financing, we agreed to amend and supplement the original licensing agreement to provide Juventas with profit-sharing and certain other
27
rights to CNCT19 (the “Supplementary Agreement”). A committee of the Company’s independent directors reviewed the terms of the Supplementary Agreement and recommended it to the board of directors for approval.
In return for the additional profit sharing, Juventas issued additional equity interest to us, resulting in equity ownership of 19.652% (post-Juventas Series B financing) on a fully diluted basis. CASI Biopharmaceuticals is also entitled to appoint a director to Juventas’ board of directors. In response to other Juventas’ investors concerns of lack of cash consideration for the additional equity interest, the form of the transactions was structured in a way that the payment we made to Juventas according to the original license agreement in the amount of RMB 70 million in September 2020 was not treated as the milestone payment, instead as an investment to obtain the additional equity interest Juventus issued to us. In addition, the RMB 70 million milestone payment obligation according to the original license agreement was waived. We accounted for the modification of license agreement and investment agreement of Series A plus equity as one transaction according to the substance of the transaction instead of the form. The investment in Series A Plus equity is in effect an in exchange of increased share of future profits payment to Juventas. The payment of investment of RMB 70 million is in substance a milestone because it became probable that the milestone would be met during the quarter ended September 30, 2020.
RESULTS OF OPERATIONS
Three months ended September 30, 2020 Compared with Three months ended September 30, 2019
Operating Items
Revenues
Product Sales
Revenues consist of product sales of EVOMELA that launched during August 2019. Revenue was $4.2 million for the three months ended September 30, 2020 compared to $2.7 million for the three months ended September 30, 2019. Revenues increased in the third quarter of 2020 as compared to same quarter in 2019 due to the continued growth in EVOMELA sales. EVOMELA was launched in August 2019.
Lease Income
Lease income consists primarily of an equipment lease with Juventas (a related party). Lease income was $37,000 for the three months ended September 30, 2020 compared to $38,000 for the three months period ended September 30, 2019.
Operating Expenses
Cost of Revenues
Cost of revenues consists primarily of the cost of inventories of EVOMELA and sales-based royalties related to the sale of EVOMELA.
Costs of revenues were $1.8 million for the three months ended September 30, 2020 compared to $2.6 million for the three months ended September 30, 2019. The decrease in cost of revenues is due to the new alternate manufacturer now in place, resulting in a considerable decrease in the unit cost of inventories of EVOMELA. The decrease was partially offset by the continued growth in EVOMELA sales. EVOMELA was launched in August 2019.
Research and Development Expenses
Research and development (R&D) expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract preclinical testing and clinical trials of our product candidates, including the costs of manufacturing drug substance and drug product, regulatory maintenance costs, facilities expenses, and amortization expense of acquired ANDAs.
28
Research and development expenses for the three months ended September 30, 2020 were $2.8 million, compared with $1.8 million for the three months ended September 30, 2019. The increases in R&D expenses are primarily due to increases in 2020 R&D expenses incurred related to the development of CID-103, and costs associated with the EVOMELA post marketing study.
Included in our research and development expenses for the three months ended September 30, 2020 are direct project costs of $1.1 million for preclinical development activities, primarily related to our CID-103 program, $0.9 million related to our ANDAs acquired in 2018, and $0.8 million for drugs in-licensed from Acrotech (previously Spectrum).
Included in our research and development expenses for the three-month period ended September 30, 2019 are direct project costs of $0.5 million related to our ANDAs acquired in 2018, $0.4 million for drugs in-licensed from Acrotech (previously Spectrum), $0.4 million for preclinical development activities related to a terminated immune-oncology program, and $0.3 million for preclinical development activities, primarily related to our CID-103 program.
General and Administrative Expenses
General and administrative expenses include compensation and other expenses related to executive, finance, business development and administrative personnel, professional services, investor relations and facilities.
General and administrative expenses for the three months ended September 30, 2020 were $5.3 million, compared with $8.0 million for the three months ended September 30, 2019. The decrease in general and administrative expenses was primarily because the 2019 period included costs related to sales and marketing efforts to prepare for the August 2019 launch of EVOMELA, as well as lower professional fees and travel costs incurred during the 2020 period.
Selling and Marketing Expenses
Selling and marketing expenses are related to the sales of EVOMELA that was launched in China in August 2019, such as sales force salaries, commissions, advertising, and other marketing efforts.
Selling and marketing expenses for the three months ended September 30, 2020 were $2.1 million, compared with $975,000 for the three months ended September 30, 2019.
Acquired in-process Research and Development
Acquired in-process R&D expenses for the three months ended September 30, 2020 was $10.9 million, compared to $0 million for the three months ended September 30, 2019. Expense of $0.6 million relates to 2020 milestone fees paid to Pharmathen’s due to the first submission to the National Medical Products Administration in China for Octreotide which was achieved during 2020 and $10.3 million relates to milestone fees paid to Juventas.
Non-Operating Items
Interest income, net
Interest income, net for the three months ended September 30, 2020 was $432,000 compared with $414,000 for the three months ended September 30, 2019. The increase in interest income is mainly due to interest income of $351,000 from 2020 loans made to Juventas (a related party), offset by the decrease in rates of return from available cash management strategies as a result of the current economic environment.
29
Other Income
Other income for the three months ended September 30, 2020 was $20,000 compared with $0 for the three months ended September 30, 2019. Other income of $12,000 recorded relates to April 2020 CASI Wuxi’s receipt of RMB 15.9 million (equivalent to approximately $2.2 million) from the Jiangsu Province Wuxi Huishan Economic Development Zone as government grant for the development of leased state-owned land in China for the construction of a manufacturing facility. The grant was recorded as deferred income in April 2020. The grant is been amortized over the term of the lease of the land.
Foreign exchange losses and gains
Foreign exchange losses for the three months ended September 30, 2020 were $526,000 compared with gains of $719,000 for the three months ended September 30, 2019. The foreign exchange losses and gains are primarily due to USD denominated cash accounts that are held by our Chinese subsidiaries.
Change in fair value of investment in equity securities
The change in fair value of investment in equity securities for the three months ended September 30, 2020 and 2019 were gains of $1,978,000 and losses of $160,000, respectively. The changes represent unrealized gains and losses on the Company’s equity investment securities.
Nine months ended September 30, 2020 Compared with Nine months ended September 30, 2019
Operating Items
Revenues
Product Sales
Revenues consist of product sales of EVOMELA that launched during August 2019. Revenue was $10.2 million for the nine months ended September 30, 2020 compared to $2.7 million for the nine months ended September 30, 2019.
Lease Income
Lease income consists primarily of an equipment lease with Juventas (a related party). Lease income was $104,000 for the nine months ended September 30, 2020 compared to $38,000 for the nine months period ended September 30, 2019.
Operating Expenses
Cost of Revenues
Cost of revenues consists primarily of the cost of inventories of EVOMELA and sales-based royalties related to the sale of EVOMELA.
Costs of revenues were $7.6 million for the nine months ended September 30, 2020 compared to $2.6 million for the nine months ended September 30, 2019. The increase is primarily due to growth in sales of EVOMELA which was launched in August 2019. The increase in cost of revenues is partially offset by a decrease in unit cost of inventories of EVOMELA as a result of the new alternate manufacturer now in place.
Research and Development Expenses
Research and development (R&D) expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract preclinical testing and clinical trials of our product candidates, including the costs of manufacturing drug substance and drug product, regulatory maintenance costs, facilities expenses, and amortization expense of acquired ANDAs.
30
Research and development expenses for the nine months ended September 30, 2020 were $7.7 million, compared with $7.4 million for the nine months ended September 30, 2019.
The increase in R&D expenses is partially due to an increase in R&D expenses incurred related to the development of CID-103 and costs associated with the EVOMELA post marketing study. These costs were partially offset by reduced regulatory costs associated with our ANDAs and lower costs associated with preclinical development activities related to an immune-oncology program terminated in 2019.
Included in our research and development expenses for the nine months ended September 30, 2020 are direct project costs of $2.9 million for preclinical development activities primarily related to our CID-103 program, $1.9 million related to our ANDAs acquired in 2018, and $1.5 million for drugs in-licensed from Acrotech (previously Spectrum).
Included in our research and development expenses for the nine-month period ended September 30, 2019 are direct project costs of $2.4 million related to our ANDAs acquired in 2018, $1.0 million for drugs in-licensed from Spectrum (previously Spectrum), $0.5 million for preclinical development activities related to a terminated immune-oncology program, and $0.4 million for preclinical development activities primarily related to the CID-103 program.
General and Administrative Expenses
General and administrative expenses include compensation and other expenses related to executive, finance, business development and administrative personnel, professional services, investor relations and facilities.
General and administrative expenses for the nine months ended September 30, 2020 were $13.5 million, compared with $20.7 million for the nine months ended September 30, 2019. The decrease in general and administrative expenses was primarily because the 2019 period included costs related to sales and marketing efforts to prepare for the August 2019 launch of EVOMELA, as well as lower professional fees and travel costs incurred during the 2020 period.
Selling and Marketing Expenses
Selling and marketing expenses are related to the sales of EVOMELA that was launched in China in August 2019, such as sales force salaries, commissions, advertising, and other marketing efforts.
Selling and marketing expenses for the nine months ended September 30, 2020 were $4.9 million, compared with $975,000 for the nine months ended September 30, 2019.
Gain (loss) on disposal of intangible assets
Gain on disposal of intangible assets for the nine months ended September 30, 2020 was $0.5 million, compared to a loss of $48,000 for the nine months ended September 30, 2019. The gain on disposal is due to the $0.5 million gain on the sale of seven ANDAs during the 2020 period.
Impairment of intangible assets
Impairment of intangible assets for the nine months ended September 30, 2020 was $1.5 million, compared to $0 for the nine months ended September 30, 2019. The impairment of intangible assets was primarily due to the reduction of the carrying value of intangible assets to their fair value.
Acquired in-process Research and Development
Acquired in-process R&D expenses for the nine months ended September 30, 2020 were $11.9 million, compared to $5.8 million for the nine months ended September 30, 2019. Acquired in-process R&D expenses for the nine months ended September 30, 2020 comprised the two 2020 milestone fees paid related to Pharmathen of $1.7 million, and the 2020 milestone fees paid to Juventas of $10.3 million. Acquired in-process R&D expenses for the nine months ended September 30, 2019 was the $5.8 million acquisition of the Black Belt’s license in April 2019.
31
Non-Operating Items
Interest income, net
Interest income, net for the nine months ended September 30, 2020 was $775,000 compared with $783,000 for the nine months ended September 30, 2019. The slight decrease in interest income, net, is mainly due to the decrease in rates of return from available cash management strategies due to the current economic environment offset by interest income of $375,000 from 2020 loans made to Juventas (a related party).
Other income
Other income for the nine months ended September 30, 2020 was $47,000 compared with $0 for the nine months ended September 30, 2019. Other income of $23,000 recorded relates to amortization recognized for the 2020 CASI Wuxi’s receipt of RMB 15.9 million (equivalent to approximately US$2.2 million) from the Jiangsu Province Wuxi Huishan Economic Development Zone as government grant for the development of leased state owned land in China for the construction of a manufacturing facility. The grant was recorded as deferred income in April 2020. The grant is been amortized over the term of the lease of the land.
Foreign exchange gains and losses
Foreign exchange losses for the nine months ended September 30, 2020 were $278,000 compared with gains of $1.3 million for the nine months ended September 30, 2019. The foreign exchange gains and losses recorded are primarily due to USD denominated cash accounts that are held by our Chinese subsidiaries.
Change in fair value of investment in equity securities
The change in fair value of investment in equity securities for the nine months ended September 30, 2020 and 2019 were gains of $2,287,000 and losses of $355,000, respectively. The changes represent unrealized gains and losses on the Company’s equity investment securities.
LIQUIDITY AND CAPITAL RESOURCES
To date, we have been engaged primarily in research and development activities. As a result, we have incurred and expect to continue to incur operating losses for the foreseeable future. Based on our current plans, we expect our current available cash and cash equivalents to meet our cash requirements for at least one year beyond the date that the unaudited condensed consolidated financial statements are issued.
We will require significant additional funding to fund operations until such time, if ever, we become profitable. We intend to augment our cash balances by pursuing other forms of capital infusion, including strategic alliances or collaborative development opportunities with organizations that have capabilities and/or products that are complementary to our capabilities and products in order to continue the development of our potential product candidates that we intend to pursue to commercialization. If we seek strategic alliances, licenses, or other alternative arrangements, such as arrangements with collaborative partners or others, to raise further financing, we may need to relinquish rights to certain of our existing product candidates, or products we would otherwise seek to develop or commercialize on our own, or to license the rights to our product candidates on terms that are not favorable to us.
We will continue to seek to raise additional capital to fund our commercialization efforts, expansion of our operations, research and development, and for the acquisition of new product candidates, if any. We intend to explore one or more of the following alternatives to raise additional capital:
| ● | selling additional equity securities; |
| ● | out-licensing product candidates to one or more corporate partners; |
| ● | completing an outright sale of non-priority assets; and/or |
32
| ● | engaging in one or more strategic transactions. |
We also will continue to manage our cash resources prudently and cost-effectively.
The on-going COVID-19 pandemic has resulted in significant volatility in the local, national and global capital markets. There can be no assurance that adequate additional financing will be available to us on terms that we deem acceptable, if at all. If additional funds are raised by issuing equity securities, dilution to existing stockholders may result, or the equity securities may have rights, preferences, or privileges senior to those of the holders of our common stock. If we fail to obtain additional capital when needed, we may be required to delay or scale back our commercialization efforts, our advancement of the Acrotech products, and the ANDA products, or plans for other product candidates, if any.
At September 30, 2020, we had cash and cash equivalents of approximately $74.6 million, with working capital of approximately $77.7 million. As of September 30, 2020, approximately $4.2 million of the Company’s cash balance was held by the Company’s wholly-owned subsidiary in China and approximately $20.4 million was held by CASI Wuxi.
FINANCING ACTIVITIES -
“Shelf” Registration Statement
We have an effective shelf registration statement, which allows us to sell debt or equity securities in one or more offerings up to a total public offering price of $100 million. We believe that this shelf registration statement currently provides us additional flexibility with regard to potential financings that we may undertake when market conditions permit or our financial condition may require. The Company intends to replace this shelf registration statement prior to its expiration in December 2020.
July 2020 Underwritten Public Offering
On July 24, 2020, the Company closed an underwritten public offering of 23 million shares of common stock (the “Offering”) and generated gross proceeds of approximately $43.7 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI. Certain insiders, including CASI’s Chief Executive Officer, and CASI’s President, purchased shares of common stock in the Offering at the public offering price and on the same terms as the other purchasers in this Offering. The Company intends to use the net proceeds of this offering for working capital and general corporate purposes, which include, but are not limited to advancing the Company’s product portfolio, acquiring the rights to new product candidates and general and administrative expenses.
Sales Agreements
On February 23, 2018, the Company entered into a Common Stock Sales Agreement (the “Sales Agreement”) with H.C. Wainwright & Co., LLC (“HCW”). Pursuant to the terms of the Sales Agreement, the Company may sell from time to time, at its option, shares of the Company’s common stock, through HCW, as sales agent. On July 19, 2019, the Company entered into an amendment to the Sales Agreement reducing the maximum amount that may be sold under the Sales Agreement to $20 million.
Any sales of shares pursuant to the Sales Agreement will be made under the Company’s effective “shelf” registration statement on Form S-3 (File No. 333-222046) which became effective on December 22, 2017 (the “Registration Statement”) and the related prospectus supplement and the accompanying prospectus, as filed with the SEC on February 23, 2018.
In 2018, the Company issued 143,248 shares under the Sales Agreement resulting in net proceeds to the Company of approximately $475,000. For the nine months ended September 30, 2020, no shares were issued. As of September 30, 2020, approximately $19.5 million remained available under the Sales Agreement.
On July 19, 2019, the Company entered into an Open Market Sale AgreementSM with Jefferies LLC (the “Open Market Agreement”). Pursuant to the terms of the Open Market Agreement, the Company may elect to sell from time to time, at its option, up to $30 million in shares of the Company’s common stock, through Jefferies LLC, as sales agent.
33
Any sales of shares pursuant to the Open Market Agreement will be made under the Company’s Registration Statement and the related prospectus supplement and the accompanying prospectus, as filed with the SEC on July 19, 2019. For the nine months ended September 30, 2020, there were approximately 434,000 shares issued with net proceeds of approximately $1,357,000. As of September 30, 2020, the Company has issued approximately 493,000 shares with net proceeds of approximately $1,539,000. As of September 30, 2020, approximately $28.4 million remained available under the Sales Agreement.
INFLATION AND INTEREST RATE CHANGES
Management does not believe that our working capital needs are sensitive to inflation and changes in interest rates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The primary objective of our investment activities is to preserve our capital until it is required to fund operations while at the same time maximizing the income we receive from our investments without incurring investment market volatility risk. Our investment income is sensitive to the general level of U.S. and China interest rates. In this regard, changes in the U.S. and China interest rates affect the interest earned on our cash and cash equivalents. Due to the short-term nature of our cash and cash equivalent holdings, a 10% movement in market interest rates would not materially impact cash and cash equivalents as of September 30, 2020.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on an evaluation under the supervision and with the participation of the Company’s management, the Company’s Chief Executive Officer and President/Principal Financial Officer have concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of September 30, 2020 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms and (ii) accumulated and communicated to the Company’s management, including its Chief Executive Officer and President/Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control Over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, unless otherwise disclosed herein, are material.
ITEM 1A. RISK FACTORS
In addition to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, investors should carefully consider the supplemental risk factors included in Exhibit 99.1 to our Current Report on Form 8-K filed with the SEC on July 21, 2020 and incorporated herein by reference. These risks could materially adversely affect our business, results of operations, financial position or cash flows.
34
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
EXHIBIT INDEX
|
1.1 |
|
|
|
10.1 |
|
Supplementary Agreement to the Exclusive License Agreement effective as of September 29, 2020.+** |
|
10.2 |
|
|
|
31.1 |
|
|
|
31.2 |
|
Rule 13a-14(a) Certification of Principal Financial Officer** |
|
32.1 |
|
|
|
32.2 |
|
|
|
101.INS |
|
Inline XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.** |
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document.** |
|
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document.** |
|
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document.** |
|
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document.** |
|
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document.** |
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101 filed herewith). |
+ Information in this exhibit identified by brackets is confidential and has been excluded pursuant to Item 601(B)(10)(IV) of Regulation S-K because it (i) is not material and (ii) would likely cause competitive harm to CASI Pharmaceuticals, Inc. if publicly disclosed.
**Filed Herewith
35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
|
|
CASI PHARMACEUTICALS, INC. |
|
|
|
|
(Registrant) |
|
|
|
|
|
|
|
|
|
|
|
|
Date: November 9, 2020 |
|
/s/ Wei-Wu He |
|
|
|
|
Wei-Wu He |
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
Date: November 9, 2020 |
|
/s/ Larry (Wei) Zhang |
|
|
|
|
Larry (Wei) Zhang |
|
|
|
|
Principal Financial Officer |
|
36
Exhibit 10.1
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
SUPPLEMENTARY AGREEMENT TO THE EXCLUSIVE LICENSE AGREEMENT
This Supplementary Agreement to the Exclusive License Agreement (this “Agreement”), is entered into as of September 29, 2020 (Beijing Time, “Effective Date”), by and between:
(i) Juventas Cell Therapy Ltd. (合源生物科技（天津）有限公司), a company duly organized and existing under the laws of PRC, having its principal office at Building 5, No.8, No.8, Haitai Development, Huayuan Industrial Zone, Tianjin Binhai High-tech Zone, Tianjin City, China (hereinafter referred to as “Juventas”, which, unless otherwise stipulated herein, shall include the assignee and heir of Juventas); and
(ii) CASI Pharmaceuticals, Inc., a company duly organized and existing under the laws of Delaware, having its principal office at 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850 (hereinafter referred to as “CASI”, which, unless otherwise stipulated herein, shall include the assignee and heir of CASI).
(Juventas and CASI are each referred hereto as a “Party” and both the “Parties”.)
WHEREAS
A. Juventas and CASI have entered into an Exclusive License Agreement (the “License Agreement”) on June 15, 2019, according to which Juventas has granted CASI an exclusive license to Commercialize (as defined below) the Product (as defined below) in the Territory (as defined below). The Product has already come into IND phase I clinical trial and is moving forward to Phase II Clinical Trial (as defined below).
B. Since the execution of the License Agreement, considering the change of the market circumstances and the Parties’ situation, the Parties intend to enter into this Agreement to further stipulate the updated cooperation relations with regard to Commercializing the Product in the Territory. This Agreement is the supplementary of the License Agreement, and matters not stipulated herein shall still be governed by the License Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing preliminary statements, the mutual agreements and covenants set out herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:
1. Definitions
Except otherwise defined herein, all capitalized terms used herein shall have the following meanings:
1.1. “Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with a person or entity, but only for so long as said control shall continue. As used herein, the term “control” or “controlled by” means: (a) ownership, directly or indirectly, of more than 50% of the voting securities of the applicable party; or (b) possession of the power to direct or cause the direction of the business, management and policies of a person whether by ownership, contract or otherwise. Solely for the purpose of defining “Affiliate” herein, Juventas shall not be deemed as an Affiliate of CASI.
1.2. “Annual Commercialization Cost Budget” has the meaning defined in Section 2.1 (4).
1.3. “Annual Net Sales” means total Net Sales of the Product in a particular Calendar Year.
1.4. “Calendar Quarter” means a period of three (3) consecutive months ending on the last day of March, June, September, or December, respectively.
1.5. “Commercially Reasonable Efforts” means, with respect to the efforts to be exerted by a Party to achieve any objective, the reasonable efforts to accomplish such objective as a similarly situated party in the pharmaceutical industry would normally use to accomplish a similar objective in its own interests under similar circumstances.
1.6. “Change of Control” means (a) any Person becomes the beneficial owner, directly or indirectly, of 50% or more of the outstanding equity interests of a Party, or (b) a Party ceases to own and control, of record and beneficially, more than 50% of each class of outstanding voting equity interests of the Party.
1.7. “China Territory” means the People’s Republic of China, and for the purpose of defining “China Territory” only, including Macau and Taiwan and Hong Kong.
1.8. “Clinical Development” means a human clinical trial of a compound or product for an indication as required prior to the marketing of a medical product.
1.9. “Commercialize” or “Commercialization” means to sell the Product through certain methods and activities, including but not limited to pricing, reimbursement, distribution, hospital listing, business planning, medical/marketing planning, budget and HC approval, the establishment of Standardized Cell Therapy Centers, clinical research related matters, sales goal and incentive compensation..
1.10. “Commercialization Costs” means the annual costs determined by JSC for Commercializing the Product and confirmed by Juventas and CASI, including but not limited to costs and expenses for marketing, medical related activities, quality control, sales, market access, etc.
1.11. “Promotional Costs” means the costs determined by JSC for the Product’s marketing and promotion and confirmed by Juventas and CASI, including but not limited to costs and expenses for marketing, medical related activities, quality control, market access, etc.
1.12. “Cost of Goods” or “COGS” means Juventas’ (and/or its contract manufacturer’s) costs of (i) materials, excipients, packaging and labeling material (including package insert);
2
(ii) direct costs, including direct labor of employees (including basic wages, labor and related payroll taxes and benefits) incurred or spent in the actual production, filling, packaging and labeling of the Product, including without limitation for quality assurance, purchasing and manufacturing facility operations; (iii) overhead (including operating expenses, indirect labor and related payroll taxes and benefits, depreciation, amortization, taxes, insurance, rent, equipment repairs and maintenance, energy costs and supplies) incurred or spent in support of the actual production, filling, packaging and labeling of the Product; and (iv) all customs duties, transportation insurance, transportation costs and any other costs with respect to the manufacture of the Product.
1.13. “EMEA” means the European Medicines Agency, or any successor entity thereto.
1.14. “Ex-China Territory” means the rest of the world outside the China Territory.
1.15. “Field” means all therapeutic uses of the Product.
1.16. “FDA” means the U.S. Food and Drug Administration, or any successor entity thereto.
1.17. “First Commercial Sale” means the first sale of the Product in any part of the Territory after Regulatory Approval for the Product has been granted, or otherwise permitted, by a Regulatory Authority of the Territory such as NMPA. For the avoidance of doubt, the First Commercial Sale does not include any sale or supply of any product for the sole purpose of clinical trials.
1.18. “GMP” means current Good Manufacturing Practices as defined in Parts 210 and 211 of Title 21 of the U.S. Code of Federal Regulations, as may be amended from time to time, or any successor thereto and foreign equivalents thereof, including, where referring to activities in China, the Guidelines on Good Manufacturing Practices specific to the Product, or such practices as may be as otherwise required by the NMPA, including under the Quality Administrative Standard for Drug Manufacturing as well as any requirements issued pursuant to the Regulation of Drug Manufacturing Administrative Procedures issued by the NMPA.
1.19. “GMP Manufacturing Facility” means any manufacturing facility that meets the GMP.
1.20. “Governmental or Regulatory Authority” means: (a) the National Medical Products Administration of the People’s Republic of China (the “NMPA”) and any other national, federal, provincial, state, municipal or other governmental body, (b) any international or multi- lateral body, (c) any subdivision, ministry, department, secretariat, bureau, agency, commission, board, instrumentality or authority of any of the foregoing governments or bodies, (d) any quasi- governmental or private body exercising any regulatory, expropriation or taxing authority under or for any of the foregoing governments or bodies, or (e) any international, multi-lateral or multi-national judicial, quasi-judicial, arbitration or administrative court, grand jury, tribunal, commission, board or panel.
1.21. “Key Target Hospitals” means the target hospitals that shall be covered for the Commercialization of the Product as determined by the JSC.
1.22. “IND” means any investigational new drug application filed with the FDA, the EMEA
3
or the NMPA prior to beginning clinical trials in humans or any comparable application filed with any Governmental or Regulatory Authority within the Territory.
1.23. “Intellectual Property” means all licensed patents, patent applications, inventions or discoveries (whether or not patentable), copyrights, copyright applications, domain names, Product specifications, data, trade secrets, trade dress, know-how and all other intellectual property rights, and all related documentation or other tangible expressions , including the proprietary information set forth in Exhibit A attached hereto as will be updated from time to time, which are necessary to the Commercialization of the Product within the Territory, but excluding any intellectual property solely relating to the development and manufacture of the Product.
1.24. “Improvements” means any inventions, discoveries, know-how, clinical data or other proprietary information related to the Product created, generated or acquired by either Party during the Term of this Agreement.
1.25. “Laws” means: (a) all constitutions, treaties, laws, statutes, codes, ordinances, guidance, orders, decrees, rules, regulations, and municipal by-laws, (b) all judgments, orders, writs, injunctions, decisions, rulings, decrees and awards of any governmental, regulatory or judicial authority, and (c) all policies, practices and guidelines of any governmental or regulatory authority.
1.26. “Losses” means any and all claims, liabilities, losses, damages, fees, penalties, judgments, awards, interest, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses and court’s costs) incurred by a Party to this Agreement, or any Affiliate thereof, resulting from a third party Proceeding against either Party.
1.27. “NDA” means a New Drug Application filed with the FDA, the EMEA, the NMPA and other Regulatory Authorities to obtain approval for commercial sale or use of the Product as a pharmaceutical or medicinal product in any formulation or dosage form (excluding any pricing and reimbursement approvals) or any comparable application filed with any Governmental or Regulatory Authority within the Territory.
1.28. “Net Sales” means the gross amount invoiced for sales of the Product by CASI, or its Affiliates or its permitted sublicensee to any third party in the Territory, less the following amounts: (i) sales taxes or other taxes separately stated on the Product invoice; (ii) price adjustments, credits, refunds or deductions for returned or defective Product, all to the extent reasonably demonstrated by CASI by written records, provided that such calculation is not in violation of the Generally Accepted Accounting Principles (GAAP) of the United States. Notwithstanding anything in this Agreement to the contrary, the transfer of the Product between or among CASI and any of its Affiliates and sublicensees will not be considered a sale.
1.29. “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
4
1.30. “Product” means one developed candidate autologous T-cell therapy product with a scFv specifically binding to CD19, which is identified by Juventas with an internal reference number of CNCT19.
1.31. “PRC” means People’s Republic of China, including Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan.
1.32. “Phase II Clinical Trial” means a human clinical trial of a compound or product for an indication conducted in the PRC, the principal purpose of which is a determination of safety and efficacy for such indication or indications in a target patient population over a range of doses and to provide the rational and provide the basis for the design of phase III clinical trial studies and the determination of dosing regimens.
1.33. “Supply Agreement” has the meaning given to such term in Section 3.2.1 of this Agreement.
1.34. “Restricted Products” has the meaning given to such term in Section 5.2 of this Agreement.
1.35. “Standardized Cell Therapy Center” means diagnostic and treatment departments established in medical institutions for carrying out activities related to CNCT19 products, including but not limited to, standardized treatment application, quality control, and medical training.
1.36. “Territory” means worldwide.
1.37. “Term” has the meaning given to such term in Section 6 of this Agreement.
1.38. “Trademark” means any word, phrase, slogan, design, symbol or product packaging used or intended to be used to identify the Product or distinguish it from competitive or related products. For clarification, the “Trademarks” means “合源生物” and “Juventas” and any other trademarks, logos or branding used by Juventas in connection with the Product.
2. Collaboration for Commercialization
Juventas and CASI will use its respective best reasonable efforts to Commercialize the Product worldwide pursuant to the terms and conditions hereof. On such basis, the Parties agree to arrange their rights and obligations below in accordance with this Agreement:
2.1. Perfection of the JSC
Juventas and CASI agree that, Section 4 of the License Agreement shall be terminated and the Parties shall perfect the JSC pursuant to the provisions below:
(1) Juventas and CASI have already jointly established the Joint Steering Committee (“JSC”), which is the decision-making and supervising authority for the Commercialization by the Parties, which shall be comprised of equal number of representatives from either Party and shall determine the matters in relation to the Commercialization of the Product, including but not limited to pricing the Product, deciding whether the Product should be listed on the National Drug Reimbursement
5
List and the specific strategies in connection therewith, distribution plan, the hospital listing plan, business planning, medical/marketing planning, budget and headcount approval, establishing the Standardized Cell Therapy Centers, post-market clinical research related matters, sales goal and incentive compensation, hiring independent experts and consultants and obtaining governmental approvals in relation to the marketing, etc. The Joint Development Committee (“JDC”) will no longer be established and its duties stipulated in the License Agreement will be undertaken by the JSC.
(2) JSC shall be consisted of 3 representatives designated by each CASI and 3 representatives designated by Juventas. Each Party may replace the JSC representative designated by such Party at any time with prior notice to the other Party, provided that such replacement shall have the same authority and the same scope of responsibility as the person being replaced. Each of CASI and Juventas shall select one of its respective representatives as the joint-chairperson of the JSC, either of which shall be entitled to call meetings. The agenda of the meeting shall be prepared and circulated five (5) days prior to each meeting (such agenda will include all matters requested by either Party), and the minutes shall be prepared and issued of each meeting within fifteen (15) days thereafter. In the event of absence of any representative in any meeting, the representatives attending such meeting can make decisions unanimously.
(3) In the event that the JSC cannot reach an agreement regarding any matter within a period of five (5) days, then the dispute shall be promptly submitted to the chief executive officer or the general manager of Juventas and CASI for resolution through consultation.
(4) Subject to Section 2.1(3) above, the JSC shall make decisions on the annual commercialization cost budget (“Annual Commercialization Cost Budget”) for the Commercialization of the Product prior to January 31 of each year.
2.2. Joint Establishment of Marketing Team
Juventas and CASI shall establish a marketing team together to jointly develop brand positioning, create marketing strategy and carry out promotional activities for Commercializing the Product.
2.3. Medical Quality Control
Juventas shall be responsible to establish medical team(s), develop medical strategy, conduct post-market clinical research, establish Standardized Cell Therapy Centers (~100) to cover Key Target Hospitals’ cell therapy clinic standardization work, including but not limited to establishing and training of the standardized process for clinic pathway for cell therapy, specific related tests for cell therapy, quality control (cell collection and transfusion, etc.), and patient management (adverse reactions treatment, patients follow-up visits and establishment of database, etc.)
2.4. Sales
CASI shall be responsible to recruit and establish sale teams, which shall cover all the
6
Key Target Hospitals as determined by JSC, to Commercialize the Product.
2.5. Transportation of the Product
The transportation obligation of the Product shall be borne by Juventas, the details of which shall be set forth in the Supply Agreement.
2.6. Business Plan
Within six (6) months after the execution of this Agreement, the Parties shall jointly complete a Commercialization plan for the Product to further clarify the responsibilities and obligations of the Parties for Commercializing the Product (“Commercialization Plan”), and submit such Commercialization Plan to the JSC for approval.
2.7. Communications with Government
CASI shall be responsible for replying to inquiries of, notices from or communications with the Governmental or Regulatory Authorities regarding Commercialization of the Product. Juventas shall be responsible for replying to all other inquiries of, notices from or communications with the Government or Regulatory Authorities regarding the Product. Each of the Parties shall provide the other Party with reasonable assistance in relation to the above-mentioned replies.
2.8. Regulatory Information
Each Party shall provide the other Party with all reasonable assistance and take all actions reasonably requested by the other Party that are necessary to enable the other Party to comply with any Law applicable to the Product. Such assistance and actions shall include, among other things, keeping the other Party informed, commencing within five (5) business days of notification of any action by, or notification or other information which it receives (directly or indirectly) from any Governmental or Regulatory Authority which: (a) raises any material concerns regarding the safety or efficacy of the Product; (b) indicates or suggests a potential material liability for either Party to third parties arising in connection with the Product or (c) is reasonably likely to lead to a field alert report, recall or market withdrawal of the Product; provided, that neither Party shall be obliged to disclose information in breach of any existing contractual restrictions.
3. Fees and Payments
This Section 3 shall replace and supersede Section 5 and Section 6 of the License Agreement entirely.
3.1. Cancellation of Milestone Payment
CASI will be not required to pay to Juventas the milestone payment of RMB 70,000,000 under Section 6.1 of the License Agreement.
3.2. Supply of Product and Supply Price
3.2.1. Supply of Product
Juventas shall complete the construction of GMP production facilities on its own or
7
through designated manufacturers, ensure that such facilities are functional, and commence to produce the Product in accordance with the terms and conditions of this Agreement. According to the applicable terms of the supply agreement to be executed by the Parties separately (the “Supply Agreement”), Juventas or its designated manufacturer shall be the exclusive manufacturer and supplier of CASI’s products. In the event that the GMP production facility has been created and is ready to operate, Juventas shall notify CASI timely. Juventas shall supply the Product to CASI in accordance with the Supply Agreement.
3.2.2. Supply Price
Juventas shall supply CASI with the Product at the supply price (“Supply Price”) equaling to the COGS of the Product with a [***] mark-up rate. The payment period of the Supply Price and the payment method will be otherwise stipulated in the Supply Agreement
3.3. Promotional Cost
Upon the determination of annual Promotional Cost budget each year, CASI shall pay to Juventas [***] of the annual Promotional Costs (“Juventas Commercialization Costs”) based on the payment schedule as determined by the Parties for the Commercialization responsibilities undertaken by Juventas, including but not limited to commercialization activities such as medical, marketing, testing, quality control, marketing access related activities. The exact amount shall be finally settled based on the actual promotional costs incurred which should be reviewed and approved by the JSC. The payment period and the payment method will be otherwise determined and agreed by the Parties in a separate agreement.
3.4. Royalty
CASI shall pay to Juventas the following royalties on the Net Sales within certain period in the Territory, the payment schedule and payment method of which will be determined by the Parties in a separate agreement:
A. China Territory. CASI will pay to Juventas a royalty on Net Sales of the Product in the China Territory on a quarterly basis at the flat royalty rate of [***].
B. Ex-China Territory: CASI will pay to Juventas a royalty on Net Sales of the Product in the Territory on a quarterly basis at the following rates:
a) For the portion of aggregate Annual Net Sales of all Product in the Ex-China Territory equal to or less than [***] in any calendar year, [***] of such portion of such Annual Net Sales;
b) For the portion of aggregate Annual Net Sales of all Product in the Ex-China Territory more than [***] but no more than [***] in any calendar year, [***] of such portion of such Annual Net Sales;
8
c) For the portion of aggregate Annual Net Sales of all Product in the Ex-China Territory more than [***] but no more than [***] in any calendar year, [***] of such portion of such Annual Net Sales; and
d) For the portion of aggregate Annual Net Sales of all Product in the Ex-China Territory more than [***] in any calendar year, [***] of such portion of such Annual Net Sales.
3.5. Profit Distribution Arrangement
The Parties agree that the overall profit obtained by Juventas hereunder shall reach the specific ratio of the Net Profit (“Juventas Target Net Profit”) as listed below in each financial year. In case the profit obtained by Juventas in such year from Section 3.2, Section 3.3 and Section 3.4 hereof (collectively, “Juventas Net Profit”) fails to reach Juventas Target Net Profit, CASI shall pay the difference amount between Juventas Net Profit and Juventas Target Net Profit. The payment schedule and payment method shall be confirmed in a separate agreement executed by the Parties, and CASI shall pay Juventas the difference in profits that should be made up in accordance with such agreement.
“Juventas Net Profit” = [***]
For purposes of the Section, “Product Net Profit” as described below =
The specific ratio of “Juventas Target Net Profit” =
|
(1) |
If the Annual Net Sales of all the Product in the Territory is [***], then Juventas shall obtain [***] of the Product Net Profit and CASI shall obtain [***] of the Product Net Profit, ie. Juventas Target Net Profit shall be [***] of the Product Net Profit. |
|
(2) |
If the Annual Net Sales of all Product in the Territory is more than [***] but no more than RMB [***] in any financial year, then Juventas shall obtain [***] of the Product Net Profit and CASI shall obtain [***] of the Product Net Profit, ie. Juventas Target Net Profit shall be [***] of the Product Net Profit; |
|
(3) |
If the Annual Net Sales of all Product in the Territory is more than RMB [***] in any financial year, then Juventas shall obtain [***] of the Product Net Profit and CASI shall obtain [***] of the Product Net Profit, ie. Juventas Target Net Profit shall be [***] of the Product Net Profit. |
3.6. Payment Reports
During the Term, following the First Commercial Sale of the Product in any country or region in the Territory, CASI shall furnish to Juventas a written report (each, a “Payment Report”) within [***] after the end of each calendar quarter showing the Net Sales of each Product in China Territory and Ex-China Territory and the royalties payable under this Agreement, along with (i) gross sales of the Product in China Territory and Ex-China Territory, (ii) Net Sales in the relevant Calendar Quarter in China Territory and Ex-China Territory, (iii) all relevant exchange rate conversions in accordance with Section 3.9, (iv) all deductions and (v) the amount of any payment due from CASI to Juventas.
3.7. Method of Payments
All payments due from CASI to Juventas under this Agreement shall be paid by CASI or its designated party in RMB by wire transfer to a bank account designated in writing by Juventas. With respect to any payment due under this Section 3, Juventas shall provide CASI the original of the invoice for the due payment.
3.8. Withholding Tax
The royalties shall be paid to Juventas by CASI after deducting all applicable withholding taxes. Before CASI makes any payment to Juventas, CASI shall provide Juventas with all forms verifying Juventas’ tax domicile to apply for any bilateral fiscal convention that provides the reduction of withholding tax rates. Juventas shall return the relevant forms to CASI. If Juventas does not immediately return the relevant qualified completed and signed forms, CASI shall be entitled to declare and pay the withholding tax in accordance
9
with the applicable common law rate for corporate income tax, and the relevant tax shall be deducted by CASI in the corresponding payment to Juventas. CASI should pay the withholding tax to the correct tax authority and the payment certificate of the relevant tax should be delivered to Juventas as proof of payment. If any Party believes that the obligations set forth in this Section 3.8 are onerous, the Parties agree to discuss other available options. For the avoidance of doubt, this Section will not apply to the Royalty occurs in PRC, and Juventas shall be solely responsible for the compliance of applicable tax Laws, and CASI will not bear any legal liability arising from Juventas’ violation of the withholding tax regulations.
3.9. Currency
With respect to sales of the Product invoiced in RMB, the Net Sales and the amounts due hereunder will be expressed in RMB. With respect to sales of Product invoiced in a currency other than RMB, the gross sales, Net Sales and royalties payable shall be expressed in the currency of the invoice issued by the Party making the sale together with the RMB equivalent of the royalty payable and the equivalent in the currency used for calculating the applicable royalty rates, calculated using the rate of exchange published in the Wall Street Journal for such currency on the last Business Day of the relevant Calendar Quarter.
3.10. Default Payment
In addition to all other rights and remedies hereunder or at law or in equity, CASI shall pay an interest for any and all payment defaulted by CASI under this Agreement. The interest shall accrue on the amount of payment defaulted by CASI, from its due date up to the date of full payment, at a rate of [***] and shall be paid in RMB by wire transfer to a bank account designated by Juventas. Such interest shall accrue from day to day and be computed on the basis of a three hundred and sixty (360) day per year and the actual number of days elapsed. If any payment by CASI is overdue [***], CASI shall be deemed to be in material breach of this Agreement.
3.11. Audit
Juventas shall have the right during the Term of this Agreement and for [***] months after termination of this Agreement to engage an independent auditor of one of the Big Four to examine the relevant records from time-to-time, as may be necessary to verify compliance with the terms of this Agreement. Such audit shall be requested in writing at least [***] in advance, and shall be conducted during CASI’s normal business hours and otherwise in a manner that minimizes any interference to CASI’s business operations. In order to fulfill the auditing, the independent auditor so selected shall have the right to access, examine, review and copy all books or accounts of CASI, relevant procurement/distribution agreements and other purchase/sales contracts, purchase/sales orders, operation records, tax paid to local government, and itemized tax for the Product, and to discuss the business, operations and conditions of CASI with its respective directors, officers, employees, accounts, auditors, financial advisors, legal counsel and investment bankers, to the extent reasonably deemed by Juventas as
10
necessary for determining the accuracy of the report provided by CASI pursuant to Section 3.5. CASI shall not unreasonably restrict the independent auditor’s access to premises of CASI during normal business hours. In the event that any independent auditor discovers an underpayment, CASI shall promptly pay to Juventas the amount of such underpayment. The fees charged by such independent auditor shall be paid by Juventas. However, CASI shall pay such fees, provided that if such auditor uncovers an underpayment of [***] or more by CASI.
4. Intellectual Properties
4.1. Intellectual Property
Juventas shall be the sole owner of all Intellectual Properties. Subject to the terms and conditions set forth herein, Juventas hereby grants to CASI during the Term, an exclusive license (the “License”) in the Territory to use the Intellectual Property and Improvements for the Commercialization of the Product based on this Agreement. For the avoidance of doubt, Juventas has no obligation to provide CASI with any information or material that is not necessary for Commercialization of the Product and Juventas retains the right to use the Intellectual Property to develop and Commercialize the Product.
4.2. Trademarks
Juventas grants to CASI an exclusive license to use the Trademarks in the Territory and solely in connection with the Product. CASI shall use the Trademarks solely in connection with its Commercialization of the Product in the Territory. All use of the Trademarks by CASI shall inure to the purpose of this Agreement. CASI shall not register or attempt to register any of the Trademarks in any jurisdiction in the Territory, or otherwise, without the prior written consent of Juventas, and in the event that CASI does register any of the Trademarks in the Territory (the “Territory Trademarks”), such Territory Trademarks that are identical to, similarly confusing with or use the Trademarks shall be transferred and assigned to Juventas upon the requests of Juventas. However, for clarity purpose, this Section 4.2 does not restrict CASI from developing, creation, registering or using its own trademarks solely to indicate CASI as a distributor of the Product. CASI’s use of the Trademarks shall comply with laws and regulations related to labeling and advertising in the Territory and other applicable Laws.
4.3. Conversion to Non-Exclusivity
Notwithstanding anything to the contrary contained in this Agreement, subject to that Juventas has fully performed its obligations under this Agreement and has used Commercially Reasonable Efforts to market the Products, if in the first calendar year after the First Commercial Sale and any subsequent calendar year, the Annual Net Sales of the Product in the Territory are less than RMB 50,000,000, and subject to the satisfaction of the following conditions, the exclusive license granted in accordance with this Agreement shall immediately be converted to a non-exclusive license, and any sub-license rights in connection therewith shall be terminated immediately: (1) CASI fails to make Commercially Reasonable Efforts to Commercialize the Product; or (2) after the Product has been launched into the market, the sales volume of CASI is less than 10%
11
(ten percent) of the total market share of the products identical with or similar to the Product. The total market share shall be determined on the basis of the market data of IQVIA (formerly IMS Health) or any successor organisation and on the basis of the volume of products sold (based on the packaging sizes, product dosage or intensity and similar factors as reasonably determined by the Parties).
4.4. Sublicense
CASI shall not sublicense the licensed rights hereunder to its Affiliates, distributors and/or sublicensees or non-affiliates without Juventas’ prior written consent, which shall not be unreasonably withheld. In the event that CASI engages any Affiliate, distributor and/or sublicensee to implement the decisions of the JSC, such Affiliate, distributor and/or sublicensee shall, after obtaining the consent of Juventas, have the right to use the License and the Trademarks subject to the terms and conditions herein and solely in connection with the Product, and the sub-license agreement shall then be negotiated and determined by CASI and Juventas.
4.5. Ownership and Preservation
Juventas retains ownership of, and all other rights to, the Intellectual Property. Juventas shall use Commercially Reasonable Efforts to preserve and maintain the Intellectual Property in the Territory and shall pay any periodic filing or administrative fees associated therewith. Juventas shall keep CASI informed regarding the prosecution and maintenance of licensed patents or patent applications in the Territory, if any, included in the licensed Intellectual Property. Additionally, in the event that Juventas fails to maintain or keep the Intellectual Property in the Territory and refuses to maintain or keep such Intellectual Property after having received a notice from CASI, then CASI may, at its sole discretion and at its own expense, do all things necessary to ensure such maintenance and servicing.
4.6. Improvements
Parties agree that all right, title and interest in and to the Improvements shall be the sole and exclusive property of Juventas. CASI shall, and shall cause their employees to make full and prompt disclosure to Juventas of all Improvements. CASI hereby assign and transfer, without additional consideration, to Juventas all right, title and interest that CASI and their employees may have in and to any and all Improvements throughout the world. CASI shall and shall cause their employees to timely execute, or cause to be executed, all papers necessary to effect and perfect the assignment and transfer of all right, title and interest that CASI and their employees may have in and to any and all Improvements to Juventas.
For the avoidance of doubt, nothing in this Agreement shall be construed to confer any rights upon CASI to modify or reversely engineer the Product. Without prior written consent of Juventas, CASI shall not further develop or file regulatory filing for the Product. Any and all information, materials, data and results developed by CASI in violation of this provision shall be solely owned by Juventas.
12
4.7. Preferred Right to Negotiate
(1) The Parties acknowledge and agree that, during the Term of this Agreement, if a combination of the Product and other active pharmaceutical ingredients is deemed as a new product from a regulatory perspective and Juventas intends to grant to any third party the right to commercialize such new product, CASI shall have the right to negotiate with Juventas regarding the right to commercialize such new product in the Territory in preference to any third party, and the specific terms and conditions shall be subject to further negotiation between CASI and Juventas. If the Parties fail to reach an agreement within sixty (60) days from the date on which Juventas informs CASI that such new product can be commercialized in the Territory, Juventas may grant the right to commercialize the new product in the Territory to any third party.
(2) Juventas agrees to grant to CASI an exclusive license for Commercializing the new product, CD19/CD20 Biantibodies, in the Field and in the Territory on terms and conditions same as those set out in this Agreement and License Agreement, providing that a non-refundable milestone payment of RMB 70,000,000 shall be paid to Juventas upon the initiation of the first Phase II Clinical Trial with the new product.
5. Representation, Warranties and Covenants
5.1. Juventas Representations, Warranties and Covenants
As from the effective date of this Agreement, Juventas hereby represents and warrants to CASI as follows, while the representations and warranties with respect to Juventas under Section 7.1 of the License Agreement shall survive:
(1) the execution, delivery and performance by Juventas of this Agreement and the consummation of the transactions contemplated hereby are within Juventas’ corporate powers and have been duly authorized by all necessary corporate action on the part of Juventas. This Agreement constitutes the legal, valid and binding obligation of Juventas, enforceable against Juventas after duly signed by the Parties;
(2) the execution, delivery and performance of this Agreement by Juventas will not violate: (i) any Laws or any order of any Governmental or Regulatory Authority; or (ii) any provision of Juventas’ certificate of incorporation or other organizational documents.
5.2. CASI Representations, Warranties and Covenants
CASI hereby represents and warrants to Juventas as follows, while the representations and warranties with respect to CASI under Section 7.2 of the License Agreement shall survive:
(1) the execution, delivery and performance of this Agreement by CASI and the consummation of the transactions contemplated hereby are within CASI’s corporate powers and have been duly authorized by all necessary corporate action on the part of CASI. This Agreement constitutes the legal, valid and binding obligations of CASI, enforceable against CASI in accordance with its terms;
13
(2) CASI will be properly registered, licensed and qualified, and have all requisite power and authority under its organizational documents and in accordance with applicable Laws to market and sell Product in the Territory, and to conduct its business and perform its obligations hereunder and, during the Term and any extensions thereof, it shall take all action as may be required and necessary to obtain and keep current any governmental licenses, permits, registrations and approvals that are necessary for it to develop, make, market and sell the Product and carry out its other activities hereunder;
(3) the execution, delivery and performance of this Agreement by CASI will not violate: (i) any Laws or any order of any Governmental or Regulatory Authority; or (ii) any provision of CASI’s certificate of incorporation or other organizational documents;
(4) CASI shall carry out its obligations and activities under this Agreement (including without limitation the marketing, promotion, distribution and sale of the Product) in accordance with: (i) the terms hereof and (ii) all applicable Laws;
(5) CASI and its employees have never been (i) debarred or (ii) convicted of a crime for which a Person can be debarred under Section 306(a) of the U.S. Generic Drug Enforcement Act of 1992 (Section 306(a) or (b) or similar Laws of any other jurisdiction; and
(6) CASI irrevocably and unconditionally agrees with and undertakes to Juventas that, unless with prior written consent of Juventas or specially permitted by this Agreement, during the Term of this Agreement and three (3) years thereafter, (1) CASI shall not engage in Commercialization of any T-cell therapy product specifically binding to CD19 (“Restricted Products”) other than the Product; and (2) CASI shall not market or sell any Restricted Products in the Territory.
6. Term and Termination
6.1. Term
Unless terminated in accordance with Section 6.2, the term of this Agreement shall be 10 years.
6.2. Termination
(1) Termination for Material Breach. Either Party may terminate this Agreement for a material breach of this Agreement by the other Party if the breaching Party fails to cure any such breach within [***] after receipt of written notice from the non-breaching Party specifying such breach.
(2) Termination for Insolvency or Bankruptcy. Either Party may immediately terminate this Agreement upon written notice to the other Party in the event that: (i) the other Party is declared insolvent or bankrupt by a court of competent jurisdiction; (ii) a voluntary petition of bankruptcy or reorganization is filed in any court of competent jurisdiction by such other Party; (iii) this Agreement is assigned by such other Party for the benefit of creditors; or (iv) an involuntary petition of bankruptcy or
14
reorganization is filed against the other Party or its assets and such petition is not dismissed within [***] of filing.
(3) Either Party may terminate this Agreement upon [***] prior written notice in the event that any Governmental or Regulatory Authority takes any action or raises any objection that prevents CASI from making, having made, marketing, promoting, importing, purchasing or selling Product, or that has the effect of making any of the transactions contemplated by this Agreement unlawful.
(4) Termination due to change in control. Either Party may terminate this Agreement upon [***] prior written notice in the event of a change of control of the other Party.
6.3. Effect of Termination
On the date of termination or expiration of this Agreement, (a) all rights and obligations granted under or imposed by this Agreement will cease and terminate, except as set forth herein and in Section 6.4, (b) all license granted to CASI under this Agreement shall terminate, (c) CASI shall cease its use and, upon request, within 30 days either return to Juventas or destroy (and certify as to such destruction) all Juventas’ Confidential Information, including any copies thereof, (d) CASI shall promptly deliver to Juventas all information, documents and other materials, which belong to the Improvements or are necessary for Juventas to Commercialize the Product and (e) CASI or its Affiliates shall not engage in development, marketing or sale of the Product in the Territory before the [***] anniversary of the termination or expiration of this Agreement. Notwithstanding the foregoing, unless this Agreement was terminated by Juventas due to CASI’s breach of this Agreement, CASI shall have the right to sell and distribute its existing inventory of Product, not including Products in process of manufacture, subject to the terms of this Agreement and payment of applicable royalties to Juventas as set forth in Section 3 above. Such expiration or termination shall not affect any claim, demand, liability or right of a Party arising pursuant to this Agreement prior to the expiration or termination hereof. For the avoidance of doubt, termination or expiration of this Agreement shall not affect a Party’s right to seek damages from the responsible Party for actions or omissions occurring prior to such termination or expiration.
6.4. Survival
The following provisions shall survive any termination or expiration of this Agreement: Section 4.4, Section4.5, Section 5.2(6), Section 6.3, Section 7, Section 8 and Section 9.
7. Confidentiality and Press Release
7.1. Confidential Information
Except to the extent otherwise agreed in writing, the Parties agree that the receiving Party (the “Receiving Party”) shall keep confidential and shall not publish or otherwise disclose or use for any purpose other than as provided for in this Agreement any confidential and proprietary information and materials, patentable or otherwise, in any form (written, oral, photographic, electronic, magnetic, or otherwise) which is disclosed
15
to it by the other Party (the “Disclosing Party”) or is otherwise received, accessed or developed by a Receiving Party in the course of performing its obligations under this Agreement, including, but not limited to, all information concerning the Intellectual Property, the Product, the contents of this Agreement and any other technical and business information of whatever nature (collectively, “Confidential Information”). Without limiting the generality of the foregoing, the Receiving Party may disclose the Confidential Information only to the Receiving Party’s officers, employees, consultants, agents (the “Representatives”) who have a need to know the Confidential Information in connection with the transaction contemplated hereby and which Representatives are contractually or otherwise legally bound to hold and use the Confidential Information in substantial accordance with the terms herein. The Receiving Party shall guarantee the full performance by the Representatives of the confidentiality obligation set forth herein. Intellectual Property and Improvements shall be the Juventas’ Confidential Information.
7.2. Exclusions
The obligations of confidentiality and non-use set forth in Section 7.1 shall not apply to any portion of the Confidential Information which the Receiving Party is able to establish by competent proof: (i) was already legally in the possession of the Receiving Party, at the time of disclosure by the Disclosing Party, other than pursuant to the License Agreement and this Agreement; (ii) was generally available to the public or otherwise part of the public domain at the time of its disclosure to the Receiving Party; (iii) became generally available to the public or was otherwise part of the public domain after its disclosure and other than through any act or omission of the Receiving Party in breach of this Agreement; or (iv) was disclosed to the Receiving Party by a third party provided that the Confidential Information was disclosed by such third party in non-violation of any confidentiality obligation.
7.3. Exceptions
The obligations of this Section 7 shall not apply to Confidential Information that: (i) is submitted to a Governmental or Regulatory Authority to facilitate the issuance of any registrations for the Product or the Intellectual Property, provided that the Disclosing Party is informed of such submission and the required Confidential Information in advance of the disclosure and reasonable measures shall be taken to assure confidential treatment of such information where permitted; (ii) is provided by the Receiving Party to third parties under confidentiality agreements having provisions at least as stringent as those in this Agreement, and solely for consulting, funding, merger or acquisition activity, external testing and marketing trials with respect to any of the subject matter of this Agreement; or (iii) is otherwise required to be disclosed in compliance with applicable Laws (including, without limitation and for the avoidance of doubt, the requirements of any securities regulatory authorities or any stock exchange on which securities issued by a Party are traded) or order by a court or other governmental or regulatory authority having competent jurisdiction; provided, that, if a Party is required to make any such disclosure of the other Party’s Confidential Information such Party will give reasonable advance written notice to the other Party of such disclosure requirement
16
and will use its best efforts to secure confidential treatment of such Confidential Information required to be disclosed.
7.4. Remedies
Each Party shall be entitled, in addition to any other right or remedy it may have, at law or in equity, to seek an injunction from any court of competent jurisdiction, without the posting of any bond or other security, enjoining or restraining the other Party from any violation or threatened violation of this Section 7.
7.5. Duration
All obligations of confidentiality, limited use and non-disclosure imposed by this Section 7 with respect to any and all items of Confidential Information shall survive the termination of this Agreement for a period of 5 years, unless a longer period is prescribed by Law.
7.6. Press Releases
Except as required by Law (including requirements of applicable securities administrators or any other stock exchange on which securities issued by a Party are traded) or any governmental or regulatory authority, neither Party shall make any press release or other public announcement relating to the Agreement or the transactions described herein without the prior written consent of the other Party, which consent will not be unreasonably withheld. Subject to the foregoing, each Party shall use Commercially Reasonable Efforts to provide the other Party an opportunity to review any press release or similar public statement related to this Agreement or Product prior to publicly releasing such press release.
8. Indemnification
Each Party (the “Breaching Party”) shall defend, indemnify and hold harmless the other Party, its Affiliates, officers, directors, employees and agents against any and all Losses arising out of, in connection with or attributable to the Breaching Party’s breach under this Agreement. The detailed agreement shall refer to Section 10 of the License Agreement
9. Miscellaneous
9.1. Governing Law
This Agreement shall be governed by and construed exclusively in accordance with the laws of Hong Kong, without regard to conflicts of law rules. Except as specifically provided below, any disputes, controversy or claims arising from or related to this Agreement or violation of this Agreement shall be resolved through negotiation between the Parties. If the negotiations do not resolve such dispute to the reasonable satisfaction of both Parties, such dispute shall be resolved by arbitration according to Section 9.2 below.
17
9.2. Arbitration
Any dispute, controversy, difference or claim arising out of or relating to this Agreement, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non- contractual obligations arising out of or relating to it, shall be referred to and finally resolved by arbitration at the Hong Kong International Arbitration Centre (HKIAC) in accordance with its rules as at present in force when the notice of arbitration is submitted. Each Party shall pay its own arbitration fees, but the losing party shall bear the fees in relation to the arbitrator
9.3. Effectiveness and Entire Agreement
(1) This Agreement shall become effective upon duly signed by the Parties.
(2) Except as otherwise stipulated in hereunder, upon the effectiveness of this Agreement, this Agreement is a supplementary agreement to the License Agreement. If both this Agreement and the License Agreement have provisions regarding the same matter and there is a discrepancy between this Agreement and the License Agreement, this Agreement shall prevail.
(3) The Parties entered into a Term Sheet dated September 22, 2020. If there is a discrepancy between this Agreement and the Term Sheet, this Agreement shall prevail.
9.4. Waiver
The waiver by any Party of a breach of any provision of this Agreement shall not operate, or be construed, as a waiver of any subsequent breach.
9.5. Force Majeure
If the actual performance of any obligations under this Agreement is prevented by any act of God (such as fire, flood, earthquake or other natural cause), terrorist events, riots, insurrections, declared or undeclared war or national emergency, any epidemic, pandemic or disease outbreak (including COVID-19), governmental action or inaction unrelated to Product or the Parties’ acts or omissions, or other similar event outside the reasonable control of a Party, the Party affected by such event (a “Force Majeure”) shall be excused on a day-by-day basis to the extent of the prevention; provided, that such Party notifies the other Party as soon as practicable of the nature and expected duration of the claimed Force Majeure, uses all Commercially Reasonable Efforts to avoid or remove the causes of nonperformance and resumes performance promptly after the causes have been removed.
9.6. Modification
No change, modification, or waiver of any terms of this Agreement shall be valid unless it is in writing and signed by both Parties.
9.7. Assignment
CASI shall not be entitled to assign its rights or delegate its obligations hereunder in whole or in part without the express prior written consent of Juventas.
18
9.8. Independent Contractor
This Agreement shall not be construed as constituting a partnership, joint venture or any other form of legal association that would impose liability upon one Party for the act or failure to act of the other Party, or as providing either Party with the right, power or authority (express or implied) to create any duty or obligation of the other Party.
9.9. Headings
The headings have been inserted for convenience only and are not to be considered when interpreting the provisions of this Agreement.
9.10. Counterparts
This Agreement may be executed in multiple counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.
9.11. Severability
Each provision of this Agreement will to the extent possible be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
9.12. Notices
All notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing to the address set forth below, and shall be conclusively deemed to have been duly given (a) when hand-delivered to the other Parties, upon delivery; (b) when sent by electronic mail, upon such mail being sent unless the sending Party subsequently learns that such electronic mail was not successfully delivered; (d) five (5) Business Days after deposit in the mail as air mail or certified mail, receipt requested, postage prepaid; or (e) three (3) Business Days after deposit with an overnight delivery service, postage prepaid with next-business-day delivery guaranteed, provided that the sending Party receives a confirmation of delivery from the delivery service provider. A Party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 9.12, by giving the other Parties written notice of the new address in the manner set forth above.
|
If to Juventas: |
Juventas Cell Therapy Ltd. |
|
Attn: |
Yiping Deng (邓一平) |
|
Address: |
1103, Building No.3, Huamao Center, 77 Jianguo Road, Chaoyang District, Beijing, China 100025 |
|
Email: |
[***] |
|
Tel: |
[***] |
|
If to CASI: |
CASI Pharmaceuticals, Inc. |
19
|
Attn: |
Larry Zhang (张炜) |
|
Address: |
9620 Medical Center Drive, Suite 300 Rockville, Maryland 20850 |
|
Email: |
[***] |
|
Tel: |
[***] |
All such notices shall be effective upon receipt.
9.13. Language
This Agreement will be made in both English and Chinese version. In case of any discrepancy between the English version and the Chinese version, the provision of the English version shall prevail.
** REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK **
20
IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.
Juventas Cell Therapy Ltd. (合源生物科技（天津）有限公司) (Seal)
|
Signed by: |
/s/ Lulu Lv |
|
|
|
|
|
|
Name: Lulu Lv |
|
|
|
Title: Legal Representative |
|
|
21
IN WITNESS WHEREOF, the Parties have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.
|
CASI Pharmaceuticals, Inc. |
|
|
|
|
|
|
|
Signed by: |
/s/ Larry (Wei) Zhang |
|
|
Name: WEI ZHANG |
|
|
|
Title: PRESIDENT |
|
|
22
Exhibit 10.2
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this “Agreement”), dated September 22, 2020 (Beijing time, the “Execution Date”), is entered into by and between:
1. JUVENTAS CELL THERAPY LTD (合源生物科技(天津)有限公司) (the “Company” or the “Target Company”), a company with limited liability established under the laws of the PRC, with its registered office at Building 5, No.8, Haitai Development Third Road, Huayuan Industrial District (Outer Ring), Binhai High-Tech Zone, Tianjin; and
2. CASI Biopharmaceuticals (WUXI) Co., Ltd. (凯信生物医药（无锡）有限公司) (the “Investor”), a company with limited liability established under the laws of the PRC, with its registered office at C10402, No. 1699, Huishan Avenue, Huishan Economic Development Zone, Wuxi.
3. [***], a limited partnership validly organized and legally existing under the PRC laws, [***];
4. [***], a limited partnership validly organized and legally existing under the PRC laws, [***];
5. [***], a limited partnership validly organized and legally existing under the PRC laws, [***];
(each party referenced above, a “Party” and collectively, the “Parties”).
WHEREAS:
(A) The Company is a company with limited liability duly organized and validly existing under the laws of the PRC engaged in research, development, manufacturing and selling of any technology or product in relation to cellular immunotherapy, including without limitation CAR-T, CAR-NK, and TIL (the “Business”).
(B) The Company desires to increase new registered capital of [***]. The Investor is an existing Shareholder of the Company and the Investor desires to subscribe for all the Increased Capital pursuant to the terms and conditions set forth in this Agreement (the “Transaction”).
(C) The Company and the Investor agree to consummate the Transaction pursuant to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereto agree as follows:
1. Definition and Interpretation
1.1 Unless the context otherwise requires, the following words and expressions shall have the following meanings:
|
|
|
|
“Agreement” |
has the meaning given to such term in the preamble of this Agreement; |
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
1.2 Unless otherwise provided in this Agreement or otherwise defined by the context, the following terms referred to in this Agreement shall be interpreted as follows:
(a) Directly or Indirectly. The term “directly or indirectly” means, directly, or through one or more intermediate persons or through contractual or other arrangements, and “direct or indirect” has the correlative meaning;
(b) Headings. Headings are included for convenience only and shall not affect the construction of any provision of this Agreement;
(c) Include not Limiting. “Include,” “including,” “are inclusive of” and similar expressions are not expressions of limitation and shall be construed as if followed by the words “without limitation”;
(d) References to Documents. References to this Agreement include the Exhibits, which form an integral part hereof. The words “hereof,” “hereunder” and “hereto,” and words of like import, unless the context requires otherwise, refer to this Agreement as a whole and not to any particular Section hereof or Exhibit hereto. A reference to any document (including this Agreement) is to that document as amended, consolidated, supplemented, novated or replaced from time to time;
(e) Time. If a period of time is specified and dates from a given day or the day of a given act or event, such period shall be calculated exclusive of that day;
(f) Writing. References to writing and written include any mode of reproducing words in a legible and non-transitory form including emails and faxes.
2. Transaction
2.1 Subscription
Subject to and on the terms and conditions of this Agreement, the Company shall increase, and the Investor shall subscribe for, the Increased Capital free of any Encumbrance on the Closing Date. Subject to and on the terms and conditions of this Agreement, the Investor shall pay the Subscription Price in the amount of RMB 70,000,000 to the Company on the Closing Date. [***] of the Subscription Price shall pay up the Increased Capital and the remaining of the Subscription Price shall be calculated as “capital surplus” of the Company.
Immediately after the Closing, the Increased Capital held by the Investor shall represent [***]% of the total Equity Interests of the Company (on a fully diluted basis) and shall enjoy the same shareholder’s right as those held by the Investor under Serie A+ Investment Agreement.
2.2 Closing
Subject to the terms and conditions of this Agreement, the consummation of the Transaction (the “Closing”) shall take place remotely via the exchange of documents and signatures, on a date mutually agreed by the Company and the Investor, which shall be no later than the twentieth Business Day after the Execution Date (the “Long Stop Date”).
2.3 Closing Deliveries
(a) On the Closing Date, the Company shall deliver to the Investor: (i) a duly signed capital
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
contribution certificate (出资证明书) evidencing that the Increased Capital has been registered in the name of the Investor; and (ii) a duly issued Shareholders’ Register (股东名册) of the Company, evidencing the valid subscription of the Increased Capital by the Investor in accordance with Section 2.1 of this Agreement.
(b) The Investor shall pay to the Company the Subscription Price. Given that the shareholder loan in an aggregate amount of RMB70,000,000 is still outstanding and repayable by the Company to the Investor, the Company and the Investor agree that, upon satisfaction of the Conditions Precedent, the Investor shall pay the capital increase price to the Company in an amount equal to the repaid amount by the Company on or prior to the second Business Day after the date of repayment of the shareholder loan by the Company to the Investor. The date on which the full Subscription Amount has been paid to the Company shall be the closing date (the “Closing Date”)
2.4 Use of Proceeds
Subject to the terms and conditions hereof, the Parties agree that the Subscription Price shall only be used by the Company as working capital for the Business and for other related capital expenditure.
3. Representations and Warranties
3.1 Each of the Parties hereto represents and warrants to the other Party as follows:
3.1.1 Existence/Authority
Each Party is duly organised and validly existing under the laws of its place of incorporation, and such Party has the power and authority to enter into this Agreement and perform its obligations contemplated hereby; such Party has the capacity to enter into and perform its obligations contemplated under this Agreement.
3.1.2 Authorisation
Each Party has the full power and authority to enter into, execute and deliver this Agreement and to perform the transactions contemplated hereby. The execution and delivery by such Party of this Agreement and the performance by such Party of the transactions contemplated hereby have been duly authorized by all necessary corporate action of such Party. Assuming the due authorization, execution and delivery of this Agreement by the other Party hereto, this Agreement constitutes the legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors' rights generally.
3.1.3 No Conflict
The execution, delivery and performance of this Agreement by such Party do not and will not:
(a) violate, conflict with or constitute a default under any provision of such Party’s constitutional documents;
(b) conflict with or result in a breach of any agreement to which such Party is a party or by which its properties are bound;
(c) violate any judgment, order, injunction, decree or award of any court, administrative agency or governmental body against, or binding upon, such Party or its properties; or
(d) constitute a violation of any Applicable Laws applicable to such Party or its properties.
3.2 Representations and Warranties of the Target Company and the Founding Shareholders
The Target Company and the Founding Shareholders jointly and severally make and ensure that the representations, statements and warranties set forth in Schedule 1 are authentic, complete and accurate. The Target Company and the Founding Shareholders unanimously acknowledge
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
that, for the purpose of matters in Schedule 1, representations, statements and warranties made by them with respect to matters involving the Target Company shall apply both to the Target Company and other Group Members.
4. Conditions Precedent to Closing
4.1 The obligations of the Target Company to consummate the Closing under Section 2.2 of this Agreement are subject to the satisfaction of the following conditions on or prior to the Closing Date:
4.1.1 The representations and warranties made by the Investor under Section 3.1 hereof are true, correct and complete on the Closing Date.
4.1.2 The Co-Marketing Agreement have been duly executed by the parties thereto, amending, restating, superseding and replacing the Existing CASI License Agreement.
4.1.3 All the Series B Transaction Documents agreed by the Company have been duly executed by the Investor.
4.2 Unless waived by the Investor in writing, the obligations of the Investor to consummate the Closing under Section 2.2 of this Agreement are subject to the satisfaction of the following conditions on or prior to the Closing Date:
4.2.1 The Co-Marketing Agreement have been duly executed by the parties thereto, amending, restating, superseding and replacing the Existing CASI License Agreement.
4.2.2 All Existing Shareholders have signed the Shareholders Resolutions, by which the Investor’s entitlement to the rights as Series A + Shareholders has been approved.
4.2.3 The Parties have signed this Agreement.
4.2.4 Neither the Founding Shareholders nor the Companies have violated the representations, representations and warranties made in Schedule 1 hereto or have committed any act in breach of the Transaction Documents.
4.2.5 This Transaction shall have been approved by the board of directors and shareholders’ meeting of the Company.
5. Mutual Covenants and Pre-Closing Covenants
5.1 Mutual Covenants
Each Party agrees to use its reasonable commercial efforts to take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable to satisfy the terms and conditions of this Agreement and to procure the Closing.
5.2 Pre-Closing Covenants
Until Closing Date, the Founding Shareholders shall cause the Company to continue to operate in the Ordinary Course of Business. The Founding Shareholders shall cause the Company not to take any action that is inconsistent with the past business practices or sound business judgment.
5.3 Timely Notification
If, at any time prior the Closing Date, any of the Founding Shareholders or the Company becomes aware of any the following facts or events, such Founding Shareholders or the Company shall promptly notify the Investors in writing: (i) there is material discrepancy between the information disclosed by the Founding Shareholders and the Company to the Investors and the actual circumstances; and (ii) there is any material discrepancy between any representations, warranties or covenants hereunder and the actual circumstances, or any such representations, warranties or covenants are misleading in any material respect.
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
6. Post-Closing Covenants
The Company shall be in charge of the change of registration and filing of the Transaction with the competent Governmental Authorities (the “Filing Procedure”) and the Filing Procedure shall be completed prior to the expiration of the tenth Business Day after the Closing Date. The Investor shall provide necessary cooperation in connection with the Filing Procedure.
7. Assignments and Transfers
The rights and obligations of any Party hereunder shall not be assigned, transferred or otherwise disposed to a third party without the prior written consent of other Parties.
8. Confidentiality
The existence and the terms and conditions of this Agreement or any agreement in connection herewith (collectively, the “Confidential Information”) shall be considered confidential information and, without the written approval of the Company and the Investor, shall not be disclosed by (a) any press release or public announcement, or (b) otherwise by any of the Parties to any other Person except that (i) each Party, as appropriate, may disclose any of the Confidential Information to its current or bona fide prospective investors, investors, limited partners, fund managers, prospective permitted transferees, employees, investment bankers, lenders, agents, accountants, professional advisors and attorneys, in each case only where such Persons are under appropriate nondisclosure obligations; (ii) if any Party is requested or becomes legally compelled (including without limitation, pursuant to securities laws or the rules of any stock exchange) to disclose the existence or content of any of the Confidential Information in contravention of the provisions of this Section 8, such Party shall promptly provide the other Party with written notice of that fact so that such other Parties may seek a protective order, confidential treatment or other appropriate remedy and in any event shall furnish only that portion of the information that is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information.
9. Default and Indemnification
9.1 In the event any Party is in breach of this Agreement which will cause a Material Adverse Effect, the other Party shall be entitled to an indemnification for its losses caused by such breach, in addition to any other rights such Party are entitled to under this Agreement.
9.2 Notwithstanding anything to the contrary herein, this Section 9 shall survive the termination of this Agreement.
10. Termination
10.1 Term
This Agreement shall become effective as of the Execution Date and continue to be valid during the existence of the Company unless otherwise terminated earlier in accordance with this Agreement.
10.2 Termination
This Agreement may be terminated:
(a) immediately by unanimous agreement in writing of the Company and the Investor; or
(b) by the Company upon written notice to the Investor, in the event the Investor fails to perform its obligation to pay the Subscription Price as agreed; or
(c) The Closing is not occurred prior to the Long Stop Date and the Parties fail to agree to extend the Long Stop Date.
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
10.3 Consequences
When this Agreement is terminated by any Party pursuant to Section 10.2 of this Agreement, no Party shall have any rights or claims against the others, save for those in respect of a breach of this Agreement prior to such termination.
11. Dispute Resolution and Governing Law
11.1 Governing Law
The terms of this Agreement shall be governed by and construed and enforced in accordance with the laws of PRC without regard to its principles of conflicts of laws.
11.2 Dispute Resolution
Any dispute arising from or in connection with this Agreement shall be submitted to China International Economic and Trade Arbitration Commission (the “CIETAC”) for arbitration which shall be conducted in accordance with the CIETAC's arbitration rules in effect at the time of applying for arbitration. The place of arbitration shall be Beijing. The arbitral award shall be in writing and final and binding upon the Parties. Except for the matters in dispute, the Parties shall continue to perform the provisions of relevant agreements.
12. Miscellaneous
12.1 Entire Agreement
This Agreement with all its Exhibits and Schedules constitute the entire agreement among the Parties relating to the transaction contemplated hereof and supersede any prior agreements, understandings or discussions among the Parties.
12.2 Succession and Assignment
The terms and conditions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. No Party may directly or indirectly transfer or assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other Party.
12.3 Notice
All notices and other communications transmitted to any Party pursuant hereto shall be in writing in both Chinese and English and delivered by hand or by prepaid courier (in each case the recipient shall execute the return receipt) to the mailing address set forth below, or by email as set forth below, or to such other mailing address or email as a Party may from time to time notify the other Party pursuant to this Section 12.3:
To Investor:
Address: 1701-1702 Tower 1, China Central Place, No. 81 Jianguo Street, Chaoyang district, Beijing, 100025, China
Telephone: [***]
Fax: /
Attention: Larry (Wei) Zhang
Email: [***]
To the Company:
Address: Room 1707-1708, South Tower of Wisdom Hill, No. 20, Kaihua Road, Huayuan
Industrial Park, Tianjin
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
Telephone: [***]
Fax: /
Attention: Fu Ding
Email: [***]
Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Section 12.3 shall be conclusively deemed to have been duly given (i) when hand delivered to the other party, upon delivery; (ii) seven (7) Business Days after deposit in the mail as air mail or certified mail, receipt requested, postage prepaid and addressed to the other party as set forth above; (iii) three (3) Business Days after deposit with an overnight delivery service, postage prepaid, addressed to the parties as set forth above with next-business-day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider; or (iv) when sent by e-mail if sent to the address set forth above, and a receipt of the e-mail is requested and received.
12.4 Amendments and Waivers
No amendment of any provision of this Agreement shall be valid unless the same is made in writing and duly signed by all the Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.
12.5 Costs
Each Party shall bear its own fees and expenses incurred in relation to this transaction contemplated herein.
12.6 Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.
12.7 Severability
If any term or provision of this Agreement is or becomes invalid or unenforceable in any event or in any jurisdiction, nothing shall affect the validity or enforceability of the remaining terms and provisions of this Agreement, and nothing shall affect the validity or enforceability of such term or provision in any other event or in any other jurisdiction.
12.8 Language
This Agreement is executed in English and Chinese and in case of any discrepancy between the Chinese version and the English version, the Chinese version shall prevail.
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written:
JUVENTAS CELL THERAPY LTD (合源生物科技(天津)有限公司) (Official Chop)
|
|
|
|
|
Signature: |
/s/ Lulu Lv |
|
|
Name: Lulu Lv |
|
|
|
Title: Authorized Representative |
|
|
(SIGNATURE PAGE OF INVESTMENT AGREEMENT in respect of JUVENTAS CELL
THERAPY LTD. (合源生物科技(天津)有限公司))
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written:
CASI Biopharmaceuticals (WUXI) Co., Ltd. (凯信生物医药（无锡）有限公司) (Official Chop)
|
|
|
|
|
Signature: |
/s/ Larrv (Wei) Zhang |
|
|
Name: Larrv (Wei) Zhang |
|
|
|
Title: Authorized Representative |
|
|
(SIGNATURE PAGE OF INVESTMENT AGREEMENT in respect of JUVENTAS CELL
THERAPY LTD. (合源生物科技(天津)有限公司))
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written:
|
[***] |
|
|
|
|
|
|
|
|
|
|
|
Signature: |
/s/ [***] |
|
|
Name: [***] |
|
|
|
Title: [***] |
|
|
(SIGNATURE PAGE OF INVESTMENT AGREEMENT in respect of JUVENTAS CELL
THERAPY LTD. (合源生物科技(天津)有限公司))
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written:
|
[***] |
|
|
|
|
|
|
|
|
|
|
|
Signature: |
/s/ [***] |
|
|
Name: [***] |
|
|
|
Title: [***] |
|
|
(SIGNATURE PAGE OF INVESTMENT AGREEMENT in respect of JUVENTAS CELL
THERAPY LTD. (合源生物科技(天津)有限公司))
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date and year first above written:
|
[***] |
|
|
|
|
|
|
|
|
|
|
|
Signature: |
/s/ [***] |
|
|
Name: [***] |
|
|
|
Title: [***] |
|
|
(SIGNATURE PAGE OF INVESTMENT AGREEMENT in respect of JUVENTAS CELL
THERAPY LTD. (合源生物科技(天津)有限公司))
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
SCHEDULE 1
REPRESENTATIONS AND WARRANTIES OF THE TARGET COMPANY AND THE FOUNDING SHAREHOLERS
1. Valid Existing of Target Company. The Target Company is a legally incorporated and validly existing entity. As of the Signing Date, according to the provisions of the AOA of Target Company, except for registered capital of the Target Company subscribed but not paid-up by [***] and[***], the registered capital of the Target Company has been paid on time and in full in accordance with its articles of association, and complies with the requirements of the PRC Laws, and there is no unpaid capital, delay in payment of capital, false registered capital, capital not paid in or withdrawal of registered capital. The articles of association of the Target Company have been legally and validly registered (if required), and are valid and enforceable.
2. Undisclosed Debts. The Target Company has no other debts that are not reflected in the balance sheet provided to the Investor, and unless otherwise disclosed to the Investor, the Target Company has not provided guarantee or other security for others, or set up any mortgage, pledge or other security interest on its properties.
3. Share Capital Structure. As of the Execution Date, the equity structure of the registered capital of the Target Company set forth in the articles of association and amendments to the articles of association registered and filed with the AMR is completely in consistent with that set forth in Schedule 2 attached hereto and the AOA of the Target Company and the amendments to the articles of association provided by the Target Company to the Investor, and has truly, completely and accurately reflected the share capital structure of the Company, without any false capital contribution. As of the closing date of the Series B Financing, the equity structure of the registered capital of the Target Company set forth in the articles of association and amendments to the articles of association registered and filed with the AMR is completely in consistent with that set forth in Schedule 3 attached hereto. As of the Closing Date, except as otherwise stipulated in the Series B Transaction Documents or as otherwise disclosed t the Investor, the Target Company has not promised to issue or actually issued in any way and to any person any equity, shares, convertible bonds, warrants, stock option or interest of the same or similar nature other than the said shareholder’s equity.
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
SCHEDULE 2
SHAREHOLDING STRUCTURE PRIOR TO INVESTMENT
[***]
INFORMATION IN THIS EXHIBIT IDENTIFIED BY BRACKETS IS CONFIDENTIAL AND HAS BEEN EXCLUDED PURSUANT TO ITEM 601(B)(10)(IV) OF REGULATION S-K BECAUSE IT (I) IS NOT MATERIAL AND (II) WOULD LIKELY CAUSE COMPETITIVE HARM TO CASI PHARMACEUTICALS, INC. IF PUBLICLY DISCLOSED.
*** Triple asterisks denote omissions
SCHEDULE 3
SHAREHOLDING STRUCTURE AFTER COMPLETION OF INVESTMENT
[***]
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
|
Date: November 9, 2020 |
|
|
|
|
|
|
|
|
/s/ Wei-Wu He |
|
|
Wei-Wu He |
|
|
Chief Executive Officer |
|
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
|
|
|
|
Date: November 9, 2020 |
|
|
|
|
|
|
|
|
/s/ Larry (Wei) Zhang |
|
|
Larry (Wei) Zhang |
|
|
Principal Financial Officer |
|
Exhibit 32.1
CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wei-Wu He, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
|
Date: November 9, 2020 |
/s/ Wei-Wu He |
|
|
Wei-Wu He |
|
|
Chief Executive Officer |
Exhibit 32.2
CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of CASI Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Larry (Wei) Zhang, as Principal Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:
| (1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report. |
The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.
|
Date: November 9, 2020 |
/s/ Larry (Wei) Zhang |
|
|
Larry (Wei) Zhang |
|
|
Principal Financial Officer |